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Mill sale said ‘death knell’ for Sparrows Point

Keywords: Tags  RG Steel, Sparrows Point, Nucor, John Ferriola, Joe Rosel, USW, United Steelworkers, 9477 Charles Bradford


NEW YORK — The sale of portions of the cold mill at the former RG Steel LLC Sparrows Point, Md., complex could signal the end of steelmaking at the site forever, market sources say, noting that few buyers will be interested in the integrated site with the state-of-the-art cold mill no longer part of the package.

Late Wednesday, Nucor Corp. president and chief operating officer John Ferriola told AMM the Charlotte, N.C.-based steelmaker had acquired portions of the Sparrows Point cold mill to use for upgrades and spare parts at its existing mills but had not purchased the full complex or any land ( amm.com, Dec. 12).

"For Nucor, it’s a great investment, and that’s that," one East Coast distributor said of the deal.

The cold mill has been highlighted as one of the most attractive parts of the facility, with one market source describing it Thursday as the "heart" of Sparrows Point. As a result, market participants said it was now hard to envision a viable buyer for the integrated facility.

"It’s difficult once you take the cold mill out of the equation," Joe Rosel, president of United Steelworkers union Local 9477, told AMM when asked if the other Sparrows Point assets would likely be operated. "I don’t think it’s impossible, but it’s difficult."

Charles Bradford, president of New York-based Bradford Research Inc., agreed. "This was the asset there it made any sense to operate," he said.

Among the available assets are a sinter plant, a blast furnace with pulverized coal injection, two basic oxygen furnaces, two straight-mold continuous casters, one hot strip mill, two active hot-dip galvanizing lines, a temper/tension mill and a self-contained tin mill operation, according to a list posted on auctioneer Hilco Trading LLC’s website.

The auction firm, which had joined with Environmental Liability Transfer Inc. over the summer to purchase the Sparrows Point complex and land during RG Steel’s bankruptcy auction, put the facility back up for sale in September. An auction had been set for Jan. 3, but Hilco canceled that auction earlier this week, saying the rest of the production assets would be sold on a private treaty basis.

One of the problems with finding an operator for the site is the size of the blast furnace, sources said. The blast furnace in Sparrows Point has a 11,000-ton-per-day capacity, and without a natural outlet for the output in the form of an in-house cold mill, it becomes difficult to run a furnace that size, sources said.

"You can run the primary side of the hot mill, (but) I’m not saying it’s likely with the cold mill out of the equation," Rosel said.

"Sparrows isn’t going to make steel anymore," one Southern service center source speculated, noting that the removal of the cold mill asset from the whole complex makes pushing downstream difficult for any operator. "That’s gotta be the death knell."

Meanwhile, customers have said that at least three other large flat-rolled producers have been able to serve the Northeast and Southern regions of the country previously supplied by RG Steel out of Sparrows Point in the months since it shuttered its operations due to its bankruptcy filing ( amm.com, May 31).

Rosel estimated that about 1,500 to 1,600 unionized employees and 300 to 400 managers from the Sparrows Point facility would be affected by a permanent closure.


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