AK Steel To Buy Severstal Facilities

FOLLANSBEE – Brooke County officials are watching carefully developments with two local steel mills, with one expected to gain a new owner and another at risk of being downsized.

West Chester, Ohio-based AK Steel announced Monday it has signed an agreement to buy Severstal North America’s steelmaking facilities, including the Mountain State Carbon plant, for $700 million.

Michael Walner, AK Steel’s general manager of communications and public relations, confirmed the Follansbee plant will be one of several facilities acquired in the deal, pending regulatory approval.

Asked the steel firm’s plans for the local mill, Walner said AK Steel officials hope to maintain and improve upon all of its new facilities.

Once a subsidiary of Wheeling-Pittsburgh Steel, the coke plant became a joint venture of RG Steel and the Russia-based Severstal. But last month Severstal acquired full ownership of the plant through a $30 million settlement out of Delaware bankruptcy court, where RG Steel has filed for Chapter 11 bankruptcy.

AK Steel President and Chief Executive Officer James L. Wainscott said of the acquisition, which includes Severstal’s Dearborn, Mich., flat-rolled steel plant located near many AK Steel customers, “We expect the transaction to be immediately accretive to our earnings and create significant long-term value for AK Steel, our employees, customers and shareholders.”

Santo Santoro, staff representative for United Steelworkers Local 2911, which represents 226 Mountain State Carbon employees, said he’s hopeful about the plant’s future, noting the coke produced by the plant is a vital element in the production of quality steel.

Santoro said Local 2911 and Severstal officials have been in talks for more than two years for a new contract for the plant’s employees, and he’s hoping a smoother relationship can be forged with AK Steel.

The news comes days after an announcement that Koppers Holdings Inc. is considering consolidating its North American tar distillation operations and specifically, moving naphthalene production from its Follansbee plant to another in Stickney, Ill.

Naphthalene is a hydrocarbon used to make moth repellents, certain dyes and other organic compounds.

It is one of various carbon materials and chemicals – produced by the Follansbee plant from coal tar, a product of the production of coke used in the production of aluminum, steel, plastics, resins, treated wood and rubber products.

But the consolidation could reduce the plant’s staff, which already has shrunk in recent years to about 45.

Koppers President and Chief Executive Officer Walter W. Turner said, in a press release, “This would allow us to better serve our customers through a more consistent quality, production and delivery of product while also effectively addressing our goal of being more cost competitive. I expect that we will make a decision within the next several months, once the analysis is completed.”

The Pittsburgh-based company has applied for various environmental permits needed for the proposed consolidation.

Koppers officials stressed the consolidation might not occur until early 2016.

City Manager John DeStefano said both developments have a major impact on the city and Brooke County in addition to area residents who work at the two mills.

He noted the city receives business and occupation tax from the two and both the city and county receive property tax from them.

Brooke County Commissioner Jim Andreozzi agreed, saying, “We’re concerned about the employees and quite frankly, the tax base.”

He estimated the county receives about $900,000 in property tax from both companies.

Of Koppers, Andreozzi said, “They have been good corporate partners for years and years and we’d hate to lose them.”

Built in 1914 by the American Tar Products Co., the Koppers plant is one of Follansbee’s oldest employers.