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9:27 a.m.: RG Steel new Severstal owner

News First. News Fast

March 2, 2011
By PAUL GIANNAMORE, Business editor

STEUBENVILLE - RG Steel, headquartered at Sparrows Point, Md., outside Baltimore, is the new owner today of the former Severstal Wheeling steel plants in the Ohio Valley, as well as half owner of Mountain State Carbon's Follansbee coke plant and the Ohio Coatings plant at Yorkville.

RG, a new subsidiary of the Renco Group Inc., a private, family owned holding company, purchased Severstal's Wheeling, Warren and Sparrows Point steel operations in a $1.2 billion deal.

The iron and steelmaking portion of Severstal Wheeling in Steubenville and Mingo Junction has been shuttered since the second quarter of 2009, and no immediate plans were discussed for restart of the furnaces or hot mill. Downstream operations at Yorkville and Martins Ferry have been operating as needed to fill orders since late 2009.

The company did not detail plans for the local mills.

"The company is focused on completing the transaction. That is our primary focus right now," said Bette Kovach, RG spokeswoman.

Bill Bensie, president of United Steelworkers Local 1190, which covers workers at Steubenville, Follansbee and Mingo Junction, cautioned the sale won't mean the mills "will start tomorrow."

"But we hope they run us. We've been laid off almost two years at the end of March, the beginning of April. That's almost 1,000 people. I hope Renco doesn't let us sit," he said.

Bensie said he doesn't take the announcement of the headquarters at Sparrows instead of Wheeling as a sign.

"They (Severstal) was headquartered at Dearborn before," he said. "We can't say too much about where the headquarters will be."

Bensie was awaiting word this morning from USW International and district officers with more information. He said he anticipates a call in the near future to head to Pittsburgh regarding the basic labor agreement. RG said in its announcement that it has reached agreement with the USW, pending ratification by the union.

RG said it will receive half the coke made at Follansbee and continue the steelmaker's relationship of supplying steel for coating at Ohio Coatings.

The Renco Group's announcement today said the steelmaker now is the fourth-largest flat-rolled steel producer in the United States.

John Goodwin, who had been an executive with U.S. Steel and was chief operating officer of ISG before it was sold to what eventually became ArcelorMittal, will be the chief executive, headquartered at Sparrows Point.

Goodwin has more than 40 years in the steel industry in executive leadership. He had led the former Wheeling-Pittsburgh Steel plants as chief executive of Esmark in 2007, which owned the mills before selling them to Russian steelmaker OAO Severstal in August 2008.

"We are looking forward to working with existing and future customers to establish the RG Steel brand as one synonymous with excellence in quality and service in the steel industry," Goodwin said.

Steelmaking is in operation at the Warren plant, but like Wheeling-Pitt, the Sparrows Point plant was shuttered by Severstal, effective last fall.

RG said with the three companies together, it will have 7.5 million tons of annual capacity.

Renco said it has executed a new collective bargaining agreement with the United Steelworkers union, subject to ratification by the Steelworkers. The union has been on a day-to-day basis without a regular contract since September 2008.

RG said the USW is supportive of a smooth transition and that pending orders are to be completed and fulfilled without a disruption or delay of service.

Reports of a potential sale of the mill by the North American branch of the Russian steelmaker have been surfacing for months, but the company would not comment on those reports. Bids apparently were taken in October. A story in Bloomberg Businessweek said in January that the original bidders included Renco, Optima Fund Management and Aurora Capital Group, with the USW putting its support behind Renco. The bid by a Ukranian steelmaker through Optima Fund Management reportedly was not backed by the USW.

The Steelworkers had backed Esmark's ownership over a bid from Brazil's CSN in 2006, and Severstal over a bid for Esmark by India's Essar in 2008. The union's contract gives the USW the right of first refusal on potential sale of the plants.

Analysts have shown a somewhat brighter picture on steel for 2011, with price increases by companies sticking as demand increases, while that's offset by increases in raw materials and energy costs.

RG said the sale is expected to be completed in March, pending approval by regulators.

Among Renco Group's holdings is AM General LLC, manufacturers of the military version of the Hummer; several metals mining and fabrication companies including US Magnesium; and the King's Jewelry chain.

Renco was founded in 1975 by Ira Rennert, who was listed by Forbes Magazine in September as having a net worth of $4.5 billion, good enough for 58th on the Forbes 400 Richest Americans list. Forbes said he owns one of the largest homes in the United States, at 43,031 square feet, in Sagaponack, N.Y., complete with 29 bedrooms and 39 bathrooms.'

Renco had bought the former WCI steel from bankrupt LTV in the late 1980s and lost it in bankruptcy in 2003.

(Giannamore can be contacted at pgiannamore@heraldstaronline.com.)

 
 

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