Local and State Officials React to Sparrows Point Sale

Local and state officials were ecstatic Wednesday morning at the news that the landmark steel mill at Sparrows Point had been sold. Russian-owned Severstal North America sold the mill to The Renco Group, a New York-based investment company, with assets reportedly $5 billion.

Optimistic that the “L” blast furnace at the plant, idled since early fall, would soon be fired up again, local and state leaders also believe the location of the new owners' headquarters at Sparrows Point bodes well for the future of steelmaking operations there.

“I think the sale brings renewed hope,” said Councilman John Olszewski, Sr., chairman of the Baltimore County Council, whose district includes Sparrows Point. “Finally, someone with a good track record, a portfolio of $5 billion, has brought in people knowledgeable in the industry—also with good track records— who believe they can make a profit at Sparrows Point. At minimum, if we keep the jobs that are already there and don’t lose any more, that would be a good thing. Down the road, there may even be room for a minimal expansion of jobs.”

“It’s a good morning for our area,” said Maryland Delegate Joseph “Sonny” Minnick, whose district includes Sparrows Point.

Both Olszewski and Minnick noted that as part of the deal, RG Steel, the newly formed Renco Group subsidiary that will manage the mills’ operations, announced it will acquire a 50 percent ownership interest in Mountain State Carbon, LLC, a coke-making facility in Follansbee, WV, and Ohio Coatings Company, based in Yorkville, OH.  

“The whole premise has been that it [steelmaking side of the plant] shut down, not because of a lack of customers or the cost of labor, but because the cost of raw materials made it unprofitable,” Olszewski said. “With 50 percent ownership interest in Mountain State Carbon, a coke-making facility in West Virginia, and the coatings company in Ohio, what that will do is secure coke that will help out with the raw materials.”

Minnick, whose family has owned a tavern in Dundalk for 75 years, said he was “very, very pleased to hear” the mill had been sold after a long period of uncertainty.

It’s a bright note, he said, after years of layoffs on top of the closing of other manufacturing plants in the Dundalk area, including General Motors, Western Electric and others.

“Renco is a very diversified company, new into the steel industry, but it seems they have brought in good people to run the mill with knowledge of the steelmaking industry,” Minnick said. “I also understand they bought a coke company in West Virginia. I know that can create some undesirable elements, in terms of pollution in that area, but West Virginia isn’t that far away for shipping.

“There’s also plenty of land (in the Sparrows Point area) that can be made available for more manufacturing in our area,” Minnick added.

Olszewski noted that Renco will also assume various Severstal financial liabilities, including employee-related and environmental liabilities totaling $650 million.

"I don't know how much of that $650 million is going toward environmental cleanup, but that is a lot of money," Olszewski said. "Severstal still has responsibility for environmental issues at Sparrows Point. That doesn't go away just because of a sale."

Christian S. Johansson, secretary of the Maryland Department of Business and Economic Development, cautioned that the deal isn’t finalized, yet, but was optimistic.

“The fact that both parties believe this will be settled in the next month, in such a short window of time, is a very positive sign they expect to get this done,” Johansson said in an interview with Patch.com.

Johansson said the state sought to do whatever it could to assist in the sale between Severstal and Renco, focusing its efforts on bringing the new owners headquarters to Maryland.

“For any business, when you have the decision-makers there, you’re better able to proactively engage them and facilitate whatever may be in the best interest of your state,” Johansson said. “That they are willing to locate their corporate headquarters here, obviously we are very happy about that fact.”

Governor Martin O’Malley weighed in on the news as well.

“The announcement today that RG Steel Inc. has agreed to purchase the Sparrows Point mill from Severstal US Holdings LLC holds the promise that the plant’s long tradition of manufacturing and steel production—and of providing jobs with family-supporting wages—will continue,” O’Malley said in a statement to the press. “For generations, Sparrows Point has been a major employer and a significant economic asset for the state. We welcome RG Steel and its headquarters to Maryland and stand ready to help the company and the United Steelworkers return, retrain and retain nearly 2,000 steelworkers in Sparrows Point.”