Brussels: Steelmaker ArcelorMittal announced that it would be selling its Maryland steel plant to privately held steel distributor Esmark Inc.
It did not say how much it would receive for Sparrows Point, near Baltimore, which U.S. regulators ordered Mittal Steel Co. NV to sell off as part of its takeover of Arcelor SA because the new company would have too much market power over tin-plated steel output, used to make cans for food, aerosol sprays and paint.
The buyer is a joint venture headed by Esmark and Wheeling-Pittsburgh Corp. which plans to combine with Esmark with participation from industry and institutional investors, ArcelorMittal said.
Analysts said the price tag would be likely around US$2 billion (8,000 crore). ArcelorMittal said it would announce more details when it received regulatory approval for the sale, which it expects to close in the fall. The U.S. Department of Justice had ordered Mittal to divest the plant by the end of the week, extending an original 21May deadline.
ArcelorMittal’s chief financial officer, Aditya Mittal, said Sparrows Point had been an important part of the company’s U.S. operations and would continue to thrive under new ownership.
“We greatly respect the uncertainty that more than 3,000 employees at Sparrows Point have had to live with during this difficult period and we thank them for their service to our company, while wishing them the best of luck in the future,” he said.
Mittal’s bid for Arcelor which is estimated at around US$41 billion (Rs1,64,000 crore) will form the world’s largest steelmaker, controlling about 10% of global steel production. The company is already operating as one out of its Luxembourg base but expects to formally complete the merger later this year.
Sparrows Point, formerly Bethlehem Steel, has stood on its site since 1887. Bethlehem Steel spent more than $600 million (Rs2400 crore) to build a cold mill and reline the blast furnace before filing for bankruptcy in 2001. The improvements helped make it one of the biggest and most efficient blast furnaces in North America.
It can make 3.9 million tons of raw steel every year for customers in construction, car making and appliance manufacturing. Located on the Chesapeake Bay, it is the only fully integrated U.S. steel mill with direct ocean access. It also has access to rail and highway shipping.
Esmark based in Chicago Heights, Illinois said earlier that it was the underdog in the bidding because it was relatively small but it had an excellent relationship with Mittal and the United Steelworkers Union that represents most of the plant’s employees.
Esmark delivers steel products to an estimated 2,000 core customers in the Midwest.