Wednesday, July 23, 2014

Historic Rouge Steel Mill Sees New Owner

Ohio-based AK Steel purchased the steel mill originally built by Henry Ford to realize his dream of vertically-integrating Ford Motor Company:
Russian steelmaker Severstal OAO said Monday it is selling its Dearborn unit formerly known as Rouge Steel to an Ohio company for $700 million as it exits North America.
Severstal Dearborn LLC subsidiaries and Severstal Columbus LLC, collectively known as Severstal North America, will be sold to AK Steel Corp. and Steel Dynamics Inc., respectively, in a $2.3 billion deal. AK Steel, a Fortune 500 company, is based in West Chester, Ohio, and employs 6,100 people in Ohio, Pennsylvania, Kentucky and Indiana.
“The sale of Columbus and Dearborn unlocks substantial value to Severstal’s shareholders,” said Alexey Mordashov, CEO of OAO Severstal.
In 2004, Severstal acquired most of Rouge Steel, a former unit of Ford Motor Co., after that steelmaker filed for bankruptcy in 2003.
AK Steel is acquiring Severstal’s coke-making facility and interests in three joint ventures that process flat-rolled steel....
Dearborn’s blast furnace, which was rebuilt in 2007, is among the most efficient and productive blast furnaces in the world for its size, according to AK Steel.
The plant began operating a new pickle line tandem cold mill and a new hot dip galvanizing line in 2011. Similar to AK Steel’s existing carbon steel operations, the Dearborn plant produces hot- and cold-rolled sheet and hot-dip galvanized products, as well as other flat-rolled steel products. The plant employs 1,400 and is capable of producing about 2.5 million tons of finished steel per year.
Upon completion of the acquisition, AK Steel’s annual shipments are expected to exceed 7.5 million tons.
AK Steel said it intends to utilize all of Dearborn’s production units, and has no plans to cease operations at any of its current steel-making or steel-finishing facilities.
Severstal had reportedly invested over $3 billion into the Dearborn and Columbus steel-making operations.  It had also sunk over $1.1 billion into buying Wheeling-Pittsburgh Steel, and nearly all of that concern's steel-making facilities are shuttered. Based on the investments Severstal had made, it appears AK Steel and Steel Dynamics got a very good deal.  If nothing else, AK Steel bought a big piece of U.S. industrial heritage.

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