Report: AK interested in Severstal mill

By Don Shilling

WARREN — An Ohio steelmaker has spoken with Severstal about buying the company’s Warren mill, an industry report said.

Officials from AK Steel met last Thursday and Friday with Severstal officials at their mill in Wheeling, W.Va., to talk about Severstal Warren, said Steel Business Briefing, which supplies the industry with news and reports.

The outcome of the discussions isn’t known, said a reporter for Steel Business Briefing, who didn’t want to be identified.

Severstal acquired the local mill, which used to be known as WCI Steel, last year for $370 million from bondholders who took control of WCI in bankruptcy court. Severstal, which is based in Russia but was expanding in this country before the recession took hold, has insisted that it plans to upgrade and operate the Warren mill.

Because of reduced demand, however, the mill is now idled with more than 1,000 hourly and salaried workers laid off.

Alan McCoy, an AK Steel spokesman, declined to talk about the Steel Business Briefing report. “We don’t comment on rumors,” he said.

A Severstal official could not be reached.

Ed Machingo, president of United Steelworkers Local 1375 at the mill, said he asked management about a possible sale Tuesday because of calls he was receiving from reporters. He said he was told the mill is not for sale.

Machingo said he thinks Severstal still intends to reopen and operate the mill but would listen to purchase offers from other companies.

The reporter for Steel Business Briefing said AK Steel is looking for small but profitable lines that it can develop as a niche player in a consolidating industry.

Sources have told the reporter that AK Steel is interested in the Warren mill because it has lines to produce steel for culvert pipe and for electrical products, such as motors and transformers. AK Steel already has strengths in both of those areas, the reporter said.

Machingo said that the Warren mill remains a good asset despite the recent shutdown. WCI had invested $56 million in the mill in 2007 and 2008 in two major projects — a new furnace and a system for filtering dust.

Severstal said in December that it hoped to restart steel production at the mill in June, but it later said that the mill will be idled indefinitely because of the recession. About 1,000 hourly workers are laid off, with fewer than 100 remaining on the job. Also, some of the mill’s 250 salaried workers are off the job.

shilling@vindy.com