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issue: August 2008 APPLIANCE Magazine

Web Exclusive: Metals Consolidation

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Metals industry consolidation continues worldwide.

Russian steel company OAO Severstal (www.severstal.com) has been on a buying binge in recent Augusts, substantially increasing its share of the steel business in the United States. Among its purchases was the Baltimore Sparrows Point steel mill, which Severstal acquired from ArcelorMittal for $810 million. That purchase made Severstal the fourth-largest steel producer in the United States. Sparrows Point has a capacity of 3.9 million tons of crude steel. It is the only integrated producer of flat-rolled steel on the U.S. East Coast.

In June Severstal announced a merger agreement with Esmark Inc. (Wheeling, WV, U.S.; www.esmark.com). The agreement was valued at $1.25 billion, beating out a lower bid from Mumbai-based Essar Steel Ltd., and Esmark estimated the deal would close as early as late July.

The deal will bring Esmark’s Wheeling-Pittsburgh Steel Corp. into the Severstal fold. The acquisition also includes Esmark Steel Services Group Inc. and gives Severstal the remaining 50% ownership of the joint venture Mountain State Carbon, a blast furnace coking coal production facility in West Virginia.

Most recently, Severstal completed a previously announced acquisition of WCI Steel in Warren, OH, U.S. in a deal valued at $140 million. WCI Steel will now be known as Severstal Warren Inc.

Global electronics and appliances OEM Samsung Corp. has also bought further into the steel business this year with the purchase of Japanese stainless-steel supplier Myodo Metal (www.myodo-metal.co.jp).

One of the most active steel firms has been Nucor Corp. (Charlotte, NC, U.S.; www.nucor.com). Nucor recently bought a majority stake of Harris Steel Group Inc. (Stoney Creek, ON, Canada; www.harrissteel.com). Harris Steel, for its part, agreed to the $185 million purchase Ambassador Steel Corp. (Auburn, IN, U.S.; www.ambsteel.com).

In July, Nucor acquired 50% of Duferdofin-Nucor S.r.l. for a purchase price of €423.5 million (approx. US$658 million). Duferdofin-Nucor is headquartered in San Zeno (near Brescia) Italy with a steel melting and bloom/billet caster in San Zeno, as well as rolling mills in Pallanzeno and Giammoro. Total production in 2007 was about 1 million tons.

May also saw Nucor agreeing to form a joint venture with Sidenor S.A. for producing long steel products and plate in the Balkans, Turkey, Cyprus, and North Africa—and the joint venture will include all of Sidenor’s steelmaking activities except its Corinth Pipe Works. Sidenor is the largest steel producer in Greece with additional steelmaking, rolling, and reinforcing mesh operations in Bulgaria and the Former Yugoslavian Republic of Macedonia (FYROM). Its primary steel plants are in Thessaloniki and Almyros (Sovel) in Greece; in Pernik, Bulgaria (Stomana Industry); and in Dojran, FYROM (Dojran Steel). Sidenor also operates steel distribution centers throughout the Balkans, some in partnerships with other firms. Total 2007 steel production was nearly 2 million tons, but that is expected to grow with the commencement of operations of a new rolling mill at its Stomana Industry plant in Bulgaria, bringing its total steel rolling capacity to more than 3.6 million metric tons per year by 2009.

Other Nucor channels of growth included its acquisition of Metal Recycling Services Inc. in Monroe, NC, and Kansas City, MO–based scrap processor Galamba Metals Group.


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