17634 Federal Register / Vol. 72, No. 67 / Monday, April 9, 2007 / Notices 

DEPARTMENT OF JUSTICE 

Antitrust Division 

Public Comment and Response on 

Proposed Final Judgment 

Pursuant to the Antitrust Procedures 

and Penalties Act, 15 U.S.C. 16(b)–(h), 

the United States hereby publishes 

below the comments received on the 

proposed Final Judgment in United 

States v. Mittal Steel Company, No. 

1:06–CV–1360–ESH, which were filed 

in the United States District Court for 

the District of Columbia, on February 

13, 2007. 

Copies of the comments and the 

response are available for inspection at 

the Department of Justice Antitrust 

Division, 325 Seventh Street, NW., 

Room 200, Washington, DC 20530, 

(telephone (202) 514–2481), and at the 

Office of the Clerk of the United States 

District Court for the District of 

Columbia, 333 Constitution Avenue, 

NW., Washington, DC 20001. Copies of 

any of these materials may be obtained 

upon request and payment of a copying 

fee. 

J. Robert Kramer II, 

Director of Operations Antitrust Division. 

UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF COLUMBIA 

United States of America, Plaintiff, v. 

Mittal Steel Company N.V., Defendant 

[Civil Action No. 1: 06CV01360–ESH] 

Response of Plaintiff United States to 

Public Comments 

Pursuant to the requirements of the 

Antitrust Procedures and Penalties Act, 

15 U.S.C. section 16(b)–(h) (‘‘APPA’’ or 

‘‘Tunney Act’’), the United States 

hereby responds to the public comments 

received regarding the proposed final 

Judgment in this case. After careful 

consideration of the comments, the 

United States continues to believe that 

the proposed Final Judgment will 

provide an effective and appropriate 

remedy for the antitrust violations 

alleged in the Complaint. The United 

States will move the Court for entry of 

the proposed Final Judgment after the 

public comments and this Response 

have been published in the Federal 

Register, pursuant to 15 U.S.C. section 

16(d). 

On August 1, 2006, the United States 

filed the Complaint in this matter 

alleging that the proposed acquisition of 

Arcelor S.A. (‘‘Arcelor’’) by defendant 

Mittal Steel Company N.V. (‘‘Mittal 

Steel’’) would violate Section 7 of the 

Clayton Act, 15 U.S.C. section 18. 

Simultaneously with the filing of the 

Complaint, the United States filed a 

proposed Final Judgment and a Hold 

Separate Stipulation and Order 

(‘‘HSSO’’) signed by plaintiff and Mittal 

Steel consenting to the entry of the 

proposed Final Judgment after 

compliance with the requirements of the 

Tunney Act, 15 U.S.C. section 16. 

Pursuant to those requirements, the 

United States filed its Competitive 

Impact State (‘‘CIS’’) in this Court on 

August 1, 2006; published the proposed 

Final Judgment and CIS in the Federal 

Register on August 24, 2006, see United 

States v. Mittal Steel Company N.V., 71 

Fed. Reg. 50084, 2006 WL 2431068; and 

published summaries of the terms of the 

proposed Final Judgment and CIS, 

together with directions for the 

submission of written comments 

relating to the proposed Final Judgment, 

in The Washington Post for seven days 

beginning on September 10, 2006 and 

ending on September 16, 2006. The 60- 

day period for public comments ended 

on November 15, 2006, and three 

comments were received as described 

below and attached hereto. 

I. The Investigation and Proposed 

Resolution 

On January 27, 2006, Mittal Steel 

announced its intention to commence a 

tender offer to acquire control of 

Arcelor. At the same time, Mittal Steel 

announced that it would subsequently 

sell Arcelor’s recently acquired 

Canadian subsidiary, Dofasco Inc. 

(‘‘Dofasco’’) to ThyssenKrupp A.G. 

(‘‘ThyssenKrupp’’) if it acquired control 

of Arcelor. For six months following the 

announcement of the tender offer, the 

United States Department of Justice 

(‘‘Department’’) conducted an extensive, 

detailed investigation into the 

competitive effects of the Mittal/Arcelor 

transaction. As part of this investigation, 

the Department obtained substantial 

documents and information from Mittal 

Steel and issued eight Civil Investigative 

Demands to third parties. The 

Department received and considered 

more than 45,000 pages of material. 

More than fifty interviews were 

conducted with customers, competitors, 

and other individuals with knowledge 

of the industry. The investigative staff 

carefully analyzed the information 

provided and thoroughly considered all 

of the issues presented. The Department 

considered the potential competitive 

effects of the transaction with respect to 

a number of steel products, obtaining 

information about these products from 

customers, competitors, and other 

knowledgeable parties. The Department 

concluded that the combination of 

Mittal Steel and Arcelor likely would 

lessen competition in one market—Tin 

Mill Products (‘‘TMP’’) sold to 

customers in the United States, east of 

the Rocky Mountains (‘‘Eastern United 

States’’.) TMP are finely rolled steel 

sheets, usually coated with a thin 

protective layer of tin or chrome. TMP 

include black plate, electrolytic tin plate 

(‘‘ETP’’), and tin free steel (‘‘TFS’’). 

Black plate is a light-guage cold-rolled 

bare steel sheet that serves as a substrate 

for production of ETP and TFS. Black 

plate is coated with tin to produce ETP 

and with chrome to produce TFS. Both 

ETP and TFS are used primarily in 

manufacturing steel cans for packaging 

a wide range of food products, such as 

soup, fruits, and vegetables, and nonfood products, such as paints, aerosols, 

and shaving cream. For most TMP 

purchasers, particularly food can 

makers, there are no close substitutes for 

TMP. Packaging alternatives, such as 

plastic containers, are not viewed as 

close product substitutes. A small but 

significant increase in price would not 

likely cause sufficient TMP can 

customers to switch products or 

otherwise curtail their TMP usage so as 

to render the increase unprofitable. 

More than 89 percent of TMP sold in 

the Eastern United States is 

manufactured by firms located either in 

the Eastern United States or eastern 

Canada. A small but significant increase 

in price for TMP would not cause TMP 

customers in the United States to 

substitute purchases from outside the 

Eastern United States in sufficient 

quantities to make such a price increase 

unprofitable. Mittal Steel, Arcelor, and 

Arcelor’s subsidiary Dofasco sell TMP to 

customers in the Eastern United States. 

As explained more fully in the 

Complaint and CIS, the acquisition of 

Arcelor and Dofasco by Mittal Steel 

would substantially increase 

concentration and lessen competition in 

the production and sale of TMP in the 

Eastern United States, giving the top 

two TMP producers, including Mittal 

Steel, a market share of more than 81 

percent of sales. Therefore, the 

Department filed its Complaint alleging 

competitive harm in the TMP market in 

the Eastern United States and sought a 

remedy that would ensure that such 

harm is prevented. 

The proposed Final Judgment in this 

case is designed to preserve competition 

in the production, manufacture, and 

sale of TMP in the Eastern United 

States. The proposed Final Judgment 

requires the divestiture of sufficient 

assets to prevent the increase in 

concentration that resulted from the 

combination of Mittal Steel’s capacity 

and Arcelor’s capacity to supply TMP to 

the Eastern United States market. The 

proposed Final Judgment requires the 


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1The merger closed on August 1, 2006. In 

keeping with the United States’s standard practice, 

neither the HSSO nor the proposed Final Judgment 

prohibited closing the merger. See ABA Section of 

Antitrust Law, Antitrust Law Developments 387 

(5th ed. 2002) (noting that ‘‘[t]he Federal Trade 

Commission (as well as the Department of Justice) 

generally will permit the underlying transaction to 

close during the notice and comment period’’). 

Such a prohibition could interfere with many timesensitive deals and prevent or delay the realization 

of substantial efficiencies. In consent decrees 

requiring divestitures, it is also standard practice to 

include a ‘‘preservation of assets’’ clause in the 

decree and to file a stipulation to ensure that the 

assets to be divested remain competitively viable. 

That practice was followed here. Proposed Final 

Judgment § VIII. In addition, the HSSO has been 

filed and entered by the Court in this case. That 

Order requires Mittal Steel to preserve Weirton and 

Sparrows Point and to hold separate Dofasco, 

pending the divestiture contemplated by the 

proposed Final Judgment. 

divestiture of a significant steel mill that 

manufactures TMP for sale in the 

Eastern United States. Specifically, it 

directs a sale of Dofasco to 

ThyssenKrupp or an alternative 

purchaser acceptable to the United 

States. At the time the proposed Final 

Judgment was filed with the Court, 

Mittal Steel already had executed a 

letter of intent to sell Dofasco to 

ThyssenKrupp when and if Mittal Steel 

acquired Arcelor, at a price comparable 

to the price Arcelor itself paid to acquire 

Dofasco in early 2006. Dofasco, which 

has a history of successful operation as 

an independent entity, has not been 

integrated into Arcelor and thus remains 

a viable divestiture candidate. 

Mittal Steel’s announced plan to sell 

Dofasco to ThyssenKrupp upon its 

acquisition of Arcelor would have 

mitigated the increase in post-merger 

concentration in the Eastern United 

States that would have resulted from its 

acquisition of Arcelor. As part of an 

effort by Arcelor’s Board of Directors to 

impede the tender offer, however, 

Arcelor sought to prevent any figure 

effort by Mittal Steel to divest Dofasco 

by transferring Arcelor’s Dofasco legal 

title to an independent Dutch 

foundation, known as the Strategic Steel 

Stichting (‘‘S3’’). Since Mittal completed 

its acquisition of Arcelor, Arcelor and 

Mittal Steel have requested that the S3 

dissolve itself so as to permit the sale of 

Dofasco to ThyssenKrupp. The board of 

the S3 nevertheless has decided not to 

dissolve itself. 

In negotiating the proposed Final 

Judgment, the parties recognized that 

the existence of the S3 could prevent 

Mittal Steel from divesting Dofasco in a 

timely manner. For this reason, the 

Department determined that alternative 

assets, owned by Mittal Steel and not 

burdened with any restrictions on sale, 

should be designated to accomplish the 

intended preservation of TMP 

competition in the event that Mittal 

Steel was unable to divest Dofasco 

within the time allowed by the decree. 

The proposed Final Judgment requires 

Mittal Steel to divest one of two steel 

mills—Sparrows Point or Weirton—if, 

despite its best efforts to do so, it has 

not been able to carry out the divestiture 

of Dofasco within the period allowed by 

the decree. Sparrows Point is a fully 

integrated steel mill located near 

Baltimore, Maryland, which produces a 

diversified portfolio of products, 

including hot-rolled sheet, cold-rolled 

sheet, galvanized sheet, Galvalume, and 

TMP, for construction, steel service 

center, container, appliance, and other 

end-use markets. Weirton, located in 

Weirton, West Virginia, operates 

primarily as a TMP finishing facility, 

converting steel slabs obtained from 

Mittal’s Sparrows Point and Cleveland 

plants. 

In the Department’s judgment, 

divestiture of Dofasco to ThyssenKrupp 

or another qualified purchaser would 

remedy the violation alleged in the 

Complaint because Dofasco is an 

integrated steel mill that has the 

demonstrated capacity to make 

significant TMP sales in the Eastern 

United States. In the event that Mittal 

fails to sell Dofasco in a timely manner 

due to legal impediments arising from 

its control by the S3 and the S3’s refusal 

to permit its sale, the proposed Final 

Judgment provides that the Department 

will determine whether Sparrows Point 

or Weirton should be divested to 

remedy the violation alleged in the 

Complaint. The Department is confident 

that these options allow it to select an 

alternate facility the divestiture of 

which to a viable qualified purchaser 

would remedy the violation. Each mill 

currently makes substantial TMP sales 

in the Eastern United States, and the 

successful continued operation of either 

mill by a viable qualified purchaser 

would remedy the violation. The 

Department is currently assessing which 

of these two mills is most likely to 

continue as an on-going vigorous 

competitor for TMP sales in the event 

that Dofasco cannot be divested. 

Sparrows Point is an integrated facility 

that produces a variety of steel products 

in addition to TMP, and it manufactures 

its own steel slabs, which are the basic 

raw material for TMP fabrication. 

Weirton currently operates as a TMP 

finishing facility that converts slabs 

obtained from Mittal Steel’s Sparrows 

Point and Cleveland mills. Mittal 

recently idled Weirton’s slab-making 

facilities because they were considered 

to be less efficient than other slab 

manufacturing locations within the 

Mittal Steel organization, and the 

Department is assessing whether those 

facilities could be reactivated to 

produce slabs at Weirton on a costeffective basis in the event of Weirton’s 

divestiture. Even if the Department 

concludes that cost-effective slab 

production at Weirton is not likely to be 

feasible, there still may be sources from 

which Weirton could obtain slabs with 

a degree of consistency and reliability, 

and at a cost that would enable it to 

compete successfully as an independent 

supplier of TMP to the Eastern United 

States market. The Department will 

consider the availability of slabs to 

Weirton and other relevant 

considerations in determining whether 

Sparrows Point or Weirton should be 

divested to remedy the violation alleged 

in the Complaint, and it will select the 

mill that is most likely to continue to 

compete successfully for TMP sales in 

the Eastern United States following its 

divestiture by Mittal Steel. The 

proposed Final Judgment would permit 

this process to go forward if Dofasco 

cannot be sold in a timely manner. 

Although entry of the proposed Final 

Judgment would terminate this action, 

the Court would retain jurisdiction to 

construe, modify, or enforce the 

provisions of the proposed Final 

Judgment and punish violations 

thereof.1

II. Summary of Public Comments and 

Responses 

During the 60-day public comment 

period, the United States received 

comments from Silgan Containers 

Corporation (‘‘Silgan’’), ThyssenKrupp, 

and DaimlerCyrysler Corporation 

(‘‘DaimlerChrysler’’). Upon review, the 

United States believes that nothing in 

the comments warrants a change in the 

proposed Final Judgment or is sufficient 

to suggest that the proposed Final 

Judgment is not in the public interest. 

The comments include concerns 

relating to whether the proposed Final 

Judgment adequately remedies the 

harms alleged in the Complaint. The 

United States addresses these concerns 

below and explains how the remedy is 

appropriate. 

A. Public Comment Submitted by Silgan 

1. Summary of Silgan’s Comment 

Silgan, the largest food can producer 

and the largest consumer of TMP in the 

United Stats, submitted a 42-page 

comment with 44 attachments (attached 

hereto as Exhibit 1). Silgan’s submission 

asserts that only the divestiture of 

Dofasco has any prospect for success, 

and that neither the divestiture of 

Weirton nor the divestiture of Sparrows 

Point will be effective. 


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2Silgan assets in its comment that the S3 has a 

5-year term. Although the actual term of the S3 is 

not public information, it is many times longer than 

the period the proposed Final Judgment gives Mittal 

Steel to effect the divestiture of one of the three 

mills. 

3The Department understands that Silgan’s 

objective would require an extension only for the 

duration of the S3, but Silgan is correct that this 

would require an extension of multiple years. 

Silgan’s comments may be 

summarized in three points. First, 

Silgan argues that Weirton cannot long 

survive as an independent producer of 

TMP, because it cannot produce slabs—

the essential TMP substrate—at a 

competitive cost and cannot obtain slabs 

from elsewhere at a competitive cost. 

Thus, Weirton should not be divested. 

Second, Silgan further asserts that, 

although Sparrows Point is capable of 

surviving as a stand-along producer of 

TMP, it currently provides 45 percent of 

the slabs used by Weirton. If Sparrows 

Point is divested, Weirton will be 

separated from a significant portion of 

its supply of slabs and will be unable to 

obtain a sufficient number of slabs from 

other sources. Thus, if Sparrows Point is 

divested, Weirton may cease TMP 

production even if it is kept in the 

Mittal Steel group. 

Finally, Silgan concludes that since 

divestiture of either Weirton or 

Sparrows Point likely will lead to the 

demise of Weirton as a TMP producer, 

neither Mittal Steel mill should be 

divested. Instead, Silgan argues that 

Dofasco should be divested even if 

accomplishing that objective must await 

the expiration of the S3, and that the 

Final Judgment should be modified to 

extend the period for divesting Dofasco 

by several years. This would require 

that the stipulated HSSo, under which 

Dofasco now is operating, be modified 

to extend for the entire duration of the 

S3.2

2. Response of United States to Silgan’s 

Comment 

The United States has carefully 

considered Silgan’s concern that 

Weirton will go out of business if the 

United States chooses Weirton or 

Sparrows Point as an alternative 

divestiture, but disagrees. 

Silgan’s conclusion rests crucially on 

an assumption that slabs suitable for use 

in TMP production would be readily or 

economically available to Weirton from 

sources other than Sparrows Point. The 

United States agrees that the supply of 

slabs is an important issue, but the 

concerns raised by Silgan are overstated. 

If Sparrows Point is divested, and 

Weirton remains part of Mittal Steel, for 

example, there would be no concern 

about the availability to the divested 

mill. Sparrows Point is a fully integrated 

steel mill that does not depend on other 

Mittal Steel facilities for significant 

operational resources or supplies and 

indeed, in recent years has produced 

more slabs than it consumes. With 

respect to Wierton, even if the new 

owner of Sparrows Point refused to sell 

slabs on reasonable terms to Mittal Steel 

for use at Weirton, Mittal Steel would 

still own even blast furnaces in North 

America, five of which are now 

operating, giving it ample ability to 

supply Wierton with slabs. Further, 

Mittal could obtain additional slabs for 

Weirton on the open market. If Weirton 

were divested from Mittal and sought to 

acquire all of its slabs from other 

sources, the supply of slabs would be 

somewhat less certain, but there is some 

indication that Weirton could obtain 

sufficient slabs, including from imports. 

Dofasco, as Silgan points out, obtains 

about 750,000 tons of slabs per year 

from other firms, 400,000 tons of which 

comes from CST in Brazil. Some of 

those slabs are used to make tin mill 

products. The fact that Dofasco itself 

successfully imports a significant 

volume of tin-quality slabs suggests that 

an independent Weirton might have 

sufficient alternative sources for such 

slabs. The Department continues to 

investigate the likelihood that a divested 

Weirton would be able to manufacturer 

or purchase tin-quality slabs on a costefficient basis. If the Department 

concludes for any reason that the lack 

of certainty regarding Weirton’s viability 

makes divestiture of Sparrows Point 

preferable, the Final Judgment permits 

the Department to direct Mittal Steel to 

divest Sparrows Point. 

Silgan proposes that, in lieu of 

diverting Weirton or Sparrows Point, 

the proposed Final Judgment be 

amended to provide that Dofasco be 

held separate for five years, which 

Silgan asserts is the duration of the S3, 

after which it could and should be 

sold.3 This proposal presents significant 

problems. To ensure Dofasco’s operation 

separately from Mittal Steel for such an 

extended period of time would be 

difficult, if not impossible. Moreover, 

under the HSSO, ordinary and 

customary business decisions that 

would be made promptly by an 

independent entity cannot be made by 

Dofasco without certain notices and 

approvals and, in some circumstances, 

Court permission. This situation is 

tolerable as a temporary solution to 

effectuate a prompt divestiture and to 

limit interference or collusion pending 

that divestiture. As a long-term 

operating arrangement, however, it 

could adversely affect the ability of 

Dofasco to operate efficiently. Given 

that a prompt remedy is in the public 

interest and that the Final Judgment 

provides a mechanism by which the 

Department can assure that adequate 

and viable Mittal Steel assets are 

divested, there is no reason to require 

the extraordinary and unprecedented 

imposition of a long-term HSSO. 

B. Public Comment Submitted by 

ThyssenKrupp 

1. Summary of ThyssenKrupp’s 

Comment 

ThyssenKrupp is a large German steel 

manufacturer that has an agreement in 

principle with Mittal Steel to purchase 

Dofasco. ThyssenKrupp currently 

exports TMP to customers in the United 

States. In its comment, attached hereto 

as Exhibit 2, ThyssenKrupp states that 

only the divestiture of Dofasco will 

adequately remedy the alleged 

anticompetitive effects set forth in the 

Complaint and that divestiture of 

Weirton or Sparrows Point cannot 

remedy those anticompetitive effects. 

ThyssenKrupp asserts that the proposed 

Final Judgment and CIS ‘‘make clear 

that divestiture of Dofasco to 

ThyssenKrupp is the preferred remedy 

for the competitive harm alleged to arise 

from Mittal [Steel]’s acquisition of 

Arcelor[.]’’ Ex. 2, ThyssenKrupp 

Comment at 3. ThyssenKrupp’s 

comment, however, does not address 

the question of what should be done if 

Dofasco cannot be divested due to the 

existence of the S3. ThyssenKrupp 

claims that neither Weirton nor 

Sparrows Point has sufficiently modern 

and efficient facilities to compete in the 

TMP market in a manner that would 

replace competition lost as a result of 

the challenged acquisition. In this 

respect, ThyssenKrupp’s comments 

mirror those of Silgan. 

2. Response of United States to 

ThyssenKrupp’s Comment 

The response of the United States to 

the Silgan Comment is equally 

applicable to the comments made by 

ThyssenKrupp. In sum, for the reasons 

given in Part II.A.2 above, the United 

States believes that the Final Judgment 

provides a mechanism to ensure that 

assets sufficient to remedy the violation 

alleged in the Complaint will be 

divested. 

Notwithstanding ThyssenKrupp’s 

evaluation of the equipment and 

facilities at Weirton and Sparrows Point, 

the Weirton and Sparrows Point assets 

have proved adequate consistently to 

supply large quantities of TMP to the 

Eastern United States market. In 2005, 

Weirton and Sparrows Point sold more 


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TMP in the Eastern United States than 

Arcelor and Dofasco combined. While 

capacity to manufacture TMP for sale in 

the Eastern United States is not the only 

factor, it is certainly a highly relevant 

factor in assessing the competitive 

significance of mill assets. In 

determining which alternate mill should 

be divested pursuant to the Final 

Judgment, the Department will focus on 

questions relating to the relative ability 

of Sparrows Point and Weirton to 

operate independently of Mittal Steel as 

future suppliers of TMP to the Eastern 

United States market. The fact that both 

mills have successfully supplied 

substantial quantities of TMP to the 

market with their current equipment 

supports the conclusion that the 

alternate mill that the United States 

selects to be divested would accomplish 

the objectives of the Final Judgment. 

As to ThyssenKrupp’s statement that 

divestiture of Dofasco is the ‘‘preferred’’

remedy, we agree. As discussed above, 

Dofasco is an attractive divestiture 

candidate for a number of reasons, and 

the proposed Final Judgment requires 

Mittal Steel in the first instance to use 

its best efforts to divest Dofasco. 

However, nothing in the proposed Final 

Judgment or the Competitive Impact 

Statement indicates that Dofasco is the 

only suitable divestiture candidate. Both 

Mittal Steel and the Department realized 

that Mittal Steel might be unable to 

accomplish the divestiture of Dofasco in 

a timely manner because the S3 might 

prevent its sale. Accordingly, the parties 

crafted alternative relief—the divestiture 

of Sparrows Point or Weirton—that also 

would preserve competition. Although 

the United States is satisfied that 

divestiture of Dofasco would remedy the 

violation alleged in the Complaint, if 

Dofasco cannot be sold within the 

period prescribed by the proposed Final 

Judgment, the United States will decide 

which of the two alternatives should be 

divested. 

C. Public Comment Submitted by 

DaimlerChrysler 

1. Summary of DaimlerChrysler’s 

Comment 

DaimlerChrysler is an automobile 

manufacturer in North America that 

sources its steel from a number of North 

American steel producers, including 

Mittal Steel and Dofasco. See 

DaimlerChrysler Comment (attached 

hereto as Exhibit 3). DaimlerChrysler 

does not use TMP in the production of 

automobiles and does not purchase 

TMP. It does, however, use another type 

of flat steel product called hot dipped 

galvanized steel, which it buys from 

Mittal Steel and Dofasco, and 

DaimlerChrysler claims that the 

proposed acquisition will adversely 

affect competition for that product. 

DaimlerChrysler asserts that 

consolidation in the steel industry since 

2001 has reduced the number of North 

American manufacturers of hot dipped 

galvanized steel from nine to five, and 

that after the acquisition of Dofasco, 

Mittal Steel will have approximately 47 

percent of North American capacity for 

this product. DaimlerChrysler also states 

that there are no adequate substitutes for 

this product, and that foreign producers 

are not suitable suppliers. 

DaimlerChrysler asserts that the alleged 

harm to competition would be 

alleviated if Mittal Steel were required 

to divest Dofasco, but that the 

divestiture of either Sparrows Point or 

Weirton would not remedy the harm 

because neither facility produces hot 

dipped galvanized steel suitable for 

automotive purposes. 

Although DaimlerChyrsler has no 

direct interest in the TMP market, the 

company nevertheless asserts that the 

divestiture of Weirton or Sparrows Point 

will not restore competition in TMP 

because neither facility is capable of 

operating as a stand-alone facility. 

DaimlerChrysler cites past financial 

troubles of Weirton when it was a standalone company and Sparrows Point 

when it was operated by the former 

Bethlehem Steel Company. 

DaimlerChrysler asserts that either 

alternative facility is likely to close after 

divestiture. The result, according to 

DaimlerChrysler, would be less 

competition in the market for TMP. 

2. Response of United States to 

DaimlerChrysler’s Comment 

DaimlerChrysler’s principal argument 

is that the United States’ focus on TMP 

is misplaced, and that the United States 

should also have alleged harm to 

competition for hot dipped galvanized 

steel. During its investigation, the 

United States carefully and thoroughly 

reviewed the competitive implications 

of Mittal Steel’s acquisition of Arcelor 

(and Dofasco) for a number of different 

potential relevant geographic and 

product markets, including hot dipped 

galvanized products. Upon completion 

of its review, the United States 

determined that it should allege a 

violation and seek relief only with 

regard to sales to TMP in the Eastern 

United States, and the Complaint filed 

in this case reflects that determination. 

The decision regarding the filing of a 

complaint as to any particular market 

lies within the prosecutorial discretion 

of the United States. 

With respect to the market for TMP, 

the United States disagree with the 

DaimlerChrysler comments relating to 

the adequacy of a divestiture of either of 

the alternative assets. As discussed 

more thoroughly above, the United 

States has considered the capabilities 

and economic viability of each of the 

alternative facilities and is confident 

that these options allow it to select an 

alternate facility the divestiture of 

which to a viable qualified purchaser 

would be sufficient to restore 

competition to the market for the sale of 

TMP in the Eastern United States. 

III. Conclusion 

The issues raised in the public 

comments were among the many 

considered during the United States’

extensive and through investigation. 

The United States has determined that 

the proposed Final Judgment as drafted 

provides an effective and appropriate 

remedy for the antitrust violations 

alleged in the Complaint, and is 

therefore in the public interest. The 

United States will move this Court to 

enter the proposed Final Judgment after 

the comments and response are 

published. 

Dated: February 13, 2007. 

Respectfully submitted, 

Lowell R. Stern (D.C. Bar #440487), 

Attorney, United States Department of 

Justice, Antitrust Division, Litigation II 

Section, 1401 H Street, NW., Suite 3000, 

Washington, DC 20530, Telephone: (202) 

307–0924, Facsimile: (202) 307–6283. 

Certificate of Service 

I hereby certify that on the 13th day 

of February, 2007, I caused a copy of the 

foregoing Plaintiff United States’s 

Response to Public Comments to be 

mailed, by U.S. mail, postage prepaid, to 

the attorneys listed below and I caused 

the attachments thereto to be delivered 

by electronic transmission to the 

attorneys listed below: 

Lowell R. Stern, 

For Mittal Steel Company N.V.: 

Mark Leddy, Esquire; Brian Byrne, Esquire; 

Jeremy J. Calsyn, Esquire; Cleary Gottlieb 

Steen & Hamilton LLP., 2000 

Pennsylvania Avenue, NW., Washington, 

DC 20006. 

For Arcelor S.A.: 

John M. Nannes, Esquire; Michael V. 

Sosso, Esquire; Skadden, Arps, Slate, 

Meagher & Flom LLP., 1440 New York 

Avenue, NW., Washington, DC 20005. 

For Silgan Containers Corporation: 

Daniel L. Porter, Esquire; Vinson & Elkins 

LLP., 1455 Pennsylvania Avenue, NW., 

Suite 600, Washington, DC 20004–10009. 

For ThyssenKrupp A.G.: 

Steven K. Bernstein, Esquire; James F. 

Lerner, Esquire; Weil, Gotshal & Manges 

LLP., 767 Fifth Avenue, New York, NY 

10153–0119. 


sroberts on PROD1PC70 with NOTICES
17638 Federal Register / Vol. 72, No. 67 / Monday, April 9, 2007 / Notices 

1See United States v. Mittal Steel Company, 

Proposed Final Judgment and Competitive Impact 

Statement, 71 Fed. Reg. 50084, 50085, 50093 

(August 24, 2006) (Attachment 1). 

A. Paul Victor, Esquire; Dewey Ballantine 

LLP., 1301 Avenue of the Americas, New 

York, NY 10019–6092. 

For DaimlerChyrsler Corporation: 

Thomas B. Leary, Esquire; Janet L. 

McDavid, Esquire; Hogan & Hartson 

LLP., Columbia Square, 555 Thirteenth 

Square, NW., Washington, DC 20004. 

Exhibit 1 

Willkie Farr and Gallagher LLP 

Theodore Case Whitehouse, 202 303 1118, 

whitehouse@willkie.com, 1875 K Street, 

NW., Washington, DC 20006–1238, Tel: 

202 303 1000, Fax: 202 303 2000. 

23 October 2005 

By Hand Delivery 

Maribeth Petrizzi, Esq., Chief, Litigation II 

Section, Antitrust Division, U.S. 

Department of Justice, Suite 3000, 1401 H 

Street, NW., Washington, DC 20530 

Re: Comments of Silgan Containers Corp. on 

Proposed Consent Decree in United States v. 

Mittal Steel Co., NV, No. 1:06–CV–01360–

ESH (D.D.C.) 

Dear Ms. Petrizzi: 

Transmitted with this letter, on behalf of 

Silgan Containers Corporation (‘‘Silgan’’) and 

pursuant to the Antitrust Procedures and 

Penalties Act (15 U.S.C. 16), are Silgan’s 

comments on the proposed consent decree 

submitted by the Division to the United 

States District Court for the District of 

Columbia in August 2006. 

Silgan and its counsel would be pleased to 

enlarge upon or explain any aspect of 

Silgan’s comments and would be pleased to 

meet with you and your staff to discuss any 

issue or concern relating to this matter. 

Sincerely, 

Theodore Case Whitehouse 

cc (w/encl.): Kerrie J. Freeborn, Esq. 

UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF COLUMBIA 

United States of America, Plaintiff, v. 

Mittal Steel Company N.V., Defendant 

[Civil Action No. 1: 06CV01360–ESH] 

Comments of Silgan Containers 

Corporation on the Proposed Final 

Judgment and Competitive Impact 

Statement Regarding Competition in the 

Tin Mill Products Market 

Willkie Farr and Gallagher LLP., 1875 K 

Street, NW., Washington, DC 20006–

1238, (202) 303–1000. 

Thomas Prusa, Ph.D., Professor of 

Economics, Rutgers University, New 

Brunswick, New Jersey. 

October 23, 2006 

Table of Contents 

Introduction and Summary of Comments 

I. Divestiture of Dofasco is the Best Option 

A. Dofasco Has a Proven Track Record of 

Operating as a Highly Profitable, 

Independent Company 

B. Dofasco Is Far Better Suited To Operate 

as a Stand-Alone Facility Than Either 

Weirton or Sparrows Point 

C. Dofasco Is More Committee To Investing 

in the Future of the Tin Mill Steel 

Market 

D. The Decree Should Be Amended if 

Necessary To Require Divestiture of 

Dofasco on the Earliest Date on Which It 

May Legally Be Divested Free of the 

Stichting Arrangements, and the HoldSeparate Order Should Continue in 

Effect Until That Divestiture Is 

Accomplished 

II. A Stand-Alone Weirton Operation Will 

Fail in the Immediate Future and 

Undermine the Departments Objective of 

Preserving Competition in the Market 

A. Weirton’s Ironmaking and Steelmaking 

Assets Are Not Competitive 

1. Weirton Has Small, Inefficient Blast 

Furnaces 

2. Weirton’s Steelmaking Operations Are 

Also Antiquated and High Cost 

3. An Independent Weirton Operating Its 

Ironmaking Facilities Would Lack Any 

Captive Raw Material Supplies 

4. Weirton’s Geographic Location 

Guarantees Higher Costs for Basic Inputs 

5. Weirton’s Limitations as a FullyIntegrated Steel Maker Producing Tin 

Mill Steel Are Recognized by Mittal and 

Outside Observers 

B. Prospects for a Stand-Alone Weirton 

Enterprise Operating as a Rolling and 

Finishing Operation Are Limited 

1. Weirton’s Rolling and Finishing Assets 

Require Substantial Investment To Be 

Competitive 

2. Weirton Would Be Committed To 

Producing Primarily Tin Mill Steel, 

Limiting Production Flexibility 

3. Weirton Would Have Difficulty Securing 

the Quality and Volume of Slab 

Necessary To Maintain Its Operations 

4. Even if a Stand-Alone Weirton Rolling 

and Finishing Operation Found a 

Consistent Source of Slab Supply, the 

Market Dynamics for Tin Mill Steel 

Would Limit Profitability 

5. A Stand-Alone Weirton Enterprise 

Running Only Its Tin Line Would Have 

Difficulty Securing Sufficient Volumes of 

Black Plate 

C. There Are No Legitimate Suitors for 

Weirton 

D. Divesting Weirton Will Have an Adverse 

Impact on Competition 

III. A Divestiture of Sparrow’s Point Would 

Also be a Far Less Effective Remedy 

Than Divesting Dofasco 

A. Divestiture of Sparrows Point Is 

Unlikely To Enhance Competition Over 

the Long Term 

1. Dofasco Is an Unlikely Replacement for 

Sparrows Point in Supplying Slabs to 

Weirton 

2. It Is Unlikely That Mittal Steel’s Other 

North American Slab Producers Will 

Divert Scarce Feedstock to Weirton 

3. It Would Make no Economic Sense for 

Mittal’s Brazilian Affiliate CST To 

Supply Slabs to Weirton 

B. Divesting Sparrows Point Will Have an 

Adverse Impact on Competition in the 

Medium to Long Term 

Conclusion 

Introduction and Summary of 

Comments 

Silgan Containers Corporation, the 

largest U.S. food can producer and 

single largest consumer of tin mill steel 

products in the United States, hereby 

provides comments on the proposed 

final judgment in United States v. Mittal 

Steel Company, the civil action 

concerning the effects of Mittal Steel’s 

acquisition of Arcelor in the tin mill 

steel market in the Eastern United 

States. These comments are submitted 

in response to the invitation of the 

Antitrust Division of the United States 

Justice Department set forth in the 

August 24, 2006 edition of the Federal 

Register. Silgan appreciates the 

opportunity to submit comments. 

Silgan wholeheartedly agrees with the 

Department’s conclusions that (1) Mittal 

Steel’s acquisition of Arcelor ‘‘further 

consolida[tes] an already highly 

concentrated market’’ and (2) ‘‘the likely 

effect of this acquisition would be to 

lessen competition substantially’’

among suppliers of tin mill steel 

products in the Eastern United States, 

and (3) ‘‘this loss of competition would 

likely result in higher prices, lower 

quality, less innovation and less 

favorable delivery terms to customers’’

of tin mill steel.1 Silgan submits that 

such conclusions are amply supported 

by the evidence. 

The proposed decree provides for two 

alternative divestiture scenarios. The 

first is to require divestiture by Mittal of 

Dofasco, a Canadian integrated steel 

producer. The alternative remedy, to be 

available only if Mittal is ‘‘unable’’

despite ‘‘best efforts’’ to accomplish the 

divestiture of Dofasco, would be 

divestiture of either the Sparrows Point 

integrated steel operation or the Weirton 

steel mill operation (which includes 

only a rolling mill capability at this 

time). Silgan wholeheartedly agrees 

with the Department that the preferred 

remedy to address this lessening of 

competition in the tin mill steel market 

is to require the divestiture of Dofasco. 

Indeed, Silgan submits that a proper 

understanding of both the market 

participants and the competitive 

dynamics affecting the market 

participants demonstrates the following: 

• Weirton would not be able to 

survive as an independent operation. 

Given its location, its old, small, and 

currently inoperative blast furnaces, and 

the limited capabilities of Weirton’s 

rolling facilities, Weirton cannot survive 

as an independent producer. Neither 


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2 Id. 

3World Steel Dynamics (2005) (Attachment 2). 

4 Id. 

5See http://www.dofascotube.com/Default.htm 

(Attachment 3). 

running Weirton’s ironmaking and 

steelmaking operations nor purchasing 

slab in the merchant market would be 

a viable strategy. Consequently, a 

remedy allowing the divestiture of 

Weirton would simply cause substantial 

tin mill steel capacity to exit the market, 

which would make the available tin mill 

steel supply even more concentrated. 

• No existing integrated steel mill has 

a serious interest in acquiring Weirton, 

because it makes no economic sense. 

Weirton’s only realistic hope of 

surviving is to operate as one facility 

within a large, diversified enterprise 

capable of supplying Weirton with key 

inputs and averaging costs across a 

larger production base. Weirton 

currently enjoys that status as part of 

Mittal. No viable alternative integrated 

steel mill is likely to come forward to 

replace Mittal. 

• Although Sparrows Point Is a 

Superior Mill to Weirton, It Is Uncertain 

Whether Divesting Sparrows Point 

Would Preserve Competition Over the 

Mid- to Long-Term. 

Within the Mittal system, Sparrows 

Point is a key supplier of slab for 

Weirton. A Sparrows Point facility 

operating outside the Mittal system 

would eliminate a guaranteed supply of 

this key feedstock to Weirton and 

thereby threaten the ongoing viability of 

Weirton. Without Sparrows Point’s slab 

capacity, the likelihood that Mittal will 

ration Weirton’s slab supply is greatly 

increased because Weirton will not be 

the best use of Mittal’s limited slab 

supply in the Midwest that can be used 

in more profitable operations. Such fact 

is evidenced by the statements of Mittal 

Steel officials that Weirton is the least 

desirable facility among Mittal Steel’s 

North American operations. In short, 

divesting Sparrows Point would almost 

certainly lead to Weirton’s demise even 

within the Mittal enterprise, thereby 

diminishing overall capacity to the 

detriment of consumers and frustrating 

the goal of the decree. 

In the pages below, Silgan discusses 

and documents these factual 

conclusions in considerable detail. 

Silgan submits that these factual 

conclusions require the Department to 

adopt the following approach in 

designing an appropriate remedy to 

address the reduced competition in the 

tin mill steel market. First, the 

Department should make every effort to 

accomplish the divestiture of Dofasco. 

Press reports immediately after 

publication of the consent decree 

suggest a lack of interest by MittalArcelor of seriously pursuing divesting 

Dofasco. The Department needs to push 

Mittal-Arcelor to accomplish the 

divestiture of Dofasco. 

Second, if immediate divestiture is 

not possible, Silgan strongly 

recommends the consent decree be 

modified to wait the five years 

reportedly necessary to eliminate any 

existing legal impediments to the 

divestiture of Dofasco. An independent 

Dofasco in five years is better than any 

of the other alternatives for preserving 

competition. A long run solution to the 

issue is better than a short term fix. 

Silgan makes this recommendation 

because the other options under 

consideration—divesting Weirton or 

divesting Sparrows Point—will not 

accomplish the Department’s objective 

of enhancing competition in the tin mill 

steel market. These other options will 

only protect competition if one believes 

that Weirton has better than a 64% 

chance of surviving over the next two or 

three years, either outside or within the 

Mittal enterprise. However, no 

knowledgeable industry observer would 

give Weirton better than a 10–20% 

chance of surviving if either Weirton or 

Sparrows Point is divested. Therefore, 

the only appropriate remedy is to divest 

Dofasco as soon as possible, even if this 

means waiting for the alleged legal 

impediments to such a divestiture to 

expire. 

To summarize: 

• Divestiture of Dofasco is the most procompetitive outcome. 

• If divestiture of Dofasco is not possible 

now (because of the stichting arrangements 

reportedly engineered by Arcelor), the 

second best option is continued independent 

operation of Dofasco for the life of the trust, 

(reportedly 5 years) followed by divestiture 

to a firm not a U.S. tin-mill producer. 

• A less desirable but feasible outcome 

would be divestiture of Sparrows Point to a 

firm not a U.S. tin-mill producer (with 

appropriate assurance that Sparrows Point’s 

tin-mill activity will be continued). 

• Divestiture of Weirton under any 

scenario would be counterproductive from a 

competition perspective and would hurt the 

market because Weirton would not survive 

and its capacity would be permanently lost. 

I. Divestiture of Dofasco Is the Best 

Option 

A combined Mittal-Arcelor would 

have three tin mill steel production 

facilities supplying the Eastern United 

States market, resulting in an 

excessively concentrated supply 

situation. To remedy that undesirable 

outcome, the Department has 

determined that Dofasco should be 

divested.2 The Department is correct in 

that determination: Divesting Dofasco 

remains the preferred remedy to address 

the loss of competition in the tin mill 

steel market resulting from the MittalArcelor merger. 

In assessing divestiture options the 

Department must consider whether the 

divested firm can operate independently 

and serve the changing needs of 

consumers. Any divested tin mill steel 

entity must be viable on its own, making 

Dofasco the most logical choice for 

divestiture. 

A. Dofasco Has a Proven Track Record 

of Operating as a Highly Profitable, 

Independent Company 

In sharp contrast to Weirton or 

Sparrows Point (both of which are 

discussed below), Dofasco is recognized 

as one of the best steel mills in the 

world. A leading steel consultancy and 

benchmarking firm, World Steel 

Dynamics (‘‘WSD’’), ranked Dofasco in 

the Top 25 of all global steelmakers. The 

same assessment ranked Dofasco the 

highest of all North American 

producers.3 Dofasco scored a remarkable 

9 out of 10 in the WSD analysis for 

profitability over the 2000–04 period.4

The WSD analysis, which covers the 

period through June 2005, presents an 

independent, expert assessment of 

Dofasco prior to its acquisition by 

Arcelor, when the facility stood as a 

fully independent entity. Dofasco’s 

performance during that period 

provides a strong indication of its likely 

performance if separated from Mittal. 

B. Dofasco Is Far Better Suited To 

Operate as a Stand-Alone Facility Than 

Either Weirton or Sparrows Point 

Compared to either Weirton or 

Sparrows Point, Dofasco is far better 

suited to survive and thrive as a standalone facility. Four differences stand 

out: (1) Dofasco has a much deeper 

product line, (2) Dofasco has a larger 

scale operation, (3) Dofasco owns its 

own raw materials, and (4) Dofasco has 

much more cold-rolled capacity to feed 

its tin mill steel production. Silgan 

discusses these below. 

First, Dofasco has production 

capability that covers the full spectrum 

of flat-rolled products, from hot-rolled 

steel to cold-rolled and galvanized, as 

well as tin mill steel. Dofasco also 

produces tubular products in operations 

that consume the hot-rolled and coldrolled steel it produces. Indeed, Dofasco 

Tubular Products is the largest and most 

diversified producer of tubular products 

in North America.5 Finally, Dofasco is a 

significant player in the high margin 

auto sheet market, in which there are 


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6The leading North American suppliers are 

Mittal (non-Sparrows Point production), U.S. Steel, 

AK Steel and Dofasco. See Peter Marsh, Massive 

Bids on Table as Giants Fight for Dofasco, Financial 

Times (January 13, 2006) (Attachment 4). According 

to long-time steel analyst Charles Bradford, 

Sparrows Point ‘‘doesn’t have those (automotive) 

grades.’’ Scott Robertson, Mittal Sparrows Point 

Mill May Be On Auction Block, American Metal 

Market (June 2, 2006) (Attachment 5). 

7See generally 2005 Directory of Iron and Steel 

Plants, Association for Iron and Steel Technology 

(2005) (Attachment 6). 

few significant North American 

suppliers.6

This breadth of production capability 

allows Dofasco to remain viable even if 

the tin mill steel market turns down. 

Neither Weirton nor Sparrows Point has 

the same breadth of production. 

Weirton’s product line is quite limited. 

Indeed, Silgan’s understanding is that 

the vast majority of Weirton’s total steel 

production is just tin mill steel. 

Sparrows Point is not much better. 

Other than tin mill steel, Sparrows Point 

predominantly focuses on commodity 

grades of cold-rolled and galvanized 

flat-rolled steel. 

Second, Dofasco is also a larger scale 

operation, with just over 4 million of 

tons of steelmaking capacity compared 

to 3.4 million tons at Sparrows Point 

and zero operating steelmaking capacity 

at Weirton. Dofasco also has larger 

rolling assets, with 4.9 million tons of 

hot strip capacity available compared to 

3 million tons at Sparrows Point and 3.8 

million tons at Weirton.7 This larger 

scale allows Dofasco to operate more 

efficiently and profitably than either 

Weirton or Sparrows Point. 

Third, Dofasco has access to captive 

supplies of both coke and iron ore, 

reducing its exposure to price volatility 

in raw material markets. Neither 

Weirton nor Sparrows Point has any 

such assets. Like the larger scale, these 

captive supplies of key feedstock allow 

Dofasco to operate more cost effectively 

and profitably than Weirton or Sparrows 

Point. 

Finally, as detailed in the chart below, 

Dofasco has a much more favorable ratio 

of tin mill steel capacity to cold-rolled 

capacity. 

FIGURE 1.—RATIO OF TIN MILL CAPACITY TO COLD-ROLLED CAPACITY

Dofasco Sparrows 

Point Weirton 

Cold-Rolled Capacity (000 tons) ................................................................................................. 3100 1580 1000 

Tin steel production (000 tons) .................................................................................................... 418 828 800 

Fraction of tin mill capacity to cold-rolled .................................................................................... 13.5% 52.4% 80% 

The ratio of tin mill capacity to coldrolled capacity at Dofasco is just 13.5 

percent. In contrast, the ratio of tin mill 

steel capacity to cold-rolled capacity at 

Sparrows Point is greater than 50%, and 

is roughly 80% at Weirton. Dofasco’s 

more limited tin mill steel capacity 

relative to its cold-rolled capacity means 

a much larger portion of its cold-rolled 

capacity is immediately available for 

sale in often more profitable cold-rolled 

or galvanized markets. Weirton and 

Sparrows Point, on the other hand, have 

limited opportunity to serve cold-rolled 

and galvanized markets while at the 

same time keeping their more 

substantial tin mill steel lines operating 

at efficient capacity utilization rates. 

C. Dofasco Is More Committed to 

Investing in the Future of the Tin Mill 

Steel Market 

A key factor for the Department’s 

consideration should be which entity 

will support the tin mill steel market for 

the long term. It is Silgan’s opinion that 

Mittal is not interested in this product 

and will not support the tin mill steel 

market, whereas Dofasco has 

demonstrated a concrete willingness to 

support the product. 

Prior to its acquisition of International 

Steel Group, Mittal had no significant 

involvement in the tinplate market from 

any of its worldwide operations. With 

ISG, Mittal acquired the former 

Bethlehem Steel tinplate operations at 

Sparrows Point, MD and the former 

Weirton Steel tinplate operations in 

Weirton, WV. Since the acquisition of 

ISG, these operations have been scaled 

back, not expanded, and Mittal has 

shown little or no interest in their longterm viability. As importantly, since its 

acquisition of ISG, Mittal has met is 

contractual volume commitment to 

Silgan, but has declined to ship 

additional volumes requested by Silgan. 

Efforts to engage Mittal in discussions 

toward extending the current supply 

commitment to Silgan have not been 

successful. 

The experience with Dofasco has been 

much different. Time and again Dofasco 

has demonstrated a willingness to 

commit to the long term production and 

supply of tin mill steel. For example, 

Dofasco understood the desire of can 

companies for wider and wider coils to 

enhance can making productivity. 

Dofasco, unlike other suppliers, decided 

to invest in additional wide coil 

capacity, and now is one of the few 

suppliers in the world to offer extrawide coils. Another example is 

Dofasco’s willingness to talk about and 

agree to longer-term supply 

arrangements. There is no question that 

producing tin mill steel is in Dofasco’s 

long term plans. 

D. The Decree Should Be Amended if 

Necessary To Require Divestiture of 

Dofasco on the Earliest Date on Which 

It May Legally Be Divested Free of the 

Stichting Arrangements, and the HoldSeparate Order Should Continue in 

Effect Until That Divestituture Is 

Accomplished 

Because of the obvious superiority, 

from the standpoint of competitive 

supply of tin mill steel products, of a 

divstiture of Dofasco over either 

alternative divestiture contemplated by 

the proposed decree, the Decree should 

be amended to ensure that Dofasco is 

divested and that any short-term 

impediment to that divestiture arising 

from the stichting arrangements erected 

by Arcelor to frustrate Mittal’s efforts to 

acquire Arcelor does not wind up 

producing long-term harm to the tin 

mill steel market in the Eastern United 

States. Dofasco’s long history of 

successful operation as a stand-alone 

entity and its modern plant and 

facilities make it highly likely that 

Dofasco could exist and prosper under 

the hold-separate order now in place for 

at least five years and remain a viable 

and attractive divestiture candidate at 

the end of that period. Thus, there is no 

reason for the Department or the Court 

to accept the plainly less effective—and 

potentially counterproductive—

alternatives of divesting either Sparrows 

Point or Weirton. 


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8See Mark Reutter, The Strange Case of Weirton 

Steel, MakingSteel.Com (April 25, 2006) (emphasis 

aded) (Attachment 7). 

9Other competitiveness factors one might 

consider include the coking rate of the furnace and 

any alternative charging technologies utilized by 

the furnace to reduce that rate and increase 

productivity. For a discussion of these alternative 

techniques, see William T. Hogan and Frank T. 

Koelbe, Fewer Blast Furnaces, But Higher 

Productivity, New Steel (November 1996) 

(Attachment 8). Note, however, that reliance on 

alternative charging techniques has presented new 

cost problems for some blast furnace operations. In 

particular, for those blast furnaces relying on 

natural gas injection to reduce coking rates 

(including Weirton), they successfully lowered their 

coking rates and boosted productivity, but were 

later hit with heavy costs as natural gas prices rose 

dramatically. 

10See How a Blast Furnace Works, AISI 

(emphasis added) (Attachment 9). 

11 Ironmaking Process Alternative Screening 

Study—Volume I, Summary Report, Lockwood 

Greene study for the Department of Energy (Oct. 

2000) at 1–1 (Attachment 10). 

12Weirton’s No. 4 furnace needs repairs before 

being restarted. Weirton’s former owner ISG 

intended to make such repairs. See Jim Leonard, 

ISG To Repair, Restart Second Blast Furnace at 

Weirton Unit, American Metal Market (July 12, 

2004) (Attachment 11). With Mittal’s acquisition of 

Weirton, it was determined that Weirton would no 

longer produce raw steel and the repair work was 

never initiated. See Mark Reutter, The Strange Case 

of Weirton Steel, MaingSteel.Com (April 25, 2006) 

(Attachment 7). 

13While age is less indicative of the efficiency of 

a furnace, Weirton’s furnaces are very old. The No. 

1 furnace was built in 1919; the No. 4 furnace was 

built in 1953. Through rebuilds and modifications, 

these furnaces have been made more efficient, but 

they remain high cost. Indeed, by Mittal’s own 

admission, Silgan knows they are at least the 

highest cost furnaces in the Mittal USA system. See 

Mark Reutter, The Strange Case of Weirton Steel, 

MakingSteel.Com (April 25, 2006) (Attachment 7). 

14Capacity data for the Weirton blast furnaces 

derived from 2005 Directory of Iron and Steel 

Plants, Association for Iron and Steel Technology 

(2005) (Attachment 6). Capacity data for Mittal, 

Sparrows Point ‘‘L’’ furnace derived from Mittal 

Steel USA Works to Restore Furnace at Sparrows 

Point, PRNewswire (July 14, 2006) (Attachment 12). 

Capacity data on Mittal, Indiana Harbor No. 7 

furnace derived from Ispat Inland Accelerates 

Maintenance Outages, Ispat Inland Press Release 

(March 7, 2005) (Attachment 13). 

15Weirton Workers Buyout from Online 

NewsHour, September 23, 1983; http:// 

www.pbs.org/newshour/bb/business/july-dec83/ 

steel_9-23-83.html. (Attachment 14). 

II. A Stand-Alone Weirton Operation 

Will Fail in the Immediate Future and 

Undermine the Department’s Objective 

of Preserving Competition in the 

Market 

There is no viable business model for 

a stand-alone Weirton operation that 

ensures even the intermediate term 

survival of the company. As a fullyintegrated steel producer making raw 

steel through to tin mill products (‘‘tin 

mill steel’’), Weirton is not competitive. 

The Weirton facility’s ironmaking and 

steelmaking assets are antiquated and 

effectively unusable. Indeed, the 

ironmaking and steelingmaking assets 

are currently not operating for this very 

reason.8 The lack of any captive raw 

material assets and the costs associated 

with transporting bulk raw materials 

such as iron ore to the Weirton site only 

make the prospects for restarting the 

ironmaking and steelmaking assets in a 

stand-alone configuration that much 

more untenable. 

As a finishing operation consuming 

either slab or more advanced 

downstream inputs (i.e., hot-rolled band 

or black plate), it is also highly doubtful 

that Weirton would survive as a standalone entity. First, the proposition that 

a stand-alone Weirton operation would 

have access to the quality or volume of 

steel inputs at the cost necessary to run 

the facility efficiently is highly 

speculative. Second, limitations at 

Weirton’s rolling operations would 

further hinder the facility’s ability to 

operate a flexible production base or 

meet the ever-increasing quality 

demands of tin mill steel consumers. 

A. Weirton’s Ironmaking and 

Steelmaking Assets Are Not Competitive 

1. Weirton Has Small, Inefficient Blast 

Furnaces 

It is generally agreed within the steel 

industry that blast furnaces with an 

annual production capacity of less than 

1.5 million tons per year are not of 

efficient scale. Most, if not all, worldclass blast furnaces exceed 3 million 

tons in annual capacity. While blast 

furnace size is not necessarily 

dispositive with respect to cost 

competitiveness, it is considered among 

the most important factors.9

The U.S. Domestic steel industry’s 

own trade association acknowledges the 

weaknesses and fate of small blast 

furnaces, as does the U.S. Department of 

Energy (‘‘DOE’’). According to an article 

posted on the American Iron and Steel 

Institute’s web page, ‘‘[b]last furnaces 

will survive into the next millennium 

because the larger, efficient furnaces can 

produce hot metal at costs competitive 

with other iron making technologies.’’ 10

Similarly, a study of alternative 

ironmaking technologies funded by DOE 

concluded that ‘‘the primary problem 

(sic) the Blast Furnace approach is that 

many of these Blast furnaces are 

relatively small, as compared to newer 

larger furnaces; thus are relatively costly 

and inefficient to operate.’’ 11

Weirton’s blast furnaces—none of 

which is currently in operation—are 

among the smallest blast furnaces in 

North America. Weirton’s primary No. 1 

furnace has a rated annual capacity of 

1.46 million tons. The facility’s No. 4 

furnace, the only other furnace at the 

Weirton site in any condition to be 

restarted,12 has a rated capacity of just 

1 million tons.13 By contrast, the wouldbe competitors of a stand-alone Weirton 

enterprise operate the largest blast 

furnaces in North America.14

FIGURE 2.—COMPARISON OF BLAST FURNACE SIZE

Company/operation Blast furnace Year built Annual capacity 

(million tons) 

Mittal, Indiana Harbor ....................................................................................................... No. 7 ................. 1980 4.0 

U.S. Steel, Gary Works .................................................................................................... No. 14 ............... 1974 3.4 

Mittal, Sparrows Point ....................................................................................................... ‘‘L’’ .................... 1977 3.2 

Weirton ...................................................................................................................... No. 1 ................. 1919 1.5 

Weirton ...................................................................................................................... No. 4 ................. 1953 1.0 

Weirton’s furnace limitations have long 

been known; in 1982, National Steel 

proposed shutting down Weirton’s 

furnaces and operating Weirton as a 

rolling mill.15

In any case, assessing the 

competitiveness of the Weirton blast 

furnaces is strictly an academic 

exercise. Both the Weirton No. 1 and 

No. 4 furnaces are no longer hot banked, 

but now sit completely cold. The costs 

of restarting the furnaces from a cold 

state are uncertain, but could be 

significant depending on any damage 

resulting from the cool down. Such 

costs may in fact be prohibitive to any 

would-be investor. 

2. Weirton’s Steelmaking Operations 

Are Also Antiquated and High Cost 

Weighed down by the high cost of its 

ironmaking operations, the Weirton 

facility inherently is a high cost steel 


sroberts on PROD1PC70 with NOTICES
17642 Federal Register / Vol. 72, No. 67 / Monday, April 9, 2007 / Notices 

16High Production Costs Hamper AK Steel’s 

Middletown Works, Steel Business Briefing (Aug. 

10, 2006) (Attachment 15). 

17See Mark Reutter, The Strange Case of Weirton 

Steel, MakingSteel.Com (April 25, 2006) 

(Attachment 7). 

18 2005 Directory of Iron and Steel Plants, 

Association for Iron and Steel Technology (2005) at 

130 (Attachment 6). 

19See Various Annual Reports from producers 

listed in the above table below. 

20 Dofasco has iron ore assets in Canada. See 

Maria Guzzo, Dofasco seals $251m purchase of 

Canadian iron ore miner QCM, American Metal 

Market (July 26, 2005) (Attachment 16). 

21Scott Robertson, Force Majeure Clobbers CokeShort Steelmakers: Weirton Eyes Options, Blast 

Furnace Closure, American Metal Market (Jan. 9, 

2004) (Attachment 17). 

22U.S. Coal Supply and Demand: 2005 Review, 

Department of Energy, Energy Information 

Administration. 

23For a discussion of the tight market for coke 

during 2004 and the factors that drive tight coke 

supplies, see Peter Krouse, Heat Back on Steel 

Makers, The Plain Dealer (February 26, 2004) 

(Attachment 18). 

24U.S. Coal Supply and Demand: 2005 Review, 

Department of Energy, Energy Information 

Administration. 

25 Vicki Smith, Furnace Will Stay Idle at Weirton 

Steel Mill, Associated Press (Dec. 2, 2005) 

(Attachment 19). 

producer. Leaving no doubt, Weirton’s 

slab costs have been rated by a leading 

steel consultancy as the highest in the 

world.16 These results are consistent 

with Mittal’s own top-down review of 

the Mittal USA system, which found the 

Weirton steelmaking assets to be the 

least economical among its many U.S. 

facilities.17

Weirton’s continuous caster is also an 

old, four-strand caster.18 A new, single 

strand caster is necessary to achieve 

better yield loss and quality control in 

important tin mill grades of steel. 

3. An Independent Weirton Operating 

Its Ironmaking Facilities Would Lack 

Any Captive Raw Material Supplies 

A stand-alone Weirton enterprise 

utilizing its ironmaking assets does not 

fit the paradigm of successful integrated 

steel makers (i.e., those operating blast 

furnaces and basic oxygen furnaces to 

produce steel) operating in the U.S. 

market. That paradigm includes access 

to captive supplies of at least some raw 

material requirements (coal, coke, or 

iron ore). 

Integrated steel producers consume 

massive amounts of raw materials in the 

form of coal, coke, and iron ore to run 

their blast furnaces. To insulate 

themselves from volatility in raw 

material markets, integrated producers 

tend to maintain captive supplies of at 

least some of their raw material needs. 

Although all U.S. mills have largely 

divested themselves of their U.S. coal 

assets, maintaining captive coke 

supplies remains a common practice 

among integrated producers. This 

practice continues given the high costs 

associated with building new coke 

plants in today’s regulatory 

environment and the fact that the coke 

market tends to be in very tight supply. 

The largest producers also maintain 

captive iron ore assets. 

FIGURE 3.—INTEGRATED MILL RAW MATERIAL ASSETS 19

Company U.S. coke 

assets 

U.S. iron ore 

assets 

U.S. Steel .................................................................................................................................................................... Yes ............... Yes. 

Mittal Steel .................................................................................................................................................................. Yes ............... Yes. 

AK Steel ...................................................................................................................................................................... Yes ............... No. 

Wheeling-Pittsburgh Steel .......................................................................................................................................... Yes ............... No. 

WCI Steel .................................................................................................................................................................... No ................ No. 

Severstal-Rouge Steel ................................................................................................................................................ Yes ............... No. 

Sparrows Point ........................................................................................................................................................... No ................ No. 

Dofasco 20 ................................................................................................................................................................... Yes ............... Yes. 

Weirton ........................................................................................................................................................................ No ................ No. 

The Weirton facility does not operate 

coke ovens, nor does it own any iron ore 

assets. As a stand-alone enterprise 

operating its blast furnaces, Weirton’s 

lack of raw materials assets would leave 

it dependent on outside supply, 

including supply from other U.S. tin 

mill steel producers. 

With respect to coke, the implication 

of Weirton’s outside supply dependency 

is documented in Weirton’s recent past. 

In 2004, Weirton experienced a coke 

supply disruption when U.S. Steel (a tin 

mill steel producer) declared force 

majeure on a supply contract with 

Weirton in a very tight market for coke, 

forcing Weirton to limit operations in 

that year.21

Although the first new coke ovens 

built in the United States in seven years 

were completed in 2005, shipments of 

metallurgical coal to U.S. coke plants 

show a decline over the last 5 years due 

to the tight specifications needed for 

coal to produce coke.22 Key sources of 

imported coke, such as China, now 

consume a larger portion of that supply 

in their own domestic markets.23 With 

a tight world market for metallurgical 

coal coupled with U.S. supply 

disruptions that occurred in 2005, the 

average delivered price of coal to U.S. 

coke plants increased by 36.2 percent to 

reach an average price of $83.79 per 

short ton in 2005. This, in turn, caused 

coke prices to skyrocket.24

FIGURE 4.—U.S. METALLURGICAL COAL SUPPLY AND PRICES TO U.S. COKE PLANTS

[Million short tons and nominal dollars per short ton] 

2001 2002 2003 2004 2005 

Consumption Average ................................................................... 26 .1 23 .7 24 .2 23 .7 23 .4 

Delivered Price ............................................................................... $46 .42 $50 .67 $50 .63 $61 .50 $83 .79 

Even Weirton’s union representatives 

acknowledge the coke problem: ‘‘Union 

spokesman David Gosset said raw 

materials are the root of Weirton’s 

problem. Weirton does not have a coke 

plant and must buy it at a high cost on 

the open market.’’ 25


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26See Peter Krouse, Heat Back on Steel Makers, 

The Plain Dealer (February 26, 2004) (Attachment 

18). 

27According to the Minneapolis Federal Reserve 

‘‘water transport via inland ports is estimated to be 

at least five times more efficient than rail and trucks 

at delivering similar cargo on a fuel cost-per-gallon 

basis. U.S. inland waterways move about 15 percent 

of interstate commerce for bulk commodities at only 

2 percent of the cost.’’ Marcia Jedd, Minneapolis 

Federal Reserve fedgazette, January 2003, http:// 

minneapolisfed.org/pubs/fedgaz/03-01/ 

shipping.cfm (Attachment 20); See also Vicki 

Smith, Furnace Will Stay Idle at Weirton Steel Mill, 

Associated Press (Dec. 2, 2005) (Attachment 19) 

(‘‘Weirton also must buy iron ore and have it 

shipped by rail. Mittal’s mill in Cleveland can get 

iron ore shipped in cheaper on Lake Erie’’). 

28Mark Reutter, The Strange Case of Weirton 

Steel, MakingSteel.Com (April 25, 2006) 

(Attachment 7). 

29 Vicki Smith, Furnace Will Stay Idle at Weirton 

Steel Mill, Associated Press (Dec. 2, 2005) 

(emphasis added) (Attachment 19). 

30Mark Reutter, The Strange Case of Weirton 

Steel, MakingSteel.Com (April 25, 2006) 

(Attachment 7). 

31Weirton filed for Chapter 11 Bankruptcy 

protection in May 2003 after racking up more than 

$700 million in losses over the previous five years. 

Vicki Smith, Weirton Files for Ch. 11; 1,100 Ohio 

Jobs Affected, Associated Press (May 20, 2003) 

(Attachment 21). Such financial performance is not 

conducive to investment in the capital-intensive 

steel industry. 

32See Hearing Transcript, In the Matter Of: Tin 

and Chromium-Coated Steel Sheet from Japan, Inv. 

No. 731–TA–860 (Review) (April 27, 2006) 

(testimony of Bill Stephans, Division Manager for 

TMP at Mittal Steel USA’s Weirton Facility) 

(Attachment 22). 

33Mark Reutter, The Strange Case of Weirton 

Steel, MakingSteel.Com (April 25, 2006) 

(Attachment 7). 

The raw material paradigm bears out 

in the experience of other integrated 

steel producers. Operations with no 

captive supplies are vulnerable and tend 

to have poorer operating performance. 

WCI Steel, for example, also retains no 

raw material assets. Not surprisingly, 

like Weirton, it was also the victim of 

the coke supply disruption that 

occurred in 2004.26 WCI emerged from 

nearly three years of bankruptcy only 

this year. 

4. Weirton’s Geographic Location 

Guarantees Higher Costs for Basic 

Inputs 

Unlike competitors along the Great 

Lakes and elsewhere, which have access 

to water transportation to bring in raw 

materials, Weirton must resort to more 

expensive truck and rail options to 

supply such basic bulk inputs as iron 

ore.27 As a stand-alone enterprise not 

affiliated with a larger integrated steel 

operation, Weirton would have no 

ability to average higher transportation 

costs over a broader asset base or 

leverage lower transportation prices 

with service providers serving more 

than the Weirton facility. 

5. Weirton’s Limitations as a FullyIntegrated Steel Maker Producing Tin 

Mill Steel Are Recognized by Mittal and 

Outside Observers 

There is no dispute that Weirton 

suffers from severe limitations as a 

fully-integrated steel producer, even 

among those parties with an immediate 

interest in, or who are otherwise 

knowledgeable about, the facility. 

Consider the comments of Mittal USA 

CEO Leo Schorsch shortly after Mittal 

acquired Weirton and made the decision 

to shut down its steelmaking operations: 

This was a very difficult decision, since the 

Independent Steelworkers Union and all 

employees have worked so hard to beat the 

odds trying to maintain steelmaking at 

Weirton,’’ said Louis L. Schorsch, chief 

executive of Mittal Steel USA. ‘‘However, the 

structural disadvantages of Weirton for these 

processes entail costs that are too high to 

support competitive downstream facilities.28

At the same time, noted industry analyst 

and expert on ironmaking/steelmaking 

assets Michael Locker stated: 

The negative of the consolidation process 

is that you have a comparison going on of 

plants * * * within the Mittal family. 

If they come out on the short end of the 

stick, they can’t justify standing alone—even 

with all the hopes of cost reduction and 

efforts by the union, which were mighty.29

Other commentary from the period is 

consistent with that above concerning 

Mittal’s own internal assessment of the 

Weirton facility: 

Unknown to Weirton workers as well as to 

many ISU officers, Mittal Steel kept obsessive 

track of all financial aspects of its five 

integrated mills (Burns Harbor and Indiana 

Harbor in addition to Cleveland, Sparrows 

Point, and Weirton). The mills were 

compared and ranked according to their raw 

material inputs, manufacturing costs, and 

product profit margins. At the bottom of the 

list lay the ‘‘swing’’ plant—the facility that, 

in times of low demand, didn’t generate 

enough money to please the steelmasters in 

London. 

Weirton was the ‘‘swing’’ plant. 

It was hobbled by higher raw material 

costs, especially for coke, than the other 

mills.30

Based on this commentary, it is clear 

that Weirton, even as part of a vast 

integrated steel enterprise, is incapable 

of being competitive running its 

ironmaking and steelmaking assets. As 

an independent enterprise running 

those assets, prospects would only 

diminish from bad to worse. 

B. Prospects for a Stand-Alone Weirton 

Enterprise Operating as a Rolling and 

Finishing Operation Are Limited 

Even if Weirton’s ironmaking and 

steelmaking assets remain closed and 

the facility continues operating as a 

rolling and finishing operation, the 

viability of such an operation on a 

stand-alone basis is doubtful. The 

Weirton rolling operations—long 

neglected by its previous and current 

owners—require substantial investment 

to remain competitive. Moreover, the 

production emphasis on tin mill steel, 

as well as the configuration and 

limitations at the mill, mean that it 

would have limited production 

flexibility to maximize profitability by 

reacting to changes in up- and downstream flat-rolled steel markets. Finally, 

the prospect of limited availability of 

merchant slab or black plate substrate 

could lead to supply disruptions and 

limit capacity utilization at the mill, 

such that it could not generate 

sustainable profits. 

1. Weirton’s Rolling and Finishing 

Assets Require Substantial Investment 

To Be Competitive 

The Weirton facility, both as an 

independent entity and as part of the 

International Steel Group and Mittal 

Steel, has been a consistent industry 

laggard. Years of losses have led to years 

of neglect at the mill.31 At the tin line, 

alone, Mittal has publicly identified the 

need for in-line edge-cutting and 

tension leveling equipment to keep the 

mill competitive.32 Mittal, however, has 

not committed to that investment, 

which it identified as important shortly 

after it acquired the Weirton assets from 

the International Steel Group.33

Given Weirton’s historically poor 

financial performance, it is likely that 

other major maintenance at the mill has 

been severely neglected. If Weirton has 

any chance at all of being a viable, 

stand-alone operation, any new investor 

would have to be committed to 

substantial new capital spending to 

improve the competitive position of the 

mill. The rolling and finishing lines as 

they currently exist are not ‘‘turn-key’’

operations that would be immediately 

competitive in today’s market. 

2. Weirton Would Be Committed to 

Producing Primarily Tin Mill Steel, 

Limiting Production Flexibility 

In today’s steel industry, few mills 

consistently make money producing 

only one product. This is particularly 

true for mills that maintain hot-rolled 

through galvanizing assets and have to 

cover the fixed costs associated with 

each stage of flat-rolled steel 

production. Large integrated operations 

such as these seek a balance, shifting 

production upstream and downstream 

to adjust to changing market conditions 

in each segment while also attempting 


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17644 Federal Register / Vol. 72, No. 67 / Monday, April 9, 2007 / Notices 

34Sam Kusic, ISU Irked by Mittal Steel’s Plan To 

Shut Weirton Galvanizing Line, American Metal 

Market (Feb. 3, 2006) (Attachment 23). 35Weirton’s resort to purchased slabs and the 

problems created by that strategy were cited in 

testimony during the 2000 antidumping case on 

TMP imports from Japan (Attachment 24). 

36 In 2006, Brazilian merchant slab supply 

became extremely tight, with prices rising to $555 

a ton, as Brazilian producer CSN struggled to make 

up for production losses due to an accident at its 

No. 3 blast furnace. A looming increase in export 

taxes on Chinese slab put further pressure on the 

market as Chinese producers pulled back from 

export markets. See Diana Kinch, Brazil Slab hits 

$555/T In Tight Export Market, American Metal 

Market (June 5, 2006) (Attachment 25). 

37Wheeling-Pittsburgh Makes Loss, Despite 

Rising Market, Steel Business Briefing (May 11, 

2006) (Attachment 26). 

38A competitor for the Wheeling-Pittsburgh 

assets, Esmark, envisions shutting down the last 

Wheeling-Pittsburgh blast furnace in an indication 

of the perceived or assessed costs of running that 

facility. See Esmark To Shut Wheeling-Pitt BF If Bid 

Succeeds, Steel Business Briefing (August 23, 2006) 

(Attachment 27). 

to preserve efficient capacity utilization 

rates at each stage of production. 

Weirton cannot make similar 

adjustments. 

At the front of the flat-rolled 

production chain, hot-rolled steel, 

Weirton would lack the ability to 

challenge more nimble and cost 

competitive minimill producers that 

have long dominated the commodity 

hot-rolled market. The economics of 

buying slab dictate that stand-alone 

Weirton rolling and finishing operation 

move downstream to higher valueadded products in order to capitalize on 

steel grades that minimills find more 

difficult to produce. 

At the end of the production chain, 

the Weirton facility is incapable of 

competing in the galvanized sheet 

market, whether using a hot-rolled or 

cold-rolled substrate. Weirton’s 

galvanizing lines were determined to be 

the highest cost operations in the Mittal 

system and closed.34 It is difficult to 

conceive of a cost environment in which 

Weirton could reliably purchase slab 

and produce a sustainable profit 

running steel through such a high cost 

facility. 

Finally, Weirton’s cold-rolling mill, 

while potentially capable of producing 

competitive cold-rolled, would have 

limited capacity to do so since it is 

dedicated to serving the tin operations, 

creating constant pressure to keep the 

tin mill operating at efficient rates to 

cover costs. 

3. Weirton Would Have Difficulty 

Securing the Quality and Volume of 

Slab Necessary To Maintain Its 

Operations 

Tin mill steel is a high grade steel 

product that must meet strict 

metallurgical and physical tolerances in 

order to satisfy customer demands. The 

steelmaking and slab casting phases of 

production are every bit as critical to 

achieving these qualities as are the 

rolling and finishing phases. As a slab 

roller, it would be necessary for a standalone Weirton enterprise to secure tin 

mill steel-grade slab from as few 

committed sources as possible in order 

to control uniformity and quality. 

Failure to do so would lead to 

circumstances with which the Weirton 

facility is all too familiar: Unreliable, 

quality-deficient supply. This was the 

outcome in 1999, when Weirton 

experimented as an independent 

producer rolling slab acquired from 

other producers. Delivery and inventory 

management were poorly handled. Slab 

arrived late and in inconsistent quality 

and tolerances.35 It is unlikely that the 

Weirton facility could achieve better 

results in today’s market. 

A stand-alone Weirton Enterprise 

rolling purchased slab would find it 

difficult to secure, on an economic 

basis, the 800 thousand to 1 million tons 

of tin mill steel-grade slab necessary for 

its operations from high quality 

suppliers. In this regard, Brazil is 

recognized as the low-cost, high quality 

producer of merchant slab (i.e., slab 

produced for sale) in the world and 

would be the logical supplier to the 

Weirton facility. However, current 

Brazilian merchant slab supply is 

largely allocated among an existing 

global customer base.36 Indeed, free 

supplies will be further limited with 

CSN’s anticipated acquisition of U.S. 

steelmaker Wheeling-Pittsburgh, which 

currently maintains 600,000 tons in 

excess hot-rolling capacity that would 

be filled by CSN slab.37 That tonnage 

could increase substantially if a 

decision is made to shut WheelingPittsburgh’s aging blast furnace.38

While the Brazilian slab industry has 

committed to a substantial expansion of 

its slab-making capacity, there is little 

prospect that an economically viable 

volume of this forthcoming slab 

capacity would be available to a standalone Weirton in the quality required to 

produce tin mill steel. As documented 

in the following table, virtually all of the 

new Brazilian slab would be unavailable 

to Weirton. Much of the planned slab 

capacity expansion among Brazilian 

producers targets either Brazilian 

domestic demand or other offshore 

demand (via existing business 

relationships). Timing considerations 

make it even more improbable that 

Brazil can source slab for a newlydivested and independent Weirton mill: 

A significant fraction of Brazil’s new 

slab capacity will ramp up years from 

now, an unsuitably long period of time. 

FIGURE 5.—BRAZILIAN SLAB CAPACITY EXPANSIONS

Producer/project New slab capacity 

(million tons) Expected startup Comments 

CST (Arcelor Brazil) 39 ............. 2.5 ............................. End of 2006 ............... Expected to add 2.5 million tons of hot-rolled coil capacity by 

2008, which will capture much of this expansion. Also intends to ship substantial additional tonnage to Arcelor-affiliate Dofasco, which is slab-deficient. 

Gerdau Acominas SA40 ........... 3 (initially 1.5) ............ Mid-2008 ................... Discussions are already underway with ‘‘possible clients 

abroad.’’

CSA41 (Thyssen/CVRD) .......... 4.4 ............................. 2008 .......................... Much of this capacity is to be dedicated to Thyssen Steel’s 

offshore operations, including a proposed U.S. greenfield 

mill expected to produce 4.5 million tons of finished steel. 

Ceara Steel 42 (CVRD/Donguk 

Steel/Danieli & C. SpA).

1.5 ............................. 2009 .......................... Donguk Steel is expected to consume at least 50 percent of 

the slab produced at the facility. 

CSN/Baosteel 43 ....................... 4.5 ............................. 2011 .......................... Two projects are envisioned, with feasibility studies to be finalized by the end of 2006. Baosteel is a projected partner 

in one project, with the expectation that a portion of the 

production would be directed at Baosteel. Other available 

capacity would also serve CSN’s rolling operations abroad, 

with the remainder available to third parties. 


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39 Diana Kinch, Arcelor Brasil Sets Sights on New 

Slab Plant, American Metal Market (May 1, 2006) 

(Attachment 28); Diana Kinch, CST to Hike Slab 

Sales to Dofasco, American Metal Market (March 

22, 2006) (Attachment 29). 

40 Diana Kinch, Gerdau Acominas Charging Into 

Slab Mart, American Metal Market (June 30, 2006) 

(Attachment 30). 

41 Diana Kinch, CSA Steel Project Receives 

License, American Metal Market (July 6, 2006) 

(Attachment 31); Scott Robertson, North American 

at Top of TK’s Agenda, American Metal Market 

(August 11, 2006) (Attachment 32). 

42 Diana Kinch, Groundwork Laid For Brazil’s 

Ceara Slab Project, American Metal Market 

(December 16, 2005) (Attachment 33). 43 Diana Kinch, CSN May Lift Slab Capacity of 

Two Projects, American Metal Market (September 1, 

2006) (Attachment 34). 44 Diana Kinch, Brazil’s Usiminas Casts Sights 

Ahead for New Slab Project Partner, American 

Metal Market (August 29, 2006) (Attachment 35). 

45At the time of acquisition, Severstal expressed 

its intent to revitalize the Rouge facility by shipping 

low-cost slab to Rouge from its Russian production 

base. See Russia’s Severstal Wants to Ship More 

Steel to U.S., Reuters (February 2, 2004) 

(Attachment 36). 

46Slab prices reflect average unit values for 

carbon steel slab imported from Brazil, tracking 

U.S. harmonized tariff schedule items 7207.12.0050 

and 7207.20.0045. U.S. market prices for hot-rolled, 

cold-rolled and galvanized sheet were sourced from 

Steel Business Briefing and are FOB Midwest U.S. 

mill. U.S. market prices for TMP were sourced from 

Tin- and Chromium-Coated Steel Sheet from Japan, 

Inv. No. 731–TA–860 (Review), USITC Pub. 3860 

(June 2006) at V–8 (Attachment 37). 

FIGURE 5.—BRAZILIAN SLAB CAPACITY EXPANSIONS—Continued 

Producer/project New slab capacity 

(million tons) Expected startup Comments 

Usiminas/CVRD 44 .................... 5 ................................ 2010–2012 ................ Usiminas is seeking a partner among companies that already 

have, or plan to set up, rolling capacity abroad. 

The Russian producer Severstal is 

also a low-cost producer capable of 

meeting international quality standards 

and therefore might be an economical 

option for a stand-alone Weirton facility 

dedicated to rolling slab. This option, 

however, is limited. Severstal’s 

acquisition of Rouge Steel limits its 

ability to supply high volumes of 

merchant slab while meeting its 

commitment to Rouge.45

In short, the market situation for 

merchant slab would likely force a 

stand-alone Weirton to source tin mill 

steel-quality slab piecemeal from 

multiple sources. As Weirton’s 1999 

experience showed, this is precisely the 

sourcing situation Weirton would want 

to avoid since it would raise the 

prospect of supply disruptions and 

production problems related to uneven 

slab consistency. 

4. Even if a Stand-Alone Weirton 

Rolling and Finishing Operation Found 

a Consistent Source of Slab Supply, the 

Market Dynamics for Tin Mill Steel 

Would Limit Profitability 

Ultimately, even if Weirton could 

secure an adequate source of slab from 

third parties, the market dynamics for 

tin mill steel would create significant 

profitability problems as the market for 

flat rolled steel ebbs and flows. In the 

flat-rolled steel market, the relationship 

between slab prices and prices for 

mainstream flat-rolled steel—hot-rolled, 

cold-rolled and galvanized products—

tends to remain more stable. A more 

consistent pricing spread is maintained 

as prices for slab rise and fall. A very 

different pattern emerges for tin mill 

steel, given the very small and 

specialized market it serves. The pricing 

spread between slab and tin mill steel 

grows or shrinks substantially as the 

overall market for flat-rolled steel 

strengthens or weakens. For a tin mill 

steel producer relying on merchant slab, 

it is more difficult to preserve profit 

margins as markets for hot-rolled, coldrolled, and galvanized steel expand and 

cause slab prices to rise. This is 

evidenced in the figure below tracking 

prices for imported slab, as well as the 

U.S. market prices for hot-rolled, coldrolled, galvanized, and tin mill steel.46


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17646 Federal Register / Vol. 72, No. 67 / Monday, April 9, 2007 / Notices 

47Tin- and Chromium-Coated Steel Sheet from 

Japan, Inv. No. 731–TA–860 (Review), USITC Pub. 

3860 (June 2006) at Table III–8 (Attachment 38). 

48Ohio Coatings is a 50–50 joint venture between 

Wheeling-Pittsburgh Steel and Donguk Steel of 

Korea. Wheeling-Pittsburgh is a producer of black 

plate and supplies Ohio Coatings that input. 

Nippon Steel is Ohio Coatings’s exclusive 

distributor, and is also a major producer of black 

plate. 

Figure 1 captures both the 

significantly depressed steel market in 

2003 and the extremely strong steel 

market that followed in 2004 and 2005. 

The substantial swing in pricing for hotrolled, cold-rolled, and galvanized sheet 

is in sharp contrast to the much flatter 

pricing trajectory of tin mill steel. 

Indeed, during much of 2004, the 

market price for commodity grade coldrolled steel (i.e., the product most 

similar to tin mill steel substrate) was 

actually higher than the tin mill steel 

price, despite the substantial additional 

value-added associated with tin mill 

steel production. While the visual 

depiction of pricing suggests tin mill 

steel also maintains a manageable 

pricing spread over time, the reality is 

very different. Consider that, over the 

2000–2005 period, U.S. tin mill steel 

producers, as an industry, recorded 

their largest loss in 2003, when it 

appears from the figure above that their 

raw material costs would have been the 

most manageable.47

Just as important, the additional 

overhead and fixed costs associated 

with running rolling and finishing 

assets from the very first stage of flat 

rolled steel production through to tin 

mill steel production means that 

margins from tin mill steel production 

become extremely tight in a strong steel 

market. Yet, this is precisely when tin 

mill steel producers would logically 

seek to recoup losses from weak years. 

This phenomenon has two important 

implications. First, a tin mill steel 

producer reliant on merchant slab is 

unable to capitalize on a strong market 

through better margins on a higher 

volume of steel shipped. Second, a tin 

mill steel producer reliant on merchant 

slab is at a competitive disadvantage in 

the acquisition of slab on the open 

market against other slab rollers 

producing traditional flat-rolled 

products. In particular, because of the 

pricing spread, these other slab rollers 

have greater bidding power to secure the 

volumes necessary for their operations. 

These two factors combine to produce a 

very difficult competitive environment 

for any tin mill steel producer wishing 

to rely exclusively on merchant slab. 

Weirton would not be an exception to 

this reality. 

5. A Stand-Alone Weirton Enterprise 

Running Only Its Tin Line Would Have 

Difficulty Securing Sufficient Volumes 

of Black Plate 

Real world experience indicates that 

even if a stand-alone Weirton enterprise 

reduced its operations to only its tin 

lines and sourced only the substrate for 

tin mill steel, black plate, it would be 

unable to source enough substrate to run 

its operations on a profitable basis. In 

this regard, Silgan notes that the 

Weirton tin lines are substantial, 

capable of running 800,000 tons of tin 

mill steel. To achieve economies of 

scale, it needs to operate those lines at 

better than 70 percent, meaning it 

would have to secure as much as 

560,000 tons of black plate to run 

efficiently. 

Consider, however, the experience of 

Ohio Coatings, a tin mill steel producer 

configured to finish black plate. Despite 

being owned by, or in close affiliation 

with, integrated steel producers with the 

capacity to produce black plate,48 Ohio 

Coatings has been unable to secure more 

than 60 percent of its black plate 

requirement. This is true even though 

the mill is capable of producing only 

300,000 tons of tin mill steel. The fact 

that an owner of the facility is unwilling 

to supply Ohio Coatings with its 

material requirements speaks volumes 

about whether a stand-alone Weirton 


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49Scott Robertson, Mittal Shows Little Interest in 

Weirton Furnace Sale, American Metal Market (May 

5, 2006) (Attachment 39). 

50Mittal Steel Plans to Sell Dofasco, Hecht Waits 

for Weirton, Steel Business Briefing (August 16, 

2006) (Attachment 40). 

51The full analysis is provided at Attachment 41 

(‘‘HHI Impact of Alternative Divestiture 

Scenarios’’). 

finishing black plate into tin mill steel, 

with far more substantial tin mill steel 

capacity, could source enough black 

plate as a stand-alone producer looking 

to the open market. 

Ohio Coatings’ problem, which is the 

same problem a stand-alone Weirton 

enterprise would face if similarly 

operated, relates back to the flat-rolled 

pricing dynamics discussed in the 

previous section. Steelmakers must 

make choices regarding the products 

they choose to market. The decision 

begins at the raw steel phase, since steel 

chemistry will dictate what finished 

steel products can be made. In a strong 

market for hot-rolled, cold-rolled, or 

galvanized sheet, the incentive to 

produce black plate for tin mill steel 

production is diminished. A steelmaker 

will seek to maximize profitability and 

throughput by focusing on those 

products generating the strongest 

margins. The difference in profit 

margins between tin mill steel and the 

other traditional flat-rolled products can 

be so great that there is no economic 

justification for producing black plate. 

The result is Ohio Coating’s dilemma—

a 60 percent capacity utilization rate 

and no ready supply of black plate from 

either its parent company, companies 

with close ties to it, or other outside 

suppliers. There is no expectation that 

a stand-alone Weirton, similarly 

configured, would fare better. It would 

likely fare worse, given the lack of any 

affiliated supplier of black plate. 

C. There Are No Legitimate Suitors for 

Weirton 

Weirton has long been perceived as 

one of the weakest and least competitive 

steel producers in the U.S. industry. To 

Silgan’s knowledge, the only individual 

to surface expressing a desire to acquire 

the Weirton assets, Mitch Hecht, is not 

taken seriously by Mittal and has 

presented no viable business plan. 

Mr. Hecht’s estimates on start-up 

costs to get the Weirton blast furnaces 

running are overly optimistic, including 

a proposed initial investment of just $10 

million, including the purchase price. 

Hecht has been even more ambiguous 

about working capital needs and what 

he sees as necessary longer term 

investment in the ‘‘several’’ tens of 

millions of dollars.49 These ‘‘estimates’’

apparently do not even consider the 

necessary investment in the rolling 

assets, but focus only on the blast 

furnaces, although Mr. Hecht has 

expressed interest in acquiring the 

rolling assets as well.50

D. Divesting Weirton Will Have an 

Adverse Impact on Competition 

Given that there is no existing steel 

entity interested in buying Weirton and 

since an independent Weirton would be 

entirely unprofitable, a decision to 

divest Weirton will result in an increase 

in the HHI. As detailed in the chart 

below, using the public data available to 

us, Silgan estimates that prior to the 

Mittal-Arcelor merger the HHI for the 

Eastern U.S. tin industry was 3058. 

With the Mittal-Arcelor merger, Silgan 

estimates that the HHI now stands at 

3446. Assuming that Weirton is divested 

and it survives as a standalone entity, 

the HHI would fall to 2761.51


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17648 Federal Register / Vol. 72, No. 67 / Monday, April 9, 2007 / Notices 

52The full analysis is provided at Attachment 42 

(‘‘Probability that Divestiture Will Improve 

Competition’’). 

FIGURE 7.—HHI ANLAYSIS: POST-MERGER AND WEIRTON MARKET EXIT

HHI impact 

Pre-merger ........................................................................................................................................................ 3058 

Post-merger (no divestiture) ............................................................................................................................. 3446 

Remedy-Divest Weirton .................................................................................................................................... 2761 (if Weirton survives). 

3645 (if Weirton fails). 

Unfortunately, as the above 

discussion makes clear, the divestiture 

of Weirton will almost certainly result 

in failure and the exit of Weirton from 

the tin industry. Assuming that Weirton 

is divested and it does not survive as 

standalone entity, the HHI will rise to 

3645. 

It is Silgan’s belief that this latter 

scenario is quite likely; indeed, Silgan 

knows of no industry expert who would 

give a stand-alone Weirton more than a 

20% chance of surviving. Consequently, 

this implies that the expected result of 

a Weirton divestiture is a higher, not 

lower, HHI. In fact, unless the DOJ 

believes that a stand-alone Weirton has 

a better than a two out of three chance 

of surviving (an unduly optimistic belief 

in Silgan’s opinion), the expected result 

of a Weirton divestiture is a less 

competitive market.52 Given Weirton’s 

poor prospects as a standalone 

producer, allowing Mittal to divest 

Weirton runs contrary to the goal of 

improving competition in tin market. 

The increase in HHI is only one 

probable consequence of a divestiture of 

Weirton. A failed Weirton would 

remove more than 800,000 tons of tinmaking capacity from the market. With 

Weirton in the market can-makers are 

often put on allocation and struggle to 

get delivery of product. The removal of 

about 20% of U.S. production capacity 

will make the current bad situation truly 

dire. 


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53 Dofasco is the fourth-largest producer of auto 

sheet in the North American market, at roughly 1 

million tons, behind the multi-site operations of 

Mittal Steel, U.S. Steel and AK Steel. See Peter 

Marsh, Massive Bids on Table as Giants Fight for 

Dofasco, Financial Times (January 13, 2006) 

(Attachment 4). 

54According to long-time steel analyst Charles 

Bradford, Sparrows Point (‘‘doesn’t have those 

(automotive) grades.’’ Scott Robertson, Mittal 

Sparrows Point Mill May Be On Action Block, 

American Metal Market (June 2, 2006) (Attachment 

5). 

55 2005 Directory of Iron and Steel Plants, 

Association for Iron and Steel Technology (2005) at 

98–101 (listing flat-rolled assets) (Attachment 6). 

Dofasco Tubular Products is the largest and most 

diversified producer of tubular products in North 

America. See http://www.dofascotube.com/ 

Default.htm (Attachment 3). 

56 Diana Kinch, CST to Hike Slab Sales to 

Dofasco, American Metal Market (March 22, 2006) 

(Attachment 29). 

57 ITC Prehearing Staff Report, Certain Carbon 

Steel Products from Australia, Belgium, Brazil, 

Canada, Finland, France, Germany, Japan, Korea, 

Mexico, Poland, Romania, Spain, Sweden, Taiwan, 

and the United Kingdom, Inv. Nos. AA1921–197 

(Second Review); 701–TA–319, 320, 325–328, 348, 

and 350 (Second Review); and 731–TA–573, 574, 

576, 578, 582–587, 612, and 614–618 (Second 

Review) (September 25, 2006) at Table CORE–III–

8 (Attachment 43). 

58 Id. at Table CTL–III–9. 

59Certain Hot-Rolled Flat-Rolled Carbon-Quality 

Steel Products From Brazil, Japan, and Russia, Inv. 

Nos. 701–TA–384 and 731–TA–806–808 (Review), 

USITC Pub. 3767 (April 2005) at Table III–11 

(Attachment 44). 

60Tin and Chromium Coated Steel Sheet from 

Japan, Inv. No. 731–TA–860, USITC Pub. 3860 

(June 2006) at Table III–8 (Attachment 38). 

61 Id. 

III. A Divestiture of Sparrow’s Point 

Would Also Be a Far Less Effective 

Remedy Than Divesting DoFasco 

A. Divestiture of Sparrows Point Is 

Unlikely To Enhance Competition Over 

the Long Term 

As discussed above, Weirton does not 

have the ability to survive on its own. 

And, without Sparrows Point, Weirton 

is unlikely to survive as part of the 

Mittal-Arcelor enterprise. The reason is 

straightforward: Without Sparrows 

Point, Weirton will not be able to secure 

sufficient volumes of feedstock to 

produce tin mill steel. 

Within the Mittal system, Sparrows 

Point is a key supplier of slab for 

Weirton. For example, Silgan’s 

understanding is that all the tin free 

steel (‘‘TFS’’) originating at the Weirton 

facility is produced using Sparrows 

Point slab. A Sparrows Point facility 

operating outside the Mittal system 

would limit the supply of this key 

feedstock to Weirton and thereby 

threaten the ongoing viability of 

Weirton. 

And, as importantly, all indications 

are that other slab producers within 

Mittal Steel’s collection of facilities 

either cannot or are unlikely to become 

reliable suppliers to Weirton’s tin mill 

steel operations. Specifically, (1) 

Dofasco’s current product mix and sales 

make Dofasco an unlikely replacement 

for Sparrows Point as a supplier of 

feedstock to Weirton, (2) given lower tin 

mill steel profitability compared to 

other flat-rolled products, it is unlikely 

that Mittal Steel’s other U.S. slab 

producers will divert scarce feedstock to 

Weirton, and (3) it would make no 

economic sense for Mittal’s Brazilian 

affiliate, CST, to supply slabs to 

Weirton. 

Silgan discusses these points below. 

1. Dofasco Is an Unlikely Replacement 

for Sparrows Point in Supplying Slabs 

to Weirton 

As discussed above, if Sparrows Point 

is divested, it is unlikely that Dofasco 

would replace Sparrows Point as a key 

supplier of slab to Weirton. First, 

Dofasco is already a producer of tin mill 

steel and, while Sparrows Point may 

claim the same status, Dofasco is also a 

key supplier to the auto sheet market,53

where profit margins are among the 

strongest in the industry. Sparrows 

Point is not a significant player in that 

market.54 There would be virtually no 

economic incentive for Mittal to divert 

slabs from Dofasco and reduce 

production in the high margin auto 

sheet segment. Dofasco’s slab 

production must also support other 

Dofasco downstream operations, 

including its hot-rolled, cold-rolled and 

pipe facilities.55

More importantly, Dofasco is not selfsufficient in slabs, but itself requires as 

much as 750,000 tons in purchased slab 

to feed its rolling and finishing 

operations.56 Thus, to maintain efficient 

capacity utilization rates at all of its 

production lines, Dofasco needs every 

ton of slab it produces and acquires. 

2. It Is Unlikely That Mittal Steel’s 

Other North American Slab Producers 

Will Divert Scarce Feedstock to Weirton 

Divesting Sparrows Point will cause 

Mittal Steel to have one fewer steelmaking facility. With one less blast 

furnace operating to support its 

operations, Weirton becomes more 

vulnerable to blast furnace outages—

some planned, some unplanned—that 

aer a regular occurrence in the steel 

industry. Blast furnace relines as well as 

accidents can cause significant supply 

disruptions, particularly if slab supply 

is already tight. Any problem at Mittal’s 

other steel-making facilities in Burns 

Harbor, Cleveland, or Indiana Harbor 

will result in a reduction of slab 

supplied to Weirton’s tinning lines. 

Facing a supply shortage, Mittal USA 

would have a strong incentive to divert 

its limited supply of slabs away from 

the downsized tin mill steel market in 

order to maintain production volumes 

in the more robust galvanized and coldrolled markets. The result would be 

significant production delays at 

Weirton. Given the tight timing 

requirements for tin mill steel, where 

can-makers demand just-in-time 

delivery, such delays would be 

devastating to Weirton’s customers. 

Without Sparrows Point’s slab 

capacity, the likelihood that Mittal will 

ration Weirton’s slab supply is greatly 

increased. As the chart below makes 

clear, the difference in profit margins 

between other flat-rolled products and 

tin mill steel is just too great to justify 

sending scarce feedstock to Weirton. 

FIGURE 8.—COMPARISON OF U.S. INDUSTRY PROFITABILITY FOR FLATROLLED PRODUCTS

[Operating margin] 

2004 2005 

Galvanized 57 ... 10.9% 5.4% 

Plate 58 ............. 22.0% 25.4% 

Hot-Rolled 59 .... 22.1% Not available. 

Tin Mill 60 ......... ¥0.9% ¥0.7% 

Very simply,Weirton will not be the best 

use of Mittal’s limited slab supply in the 

Midwest that services more profitable 

operations. 

3. It Would Make No Economic Sense 

for Mittal’s Brazilian Affiliate CST To 

Supply Slabs to Weirton 

Within Mittal’s global steel 

operations, its Brazilian affiliate CST 

(Arcelor/Brazil) is a significant producer 

of slab for sale in export markets. CST 

also has plans to expand its slab 

capacity in the very near term, with the 

introduction of some 2.5 million tons of 

new slab capacity at the close of this 

year. CST, however, is an unlikely 

candidate to ship a significant tonnage 

of slab to Weirton. 

CST is already a major supplier of 

slab to Dofasco, shipping some 400,000 

tons with plans to increase that amount, 

perhaps to meet all of Dofasco’s 

merchant slab requirements (750,000 

tons).61 It would make more economic 

sense to ship this slab to Dofasco, a high 

profit margin producer that needs the 

slab to fill capacity in high demand, 

than to Weirton. 

The window in which CST might ship 

to Weirton is also limited since it has 

plans to increase its own hot-rolled 

sheet capacity by 2.5 million tons by 

2008, the same amount as its slab 


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17650 Federal Register / Vol. 72, No. 67 / Monday, April 9, 2007 / Notices 

62 Diana Kinch, Arcelor Brasil Sets Sights On New 

Slab Plant, American Metal Market (May 1, 2006) 

(Attachment 28) 

63The full analysis is provided at Attachment 41 

(‘‘HHI Impact of Alternative Divestiture 

Scenarios’’). 

capacity expansion.62 Between servicing 

this new hot-rolled capacity and other 

profitable global accounts, CST would 

be very reluctant to allocate slab for 

supply to Weirton. Under the 

circumstances, as a rational economic 

actor seeking to maximize profits, there 

is no justification for Mittal to ship slabs 

from CST to Weirton. 

B. Divesting Sparrows Point Will Have 

an Adverse Impact on Competition in 

the Medium to Long Term 

From the standpoint of consumer 

impact, the divestiture of Sparrows 

Point is, at best, a highly risky policy 

option. As detailed in the chart below, 

Silgan estimates that, prior to the MittalArcelor merger, the HHI for the Eastern 

U.S. tin industry was 3058; following 

the merger, Silgan estimates that the 

HHI will be 3446. Assuming that 

Sparrows Point is divested and that 

such divestiture neither adversely 

impacts Weirton’s viability nor alters 

Sparrow Point’s commitment to tin, the 

HHI would fall to 2836.63

FIGURE 9.—WEIRTON AND SPARROWS POINT HHI ANALYSIS

HHI impact 

Pre-merger ................................................................................................ 3058. 

Post-merger (no divestiture) ..................................................................... 3446. 

Remedy–Divest Sparrows Point ............................................................... 2836 (if both W & SP survive). 

3421 (if Weirton fails). 

3495 (if SP does not maintain its tin operations). 

Regrettably, the necessary conditions 

for an improvement in the concentration 

metric (both Weirton and Sparrows 

Point surviving upon divestiture) are 

unrealistic and not likely to materialize. 

As explained above, the divestiture of 

Sparrows Point will significantly 

threaten the reliable supply of quality 

slab to the Weirton facility and hence 

will jeopardize Weirton’s viability. 

While Weirton would not likely fail 

immediately, the lack of reliable captive 

slab supply will result in the exit of 

Weirton from the tin industry. Such exit 

from the industry would cause the HHI 

to rise to 3421. Said differently, if the 

divestiture of Sparrows Point results in 

Weirton failing, the Sparrows Point 

divestiture would be totally ineffectual 

in restoring competitive balance to the 

tin industry. 

Further weakening the benefits of a 

Sparrows Point divestiture is the 

question of Sparrows Point’s 

commitment to the tin market. As 

discussed, Sparrows Point has never 

operated as a stand-alone facility and is 

not only likely to invest insufficiently in 

making its tin lines world class. If a 

stand-alone Sparrows Point is not 

committed to its tin facility, the HHI 

would be 3495. Again, this implies that 

the Sparrows Point divestiture would be 

totally ineffectual in restoring 

competitive balance to the tin industry. 

In sum, the divestiture of Sparrows 

Point is a risky gambit. The Department 

of Justice’s competition policy should 

not be based on hope and a prayer. If the 

DOJ believes that either of the above two 

scenarios has more than a one in two 

chance of occurring, the expected result 

of a Sparrows Point divestiture is a less 

competitive market. 

Conclusion 

For all the foregoing reasons, we ask 

that the Department adopt the following 

approach in designing an appropriate 

remedy to address the reduced 

competition in the tin mill steel market. 

• First, the Department should make 

every effort to accomplish the 

divestiture of Dofasco. 

• Second, if immediate divestiture is 

not possible, Silgan strongly 

recommends the consent decree be 

modified to wait the five years 

reportedly necessary to eliminate any 

existing legal impediments to the 

divestiture of Dofasco. An independent 

Dofasco in five years is better than any 

of the other alternatives for preserving 

competition. 

Respectfully submitted, 

Theodore C. Whitehouse 

James P. Durling 

Daniel L. Porter 

Matthew McCullough 

Willkie Farr & Gallagher LLP, 1875 K Street, 

NW., Washington, DC 20006, (202) 303–

1000. 

List of Attachments 

1. United States v. Mittal Steel 

Company, Proposed Final Judgment and 

Competitive Impact Statement, 71 Fed. 

Reg. 50084, 50085, 50093 (August 24, 

2006). 

2. World Steel Dynamics (2005). 

3. http://www.dofascotube.com/ 

Default.htm. 

4. Massive Bids on Table as Giants 

Fight for Dofasco, Financial Times 

(January 13, 2006). 

5. Mittal Sparrows Point Mill May Be 

On Auction Block, American Metal 

Market (June 2, 2006). 

6. Excerpts from 2005 Directory of 

Iron and Steel Plants, Association for 

Iron and Steel Technology (2005). 

7. The Strange Case of Weirton Steel, 

MakingSteel.com (April 25, 2006). 

8. Fewer Blast Furnaces, But Higher 

Productivity, New Steel (November 

1996). 

9. See How a Blast Furnace Works, 

AISI. 

10. Ironmaking Process Alternative 

Screening Study—Volume I, Summary 

Report, Lockwood Greene study for the 

Department of Energy (Oct. 2000). 

11. ISG To Repair, Restart Second 

Blast Furnace at Weirton Unit, 

American Metal Market (July 14, 2004). 

12. Mittal Steel USA Works to Restore 

Furnace at Sparrows Point, PRNewswire 

(July 14, 2006). 

13. Ispat Inland Accelerates 

Maintenance Outages, Ispat Inland 

Press Release (March 7, 2005). 

14. Weirton Workers Buyout from 

Online NewsHour, September 23, 1983; 

http://www.pbs.org/newshour/bb/ 

business/july-dec83/steel_9-23-83.html. 

15. High Production Costs Hamper AK 

Steel’s Middletown Works, Steel 

Business Briefing (Aug. 10, 2006). 

16. Dofasco Seals $251m Purchase of 

Canadian Iron Ore Miner QCM, 

American Metal Market (July 26, 2005). 

17. Force Majeure Clobbers CokeShort Steelmaking: Weirton Eyes 

Option, Blast Furnace Closure, 

American Metal Market (Jan. 9, 2004). 

18. Heat Back on Steel Makers, The 

Plain Dealer (February 26, 2004). 

19. Furnace Will Stay Idle at Weirton 

Steel Mill, Associated Press (Dec. 2, 

2005). 

20. The shipping news & forecast: 

District ports face many competitive 

challenges, but whether they sink or 


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Federal Register / Vol. 72, No. 67 / Monday, April 9, 2007 / Notices 17651 

swim over the long term will likely 

depend on infrastructure improvements, 

Minneapolis Federal Reserve fedgazette 

(January 2003). 

21. Weirton Files for Ch. 11; 1,000 

Ohio Jobs Affected, Associated Press 

(May 20, 2003). 

22. Testimony of Bill Stephans, 

Division Manager for TMP at Mittal 

Steel USA’s-Weirton Facility from 

Hearing Transcript, In the Matter Of: 

Tin and Chromium Coated Steel Sheet 

from Japan, Inv. No. 731–TA–860 

(Review) (April 27, 2006). 

23. ISU Irked by Mittal Steel’s Plan To 

Shut Weirton Galvanizing Line, 

American Metal Market (Feb. 3, 2006). 

24. Excerpts of Testimony from 

Hearing Transcript, In the Matter Of: 

Tin and Chromium Coated Steel Sheet 

from Japan, Inv. No. 731–TA–860 (F) 

(June 29, 2000). 

25. Brazil Slab Hits $555/T In Tight 

Export Market, American Metal Market 

(June 5, 2006). 

26. Wheeling-Pittsburg Makes Loss, 

Despite Rising Market, Steel Business 

Briefing (May 11, 2006). 

27. Esmark To Shut Wheeling-Pitt BF 

If Bid Succeeds, Steel Business Briefing 

(Aug. 23, 2006). 

28. Arcelor Brasil Sets Sights On New 

Slab Plant, American Metal Market 

(March 22, 2006). 

29. CST to Hike Slab Sales to Dofasco, 

American Metal Market (March 22, 

2006). 

30. Gerdau Acominas Charging Into 

Slab Mart, American Metal Market (June 

30, 2006). 

31. CSA Steel Project Receives 

License, American Metal Market (July 6, 

2006). 

32. North America at Top of TK’s 

Agenda, American Metal Market 

(August 11, 2006). 

33. Groundwork Laid For Brazil’s 

Ceara Slab Project, American Metal 

Market (September 1, 2006). 

34. CSN May Lift Slab Capacity Of 

Two Projects, American Metal Market 

(September 1, 2006). 

35. Brasil’s Usiminas Casts Sights 

Abroad For New Slab Project Partner, 

American Metal Market (August 29, 

2006). 

36. Russia’s Severstal Wants to Ship 

More Steel to U.S., Reuters (February 2, 

2004). 

37. Tin and Chromium Coated Steel 

Sheet from Japan, No. 731–TA–860 

(Review), USITC Pub. 3860 (June 2006) 

at V–8. 

38. Tin and Chromium Coated Steel 

Sheet from Japan, Inv. No. 731–TA–860 

(Review), USITC Pub. 3860 (June 2006) 

at Table III–8. 

39. Mittal Shows Little Interest in 

Weirton Furnace Sale, American Metal 

Market (May 5, 2006). 

40. Mittal Plans to Sell Dofasco, Hecht 

Waits for Weirton, Steel Business 

Briefing (August 16, 2006). 

41. ‘‘HHI Impact of Alternative 

Divestiture Scenarios’’. 

42. ‘‘Probability that Divestiture Will 

Improve Competition’’. 

43. ITC Prehearing Staff Report, 

Certain Carbon Steel Products from 

Australia, Belgium, Brazil, Canada, 

Finland, France, Germany, Japan, 

Korea, Mexico, Poland, Romania, Spain, 

Sweden, Taiwan, and the United 

Kingdom, Inv. Nos. AA1921–197 

(Second Review); 701–TA–319, 320, 

325–328, 348, and 350 (Second Review); 

and 731–TA–573, 574, 576, 578, 582–

587, 612, and 614–618 (Second Review) 

(September 25, 2006) at Tables CORE–

III–8 and CTL III–9. 

44. Certain Hot-Rolled Flat-Rolled 

Carbon-Quality Steel Products From 

Brazil, Japan, and Russia, Inv. Nos. 

701–TA–384 and 731–TA–806–808 

(Review), USITC Pub. 3767 (April 2005) 

at Table III–11. 

Attachment 1—United States v. 

Mittal Steel Company, Proposed Final 

Judgment and Competitive Impact 

Statement 71 FR 50084, 50085, 50093 

(August 24, 2006) 

The attachment is available in the 

Federal Register, 71 FR 50084. 

Attachment 2—World Steel Dynamics 

(2005) 

POSITIONING OF 23 WORLD-CLASS STEELMAKERS AS OF JUNE 2005 

[Version A—by Factor Weight] 

1=least favorable 1 10=most favorable 1

Arcelor 

E.U 

Anshan 

Steel 

China 

BaoSteel 

China 

BlueScope 

Australia 

China 

Steel 

Taiwan 

Corus 

UK 

CSN 

Brazil 

CST 

Brazil 

Dofasco 

Canada 

Gerdau 

Brazil 

JFE 

Japan 

Annual Steel Shipments 

(million tons) .................... .................... 53 10 19 8 12 23 5 5 5 15 30 

Factor Weight 

(percent) 

1 Cash operating costs ..... 10 6 8 8 8 7 5 10 10 6 7 6 

2 Harnessing technological 

revolution ......................... 10 6 7 8 7 5 4 4 6 6 5 7 

3 Profitability in 2000–

2004 ................................. 6 4 8 10 9 8 4 10 8 9 10 6 

4 Balance sheet ................ 6 7 4 8 8 10 8 7 5 7 9 7 

5 Dominance country/region .................................. 6 4 10 10 4 3 2 8 8 3 7 2 

6 Domestic market growth 5 6 7 8 7 5 4 4 6 6 5 7 

7 Expanding capacity ....... 5 3 10 9 6 3 2 6 10 3 8 3 

8 Access to outside funds 4 7 6 10 9 9 5 6 9 9 8 8 

9 Cost-cutting efforts ........ 4 10 9 7 7 6 10 6 6 6 6 10 

10 Downstream businesses ............................. 4 5 3 4 9 3 7 5 3 4 6 10 

11 Environment and safety 4 9 9 9 9 9 9 9 9 9 9 9 

12 Iron ore and coking 

coal mines ....................... 4 3 7 4 4 3 3 7 3 5 4 3 

13 Liabilities for retired 

workers ............................ 4 6 6 8 6 6 10 7 10 7 8 6 

14 Location to procure raw 

materials .......................... 4 6 7 8 8 8 8 7 8 6 5 8 

15 Alliances, mergers, acquisitions and JVs ........... 4 10 9 9 7 6 4 7 7 7 10 9 

16 ‘‘Pricing Power’’ with 

large buyers ..................... 4 8 4 8 8 10 8 7 5 7 7 8 

17 Threat from nearby 

competitors ...................... 4 5 4 5 8 8 5 7 6 6 7 7 


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17652 Federal Register / Vol. 72, No. 67 / Monday, April 9, 2007 / Notices 

POSITIONING OF 23 WORLD-CLASS STEELMAKERS AS OF JUNE 2005—Continued 

[Version A—by Factor Weight] 

1=least favorable 1 10=most favorable 1

Arcelor 

E.U 

Anshan 

Steel 

China 

BaoSteel 

China 

BlueScope 

Australia 

China 

Steel 

Taiwan 

Corus 

UK 

CSN 

Brazil 

CST 

Brazil 

Dofasco 

Canada 

Gerdau 

Brazil 

JFE 

Japan 

18 Product quality ............. 4 9 5 9 8 8 8 7 8 9 6 10 

19 Skilled and productive 

workforce ......................... 4 8 5 7 8 8 8 7 9 10 8 10 

20 Stock market performance (3-year) ................... 4 9 9 9 9 9 9 9 9 9 9 9 

Average Score ............. .................... 6.55 6.85 7.90 7.45 6.70 6.15 7.00 7.25 6.70 7.20 7.25 

Ranking 1 ...................... .................... 18 14 4 7 15 23 13 9 15 11 9 

Weighted-Average 

Score ........................ .................... 6.07 6.75 7.61 7.05 6.22 5.60 6.80 6.98 6.19 6.81 6.66 

Ranking 1 ...................... .................... 20 12 4 7 18 23 10 8 19 9 13 

1 Many of these rankings are subjective and some are duplicative. 

2Plants in many countries, includes lspat International. 

Source: WSD estimates. 

POSITIONING OF 23 WORLD-CLASS STEELMAKERS AS OF JUNE 2005 

[Version A—by Factor Weight] 

1=least favorable 1 10=most favorable 1

Mittal 1

Steel 

Maanshan 

China 

Nippon 

Steel 

Japan 

Nucor 

USA 

POPSO 

S.K. 

SDI 

USA 

Severstal 

Russia 

Shagang 

China 

Tata 

Steel 

India 

Thyssen/ 

Krupp 

Germany 

U.S. 

Steel 

USA 

Wuhan 

China Avg. 

Annual Steel Shipments 

(million tons) ..................... 62 8 30 20 34 4 13 5 5 19 21 10 18 

Factor: 

1 Cash operating 

costs .......................... 7 7 6 8 8 8 10 6 10 5 6 7 7.4 

2 Harnessing technological revolution ....... 7 6 7 10 9 9 6 7 7 6 5 6 6.5 

3 Profitability in 2000–

2004 .......................... 7 7 6 7 10 9 9 8 10 4 4 8 7.6 

4 Balance sheet ......... 8 6 7 6 10 4 8 4 8 6 6 6 7.0 

5 Dominance country/ 

region ........................ 6 10 2 2 6 2 8 10 10 2 2 10 5.5 

6 Domestic market 

growth ....................... 7 6 7 10 9 9 6 7 7 6 5 6 6.5 

7 Expanding capacity 8 10 3 10 4 10 9 10 10 5 3 9 6.6 

8 Access to outside 

funds ......................... 10 6 8 10 10 9 9 5 10 7 7 6 8.0 

9 Cost-cutting efforts .. 10 9 9 6 6 6 6 6 8 8 8 8 7.5 

10 Downstream businesses ....................... 5 7 10 10 7 6 7 2 5 10 3 2 6.0 

11 Environment and 

safety ........................ 9 9 9 9 9 9 9 9 9 9 9 9 9.0 

12 Iron ore and coking 

coal mines ................. 7 5 3 ............ 4 ............ 10 3 10 3 7 3 4.9 

13 Liabilities for retired 

workers ..................... 7 6 6 10 8 10 8 10 6 6 5 6 7.4 

14 Location to procure 

raw materials ............ 8 6 8 6 8 6 7 8 10 5 8 6 7.2 

15 Alliances, mergers, 

acquisitions and JVs 10 7 7 10 8 10 8 8 9 9 10 8 8.2 

16 ‘‘Pricing Power’’

with large buyers ...... 8 4 8 4 10 3 9 3 8 7 5 4 6.8 

17 Threat from nearby 

competitors ............... 6 4 7 4 10 4 8 4 7 5 5 4 6.0 

18 Product quality ...... 7 5 10 7 10 7 6 5 8 9 9 6 7.7 

19 Skilled and productive workforce ............ 8 5 10 10 10 10 7 7 8 9 9 5 8.2 

20 Stock market performance (3-year) ..... 10 9 9 9 9 9 10 5 9 9 9 9 8.9 

Average Score .............. 7.75 6.70 7.10 7.79 8.25 7.37 8.00 6.35 8.45 6.50 6.25 6.40 7.16 

Ranking 1 ...................... 6 15 12 5 2 8 3 21 1 19 22 20 ............

Weighted-Average 

Score ......................... 7.21 6.52 6.54 7.10 7.87 6.75 7.65 6.27 8.11 5.93 5.70 6.29 6.76 

Ranking 1 ...................... 5 15 14 6 2 11 3 17 1 21 22 16 ............

1 Many of these rankings are subjective and some are duplicative. 

2Plants in many countries, includes Ispat International. 

Source: WSD estimates. 


sroberts on PROD1PC70 with NOTICES
Federal Register / Vol. 72, No. 67 / Monday, April 9, 2007 / Notices 17653 

Attachment 3—http:// 

www.dofascotube.com/Default.htm 

The attachment is available at the 

following Web site, http:// 

www.dofascomarion.com/Default.htm 

Attachment 4—Massive Bids on Table 

as Giants Fight for Dofasco, 

Financial Times (January 13, 2006) 

Massive Bids on Table as Giants Fight 

for Dofasco 

Scarcity and an iron ore mine drive 

the battle between Arcelor and 

ThyssenKrupp for the Canadian 

steelmaker, says Peter Marsh. 

By Peter Marsh 

13 January 2006 

Financial Times 

(c) 2006 The Financial Times Limited. 

All rights reserved 

The global steel industry has been 

through a transformation as spectacular 

as any to have affected the business 

world in the past few years. 

That is confirmed in the bidding 

battle between Arcelor and 

ThyssenKrupp, two giants of the 

European steel industry, for Dofasco, a 

mid-sized Canadian steelmaker that 

both companies are valuing at more 

than USDollars 4bn. 

Luxembourg-based Arcelor is 

considering whether to make a fresh bid 

for the Ontario company higher than 

that tabled by its German rival—and 

other companies could still enter the 

fray. Just before Christmas, Lakshmi 

Mittal, chairman and majority owner of 

Mittal Steel, the world’s biggest 

steelmaker, indicated he had not ruled 

out making an offer for Dofasco, even 

though such a move is considered 

unlikely. Mr. Mittal has been a prime 

initiator of steel industry mergers since 

2000 that have increased the size of the 

main players in the sector and put them 

in a much stronger position to dictate 

terms to customers. At the same time, 

steel prices have rocketed due to 

rapacious demand from China as its 

economy has expanded to suck in about 

30 percent of world steel output. 

As a consequence, share prices of 

quoted steel companies in recent years 

have been among the best performers on 

global stock markets, despite a 

downturn in recent months. Thyssen’s 

most recent January 3 offer of CDollars 

63 a share values Dofasco at CDollars 

4.9bn (USDollars 4.2bn). It was pitched 

at the same level as a rival bid by 

Arcelor—which started the effort to 

acquire Dofasco through a CDollars 56- 

a-share bid in November. But the 

Canadians regard Arcelor as a predator 

and the Dofasco board is backing the 

Germans, at least in part because if it 

sells to another suitor, Dofasco would 

have to hand Thyssen a CDollars 100m 

break-up fee. 

Mike Locker, of Locker Associates, a 

US steel consultancy, says the 

magnitude of both bids is ‘‘eyepopping’’, given that Dofasco is a 

relatively small player with production 

last year estimated at about 5m tonnes. 

In the first nine months of 2005, Dofasco 

turned in net income of CDollars 142.6 

m on sales of CDollars 2.69bn, with the 

earnings figure well down on the 

CDollars 280.1m net income recorded in 

the first nine months of 2004, a result 

of tougher conditions generally in the 

steel industry in the early part of last 

year. 

But in spite of the earnings drop, Mr. 

Locker still thinks the high price of the 

offers can be justified, given Dofasco’s 

strong position in higher-value segments 

of the steel industry—particularly in flat 

galvanized sheet used for car bodies. 

About 75m tonnes of this material—

which has to be made using special 

processes so it is especially shiny and 

resistant to corrosion—is made each 

year, with Arcelor being the world 

leader with about 10m tonnes. 

While Thyssen is well behind with 

5m tonnes, both are keen to expand in 

this field in North America—where 

Dofasco is the fourth biggest producer 

with output estimated at about 1m 

tonnes a year. Mittal Steel and US Steel 

are the two largest producers of 

automotive sheet steel in the region—

with global output of 6m tonnes and 5m 

tonnes respectively, most of this coming 

from their US plants. 

The third player in North America, 

with 2m tonnes, is AK Steel—which has 

been in financial difficulties and is 

burdened by healthcare and pensions 

liabilities estimated at Dollars 3.5bn. 

‘‘Since neither Mittal nor US Steel is 

available, and AK is probably ruled out, 

there is a scarcity value about Dofasco 

(in automotive steel) which inevitably 

increases its price,’’ says Mr. Locker. 

Another attraction of the Canadian 

company is its ownership of QCM, an 

iron ore mine in Quebec. This raw 

material has been in short supply in the 

past two years, with a consequent big 

increase in price. 

Michelle Applebaum, of Michelle 

Applebaum Research, an Illinois-based 

consultancy, says ‘‘roughly a third’’ of 

the money Arcelor and Thyssen are 

prepared to pay for Dofasco could be 

linked to ownership of the mine—which 

produces about 16m tonnes of ore a 

year, most for sale to other steelmakers. 

Attachment 5—Mittal Sparrows 

Point Mill May Be On Auction 

Block, American Metal Market (June 2, 

2006) 

Mittal Sparrows Point Mill May Be on 

Auction Block 

By Scott Robertson 

PITTSBURGH—Mittal Steel Co. NV 

reportedly is shopping its integrated 

steel mill in Sparrows Point, Md., as 

part of what appears to be a contingency 

plan if its proposed acquisition of 

Arcelor SA, Luxembourg, falls through. 

Executives from ThyssenKrupp AG, 

which is in line to buy Dofasco Inc. if 

Mittal acquires Arcelor, toured the 

Sparrows Point plant last week and 

have expressed interest in it, according 

to Mittal sources. 

Mittal reportedly is entertaining a sale 

of the Sparrows Point plant, formerly 

owned by Bethlehem Steel Corp. and 

later by International Steel Group Inc., 

in an antitrust maneuver. 

Mittal is interested in acquiring 

Arcelor and has reached an agreement 

to sell Dofasco—currently held in a trust 

created by Arcelor—to ThyssenKrupp if 

it succeeds in getting Arcelor. 

Arcelor, however, has reached an 

agreement to acquire Russian steel 

producer OAO Severstal that could take 

Mittal out of the picture. The possible 

sale of the Sparrows Point plant to 

ThyssenKrupp might be a contingency 

plan should Mittal be unable to 

complete the promised sale of Dofasco 

as part of an Arcelor takeover. 

A spokesman for Mittal Steel USA 

Inc., Chicago, said Thursday that its 

Rotterdam-based parent expects to 

complete the Arcelor purchase and to 

move forward with its sale of the 

Dofasco mill in Hamilton, Ontario, to 

ThyssenKrupp. In that case, he said, ‘‘no 

other moves would be necessary.’’

The U.S. Department of Justice 

already has granted conditional 

approval to the Mittal merger with 

Arcelor. The conditions stipulate that it 

dispose of certain operations—

interpreted to be Dofasco. 

Calls to managers at the Sparrows 

Point plant, to Mittal Steel offices in 

London and to ThyssenKrupp in 

Dusseldorf, Germany, were not returned 

by late Thursday. 

It is not unusual for representatives of 

steel producers to tour each other’s 

plants, so in some respects a 

ThyssenKrupp tour of Sparrows Point 

could be viewed as something done in 

the normal course of business. The 

appearance of ThyssenKrupp 

representatives at the plant, however, 

sparked widespread industry chatter 

that the plant was on the block and 


sroberts on PROD1PC70 with NOTICES
17654 Federal Register / Vol. 72, No. 67 / Monday, April 9, 2007 / Notices 

could be part of a Mittal-ThyssenKrupp 

contingency plan. 

When it announced last month it was 

improving its bid for Arcelor, Mittal 

Steel said it would consider selling 

other North American assets if it could 

not complete the sale of Dofasco to 

ThyssenKrupp. 

Several sources said that while the 

contingency plan idea might be true, a 

ThyssenKrupp acquisition of Sparrows 

Point would not mesh with its goals for 

the North American market. 

ThyssenKrupp, which lost out in a 

bidding war with Arcelor for Dofasco 

earlier this year, in the past has been 

rumored to be interested in acquiring 

AK Steel Corp., Middletown, Ohio, or 

U.S. Steel Corp., Pittsburgh, in an effort 

to gain entry to the North American 

automotive market. 

‘‘Sparrows Point doesn’t have those 

(automotive) grades,’’ longtime steel 

industry analyst Charles Bradford said. 

‘‘If (Mittal) were going to get rid of 

something in North America, I don’t 

think it would be Sparrows Point. I 

think if they had their druthers, they’d 

sell Weirton, but that does not meet 

what ThyssenKrupp needs, either. 

‘‘I think it would be more likely that 

they would get rid of Inland,’’ he said, 

referring to the former Ispat Inland plant 

in East Chicago, Ind. that is now part of 

Mittal’s Indiana Harbor division. ‘‘It 

used to be said that Inland and Dofasco 

were like brother and sister in terms of 

the things they did, so that would make 

more sense to me. Getting rid of 

Sparrows Point does not make sense 

from an antitrust perspective because it 

is not related to automotive like Inland 

and Dofasco are.’’

Bradford added that ThyssenKrupp’s 

presence in the global stainless steel 

market and its ownership of 

ThyssenKrupp Budd Co., an automotive 

parts manufacturer in Troy, Mich. also 

make an acquisition of Sparrows Point 

unlikely. 

‘‘They (Budd) are a parts-maker and 

chassis maker,’’ Bradford said. ‘‘Again, 

that does not fit with what Sparrows 

Point does. But you always go and take 

a look whenever a competitor gives you 

that opportunity, you take advantage of 

it.’’

Another market source close to the 

Sparrows Point plant said the visit 

could be nothing more than a 

smokescreen. ‘‘ThyssenKrupp 

announced a few days ago it will 

downsize its steel business,’’ he said. 

‘‘So while an outpost in North American 

could be good for ThyssenKrupp, since 

they won’t get Canada’s Dofasco (in the 

case of a Severstal-Arcelor merger), 

there might be less to this than meets 

the eye. 

‘‘Maybe this was done on behest of 

Mittal to raise interest among other 

(potential) investors,’’ he said. ‘‘I know 

ThyssenKrupp and Mittal are pretty 

tight at the moment.’’

Attachment 6—Excerpts from 2005 

Directory of Iron and Steel Plants, 

Association for Iron and Steel 

Technology (2005) 

IRON AND STEEL PLANT FACILITIES

[CSN USA—Cont’d] 

Identification Capacity, 

tons/year Bases Furnaces Atmosphere 

Batch Annealing 

308,000 12 4-high stack .................................. 6 100% H2

Identification Nominal width, in. Capacity, tons/ 

year 

Product size, thickness × 

width, in. Configuration 

Low C Motor Lam. 

Temper/Skinpass Mill 

Max width: 73 untrimmed, 72 

trimmed.

600,000 0.012 min .... 0.025 min .... Single stand 4-h. 

Min. width: 34 ............................. ........................ 0.100 max ... 0.040 max ... Dynamic Shape Roll. 

85 in. max OD. 

38 in. min OD. 

85,000 max. wt. 

Type Capacity tons/ 

year 

Product thickness × width, in. Differential coating Cold roll Hot roll Width 

Galvanizing 

Hot dip ................................................................... 350,000 ............ min. 0.012 ........

max. 0.080. ......

min. 0.050 ........

max. 0.130. ......

min. 34 ..............

max. 73. ...........

Yes. 

Identification Unit capacity, 

tons/year No. of units Product size range Configuration 

Slitting 

Pro-Eco ................................... ........................ 1 0.010–0.175 × 72 ...............................

85,000 max wt. 

Driven slit and slitter assist tension 

unit Kor-flex leveler. 


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Federal Register / Vol. 72, No. 67 / Monday, April 9, 2007 / Notices 17655 

DOFASCO INC. 

Hamilton, Ont., Canada 

Battery identification Type Battery capacity, tons/year 

Ovens 

per 

battery 

Oven dimensions, ft-in. 

Byproducts recovered 

Height Width, 

avg. Length 

Cokemaking 

1 ....................... Gun ........................ 148,607 25 13–0 17 39–111⁄8 Tar, ammonium sulfate, light oil, 

sulfur. 

2 ....................... Gun ........................ 208,050 35 13–0 17 39–111⁄8

3 ....................... Gun ........................ 267,493 45 13–0 17 39–111⁄8

4 ....................... Gun ........................ 322,478 53 13–0 17 39–611⁄8 Tar, anhydrous ammonia, light 

oil, hydrogen. 

5 ....................... Gun ........................ 322,478 53 13–0 17 39–61⁄8

6 ....................... Compound/underjet 402,412 35 20–5/32 17 48–11⁄2

IRON AND STEEL PLANT FACILITIES

Identification 

Capacity Total height, 

ft-in. 

Hearth 

dia. ft-in. 

Working vol. 

cu. ft Injectants No. of stoves tons/day tons/year 

Blast Furnace 

No. 2 .................. 2650* 758,300 ..................... 108–9** 20–9 32,600 Oil, oxygen .................... 3 

No. 3 .................. 2750* 846,600 ..................... 108–101⁄2 ** 21–6 31,900 Oil, oxygen .................... 2 

No. 4 .................. 4850* 1.4 million ................. 118–93⁄4** 28–0 56,320 Oil, oxygen .................... 3 

* Instantaneous smelting rate. 

** lip ring to foundation pad. 

Shop Identification Process Capacity, tons/year No. of 

vessels 

Heat size, 

tons Gas cleaning 

Steelmaking—Oxygen 

K–OBM .............. 2.75 million ............................ 1 330 Scrubber and screen. 

Process Capacity, tons/year No. of 

vessels Heat size, tons Gas cleaning Transformer rating, MVA 

Steelmaking—Electric Arc Furnace 

Twin-shell, AC ......................... 1.35 million .............................. 1 180 Baghouse ................................. 120 

Type Total capacity, tons/year No. of 

units Heat size, tons Injectants 

Vacuum Degassing 

Tank ................................ 1.5 million ................................................................ 1 290 Aluminum for deoxidation after 

vacuum. 

Total capacity, tons/year No. of units Heat size, tons Injectants Transformer 

rating, kVA 

Ladle Metallurgy 

2.37 million (aim) ................................................ 1 reheat furnace, 2 high-flow stirring stations, 2 

deslag stations.

330 (avg.) Nil 40,000 

1.35 million .......................................................... 1 reheat furnace to handle two ladle cars (twinshell).180 1 20,000 

Capacity, tons/year Strands Ladle capacity, 

tons Product size range, in. Shroud 

Continuous Casting 

2.75 million (aim) ...................................................... 2 300 8.5 × 30.5–63 × 177–374 Argon 

1.35 million ............................................................... 1 180 8.5 × 30.5–63 × 177–374 Argon. 


sroberts on PROD1PC70 with NOTICES
17656 Federal Register / Vol. 72, No. 67 / Monday, April 9, 2007 / Notices 

Mill served Type No. of 

furnaces 

Capacity, tons/ 

hr/furnace Hearth dimensions 

Reheating Furnaces 

No. 2 hot strip mill .......... Walking beam ......................................................................... 2 400 47.4 × 12.0 m 

IRON AND STEEL PLANT FACILITIES

[DOFASCO INC.—Cont’d] 

Nominal width, in. Capacity, tons/year Finished size, thickness 

× width, in. 

No. and configuration 

Roughing stands Finishing stands 

Hot Strip Mill 

68 ................................... 3.2 million ...................... 0.060–0.500 × 30–62 2-hi reversing with attached 

edgers.

Horizontal 541⁄2 × 72, vertical 

42 × 431⁄2.

7-stand, 4-hi, 30 and 60 × 68. 

Identification Capacity, tons/ 

year 

Strip thickness × width, 

in. Acid used 

Pickling 

No. 2 ..................................................................... 660,000 0.075–0.110 × 24–56 HCl. 

No. 3 ..................................................................... 1,100,000 0.075–0.200 × 24–66 HCl. 

No. 4 ..................................................................... 750,000 0.055–0.275 × 24–62 HCl. 

CPCM ................................................................... 1,000,000 0.075–0.215 × 24–62.5 HCl. 

Identification Nominal width, 

in. 

Capacity, tons/ 

year 

Finished size, thickness 

× width, in. Configuration 

Cold Reduction Mill 

66 in ........................................................ 66 260,000 0.0195–0.1650 × 24–61 4-hi, single-stand reversing. 

No. 1 tandem .......................................... 56 450,000 0.0072–0.0456 × 24–49 4-hi, 5-stand tandem. 

No. 2 tandem .......................................... 72 1,400,000 0.011–0.0125 × 24–61.5 4-hi, 5-stand tandem. 

CPCM ..................................................... 68 1,000,000 0.008–0.100 × 23.5–62 4-hi, 5-stand continuous. 

Identification Capacity, tons/ 

year 

Strip thickness × width, 

in. Fuel type 

Continuous Annealing 

No. 2 tower anneal ............................................... 280,000 0.0077–0.036 × 40 max. Electric. 

No. 1 ..................................................................... 80,000 0.007–0.025 × 18–48 

No. 2 ..................................................................... 110,000 0.007–0.040 × 18–48 

Identification Capacity, tons/ 

year Bases 

Batch Annealing 

Sheet mill batch ........................................ 575,000 10 × 60-in. radiant tube, HNX, single stack. 

112 × 72-in. radiant tube, HNX, single stack. 

48 × 72-in. direct-fire, HNX, single stack. 

4 × 86-in. direct-fire, 100% H2, single stack. 

Open coil anneal ....................................... 52,200 3 × 108-in. radiant tube, HNX, single stack. 

11 × 114-in. radiant tube, HNX, single stack. 

2 × 114-in. direct-fire, HNX, single stack. 

16 × 114-in. radiant tube, HNX, single stack. 

Identification Nominal 

width, in. 

Capacity, 

tons/year 

Product size, thickness × 

width, in. Configuration 

Temper/Skinpass Mill 

42 in. ...................................................... 42 317,200 0.0061–0.0350 × 20–39.5 4-hi, 2-stand. 

56 in. ...................................................... 56 341,000 0.0051–0.0480 × 20–52 4-hi, 2-stand. 

No. 1 ...................................................... 66 372,800 0.018–0.135 × 20–61 4-hi, single-stand. 

No. 2 ...................................................... 66 475,900 0.018–0.135 × 20–61 4-hi, single-stand. 

No. 5–56 ................................................ 56 300,000 0.012–0.040 × 24–50 4-hi, single-stand. 


sroberts on PROD1PC70 with NOTICES
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Type Capacity, 

tons/year 

Product thickness × 

width, in. Differential coating 

Galvanizing 

No. 1 hot dip ....................................... 170,000 .............................................. 0.012–0.080 × 24–48 Galvalume/galvanize. 

No. 2 hot dip ....................................... 320,000 .............................................. 0.024–0.0168 × 24–60 Galvanneal/galvanize. 

No. 3 hot dip ....................................... 254,000 .............................................. 0.010–0.080 × 24–52 Galvanneal/galvanize. 

No. 4 hot dip ....................................... 305,000 .............................................. 0.012–0.080 × 24–60 Galvanize. 

DJG hot dip ........................................ 400,000 (Dofasco 50% ownership) ... 0.0157–0.0787 × 24–72 Galvanneal/galvanize. 

DSG hot dip ........................................ 450,000 (Dofasco 80% ownership) ... 0.0196–0.0787 × 36–72 Galvanneal/galvanize. 

Sorevco hot dip .................................. 125,000 (Dofasco 50% ownership) ... 0.012–0.0787 × 24–50 Wipe coat/galvanize. 

Type Capacity, tons/ 

year Product thickness × width, in. 

Tinplate 

No. 2 E line .................................................................................................................................... 144,600 0.0055–0.0230 × 18–40 

No. 3 E line, tin/chrome ................................................................................................................. 273,200 0.0055–0.0230 × 58–43 

Identification Unit capacity, 

tons/year 

No. of 

units Product size range Configuration 

Slitting 

48 in. .................................................................. 64,000 1 19–48.

60 in. .................................................................. 350,000 1 0.059–0.100 × 9–64 entry to 2 min. out.

62 in. .................................................................. 300,000 1 0.100–0.375 × 17–64 entry to 21⁄4 min. out.

Unit Capacity, tons/ 

year 

No. of 

units Product size range 

Miscellaneous 

Prep Line ................................................................................................................... 320,000 1 0.005–0.023 

No. 1 Cleaning Line ................................................................................................... 220,000 1 0.006–0.026 

No. 2 Cleaning Line ................................................................................................... 360,000 1 0.077–0.140 × 18–68 

Rewind Line ............................................................................................................... 200,000 1 0.010–0.100 × 25–62 

No. 3 Shear Line ....................................................................................................... 50.000 1 0.0081–0.048 × 12.5–40 

No. 5 Shear Line ....................................................................................................... 150,000 1 0.014–0.135 × 12.5–67 

IRON AND STEEL PLANT FACILITIES

[International Steel Group—Cont’d.] 

Type Capacity, tons/year No. of units Heat size, tons Injectants 

Vacuum Degassing 

RH 5-stage steam ejection unit ...... 1 million .......................................... 2 340 Argon, aluminum 

Type Capacity, tons/year No. of 

units Heat size, tons Injectants 

Ladle Metallurgy 

Ladle stirring and Trim Station.3,000,000 1 340 Argon, carbon, aluminum, manganese and scrap. 

CAS–OB .............................. 3,000,000 1 340 Argon, oxygen, nitrogen, carbon aluminum, manganese, 

titanium. 

Capacity, tons/year Strands Ladle capacity, 

tons Product size range, in. Shroud 

Continuous Casting 

3,000,000 ............................................ 4 340 32–48 × 9 × 400 max. Argon gas submerged ladle shroud; Fused silica and alumina graphite. 

Mill served Type No. of 

furnaces 

Capacity, tons/ 

hr/furnace Hearth dimensions, ft 

Reheating Furnaces 

54-in. hot mill .............................................. Walking beam ............................................. 2 350 35 × 155 


sroberts on PROD1PC70 with NOTICES
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Nominal width, in. Capacity, tons/year Finished size, thickness 

× width, in. 

Number and configuration 

Roughing stands Finishing stands 

Hot Strip Mill 

54 ................................. 3.8 million ............................. 0.056–0.50 × 23–49 1 4-hi reversing, 1 4-hi continuous.7-stand, 4-hi. 

Identification Nominal width, 

in. 

Capacity, 

tons/year 

Finished size, thickness × 

width, in. Configuration 

Cold Reduction Mill 

No. 7 tandem ..................................... 52 725,000 0.0065–0.0359 × 221⁄2–48 5-stand, 4-hi 

No. 8 tandem ..................................... 52 699,000 0.0193–0.138 × 221⁄2–48 4-stand, 4-hi 

No. 9 continuous tandem .................. 52 991,000 0.0065–0.060 × 241⁄2–48 5-stand, 4-hi 

Attachment 7—The Strange Case of 

Weirton Steel, MakingSteel.com (April 

25, 2006) 

The attachment is available at the 

following Web site, http:// 

www.makingsteel.com/weirton.html 

Fewer Blast Furnaces, But Higher 

Productivity 

The number of U.S. blast furnaces has 

dropped from 83 to 43 in the past 

decade, but PCI and natural gas have 

helped raise output from the survivors 

by 25 percent 

By William T. Hogan, S.J., and Frank T. 

Koelble 

Father William Hogan and Frank 

Koelble of Fordham University’s 

Industrial Economics Research Institute 

recently conducted an extensive study 

of the current capacity, condition, and 

outlook of coke ovens and blast furnaces 

in the U.S. In this two-part study, New 

Steel looks this month at blast furnaces 

and next month at coke ovens and at 

how steelmakers are boosting 

productivities and responding to new 

environmental regulations. 

A quiet recasting of how the U.S. iron 

and steel industry makes its iron has 

been yielding major gains in 

productivity and major benefits to the 

environment. Driving this progress has 

been not some new, ‘‘direct’’ technology 

but the tried-and-true blast furnace, the 

dominant ironmaker for more than a 

century. Today’s surviving blast 

furnaces still support some 60 percent 

of all U.S. steelmaking activity by 

producing much more iron and 

consuming much less coke than they 

did even a few years ago. And yet, 

because of impending environmental 

standards on cokemaking, the future of 

the blast furnaces is anything but 

assured. 

On Jan. 1, 1998, 90 percent of all U.S. 

cokemaking capacity will have to meet 

much stricter standards under the Clean 

Air Act. Five years later, on Jan. 1, 2003, 

an initial group of coke batteries will 

have to meet a new public-health 

standard, which has not yet been 

promulgated. 

As the two deadlines force more coke 

plants to close, the current deficit in 

domestic coke supply is likely to widen 

appreciably. This could constrain blastfurnace output and offset the recent 

improvements in productivity, which 

have allowed for fewer furnaces to 

sustain and even increase the supply of 

steelmaking iron. 

The U.S. blast-furnace population has 

declined as the U.S. steel industry has 

undergone one of the most drastic 

restructurings in the history of 

industrial enterprise. At one point, 

nearly one-third of the industry’s rawsteel capacity was downsized out of 

existence. 

The blast-furnace-based integrated 

steelmakers were hit the hardest. Since 

1975, the number of integrated mills 

with blast furnaces has fallen from 48 to 

21. The number of blast furnaces in the 

U.S. has plummeted from 197 to 43. The 

most recent shutdown was a year ago, 

when Bethlehem Steel shut down its 

blast furnace, basic oxygen furnaces 

(BOFs), and electric furnace in 

Bethlehem, Pa., in Nov. 1995 (Steel 

Forum, Jan. 1995). 

Electric furnaces accounted for 40 

percent of U.S. steel production last 

year, up from 28 percent in 1980 and 34 

percent in 1985. The growth of scrapusing EAFs has meant that ferrous scrap 

now accounts for more of U.S. 

steelmakers’ metallics supply than blastfurnace iron. 

BOFs accounted for 60 percent of 

steel production last year—virtually the 

same as in 1980. BOFs use on average 

77-percent blast-furnace iron and 23- 

percent scrap. Much of the growth of the 

electric furnaces occurred at the 

expense of the open hearth, the now 

extinct process once used by integrated 

plants and phased out completely in 

1991. 

The Future Metallics Supply 

The growth in blast-furnace 

productivity and in the output of scrapbased EAFs has helped U.S. steelmakers 

to have a viable metallics supply in 

recent years. But several trends do not 

bode well for the future supply of 

metallics feedstocks for American mills: 

(1) Secular trends in U.S. steel 

demand and production have shifted 

from decline to renewed growth. 

Increasing quantities of both iron and 

scrap will be needed to support 

steelmaking over the long term. 

(2) Recent levels of U.S. coke and iron 

demand already have been taxing the 

limits of coke-oven and blast-furnace 

capacity. 

(3) U.S. coke ovens are of advancing 

age. Although steelmakers have invested 

considerably in extending their useful 

lives, the stricter environmental 

regulations will make the coke ovens’

future operation increasingly difficult 

and higher in cost. 

(4) U.S. steelmakers are depending 

more on imports of coke and 

semifinished steel. This ultimately 

raises the costs of finished-steel output 

and undermines the U.S. iron and steel 

industry’s long-term competitiveness. In 

the past, U.S. mills have imported coke 

and slabs mainly to alleviate temporary 

shortfalls in domestic coke, iron, and 

steel production. 

(5) Despite advances in scrap-based 

steelmaking and in the substitution of 

scrap for iron, electric-furnace melting 

alone is incapable of meeting U.S. steel 

demand. Minimills are limited by the 

availability and cost of high-quality, 

low-residual scrap and purchased 

electricity as well as by restrictions on 

the types and qualities of steel it can 

produce without access to virgin iron 

units at an economical cost. 

For these reasons steelmakers are 

investigating new, direct methods of 

producing iron, both in solid form as a 

high-quality complement to scrap and 

in molten form as an alternative to iron 


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Federal Register / Vol. 72, No. 67 / Monday, April 9, 2007 / Notices 17659 

from the blast furnace. However, at least 

for the next ten years, U.S. mills will 

implement such ironmaking alternatives 

on a relatively small scale in 

comparison to U.S. blast-furnace 

capacity. 

Saving 350 Pounds of Coke per Ton of 

Iron 

U.S. steelmakers currently are 

operating 40 blast furnaces with a 

combined annual ironmaking capacity 

of 61.2 million tons. In addition, three 

furnaces are designated as ‘‘standby’’

but are unlikely to operate again; these 

have a combined capacity rating of 2.7 

million tons. This brings the total blastfurnace population to 43 units. (All tons 

in this article are net.) 

U.S. steelmakers have eliminated 27 

blast furnaces since mid-1990. In June 

1990, there were 70 U.S. blast furnaces 

with a combined capacity of 75.3 

million tons. 

Most of the blast furnaces shut down 

in recent years were idled before 

shutdown. The number of idle furnaces 

has fallen from 35 in 1986 to three now. 

The active furnace population declined 

from 48 in 1986 to 40 in 1996; the total 

blast-furnace population declined from 

83 to 43 during this period (see Table 

2). 

Despite the shutdown of 27 furnaces 

since June 1990, the ironmaking 

capacity of U.S. blast furnaces dropped 

during that period by just 11.4 million 

tons—half the capacity represented by 

the 27 abandoned furnaces. The 

difference was made up by major 

productivity gains at the blast furnaces 

that continue to operate. 

While closing the least efficient 

furnaces, steelmakers now are 

concentrating ironmaking output at the 

fewer, more productive blast furnaces. 

The overall productivity of today’s 

active furnaces is more than one-fourth 

higher than it was a decade ago. Daily 

output over the past decade has risen, 

on average, from 5.5 to nearly 7.0 tons 

per 100 cubic feet of working volume. 

From 1975 to 1995, ironmaking coke 

needs were cut by more than one-fourth, 

saving some 350 pounds of coke per ton 

of iron. The quantity of coke required to 

smelt one ton of iron fell during this 

period from 1,222 pounds (0.611 ton) to 

874 pounds (0.437 ton) (Table 3). 

Although the active blast-furnace 

population declined from 135 to 40 

from 1975 to 1995, average yearly 

output per furnace increased from 

590,000 to 1.4 million tons. 

Much of the boost in productivity 

took place recently. It took some 150 

pounds less coke to make a ton of iron 

in 1995 than it did in 1991. 

One big reason for the higher 

productivity is that blast-furnace 

operators are injecting more 

supplemental fuels, primarily natural 

gas and pulverized coal. This not only 

has reduced coke consumption but also 

has increased iron output by making 

additional space available in the furnace 

to hold iron ore and other iron-bearing 

materials instead of the coke displaced. 

Steelmakers also are boosting iron 

output by: 

• Charging scrap metal, directreduced iron (DRI), and self-fluxing 

iron-ore pellets into the blast furnaces; 

• Optimizing such hot-blast 

conditions as temperature and 

contained oxygen; and 

• Using new repair and maintenance 

techniques, including refractory 

gunning and grouting, to reduce 

maintenance downtime and 

significantly extend furnace campaigns 

between major relines, obviating the 

need for standby capacity. 

The combined result of these 

advances has been not only to sharply 

reduce the coke rate since 1991 but also 

to boost the aggregate capacity of today’s 

40 still-active furnaces by some 10 

million annual tons. 

Leading Blast Furnaces 

Acme, AK, National, and U.S. Steel 

are among the leaders in boosting blastfurnace productivities. Acme’s A blast 

furnace at South Chicago has raised its 

ironmaking capacity by one-third to a 

current level of 3,200 tons/day. Acme 

did this by injecting natural gas at a rate 

of 250 pounds/ton of iron, by using selffluxing pellets, and by raising the hotblast temperature some 100 degrees F to 

1,910 degrees F. Acme uses the stoves 

and hot-blast system of the B furnace to 

enhance the hot blast on A; this is a 

primary reason Acme maintains B as 

standby capacity. 

Acme operators eventually plan to 

raise throughput on the A furnace to 

more than 4,000 tons/day by injecting 

additional natural gas and adding scrap 

to the furnace charge. The increased 

iron output realized to date has been 

accompanied by a decline in the coke 

rate from just above 0.500 to a low of 

0.365 ton of coke input ton of iron 

output. 

AK Steel’s two remaining blast 

furnaces, Amanda at Ashland, Ky., and 

No. 3 at Middletown, Ohio, also have 

made major productivity gains in the 

past few years. Employees at Amanda 

have increased the blast-furnace 

capacity by 49 percent by using 

pulverized-coal injection (PCI) at a rate 

of 200 pounds/ton of iron and by adding 

BOF slag and scrap to the iron-ore 

pellets charged. 

Operators at the No. 3 furnace in 

Middletown have boosted capacity by 

54 percent to a current level of 6,000 

tons/day partly by injecting natural gas 

at a rate of 215 pounds/ton and using an 

enhanced burden that contains some 

350 pounds/ton of hot-briquetted iron 

(HBI). The coke input rates have 

declined from 0.425 ton per ton of iron 

output at both blast furnaces a few years 

ago to 0.388 at Amanda in Ashland and 

0.353 at No. 3 in Middletown. 

A recent reline and upgrading of 

National’s B furnace at Granite City, Ill., 

boosted its ironmaking capacity by 50 

percent from 2,800 to 4,200 tons/day. 

Improvements included a new furnace 

top, a newly designed hearth, increased 

cooling and advanced process controls 

at the furnace, and a revamp of the 

stoves to raise the wind rate and hotblast temperature. 

U.S. Steel’s four remaining blast 

furnaces at Gary, Ind., have raised their 

ironmaking throughput by an average of 

30 percent while their combined input 

coke rate has fallen to 0.340 ton per ton 

of iron output. The productivity gains 

largely are due to the use of PCI in all 

four furnaces at injection rates that, 

averaged, currently lead the industry. 

PCI vs. Natural Gas 

Although they have used 

supplemental fuel injection for decades, 

U.S. ironmakers in recent years have 

aggressively increased their injection 

rates of natural gas and, more recently, 

pulverized coal. All 40 active blast 

furnaces today inject either one or a 

combination of fuels, including natural 

gas, pulverized coal, oil, tar, and cokeoven gas. Twenty-five furnaces inject 

natural gas at rates of up to 250 pounds 

per ton of iron produced; 12 furnaces 

use PCI at rates of up to 375 pounds/ton. 

The volume of natural gas consumed 

by U.S. blast furnaces has increased 

nearly 90 percent since 1990, from 56.7 

million to 106.5 million cubic feet 

annually. The acceptance of natural gas 

stems from its ready availability, its 

relatively low price in recent years, and 

its adaptability to injection without 

major capital or startup costs. Assuming 

a starting coke input rate of 0.500 ton 

per ton of iron output (or 1,000 pounds/ 

ton), natural-gas injection has been 

proven by some mills to be capable of 

displacing about 25 percent of coke 

requirements—and maybe more, 

depending on the outcome of current 

tests sponsored by the Gas Research 

Institute. 

Although 250 pounds/ton is the 

highest natural-gas injection rate 

currently employed, the average rate is 

a much lower 125 pounds/ton. At most 

blast furnaces, injection is limited to 


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17660 Federal Register / Vol. 72, No. 67 / Monday, April 9, 2007 / Notices 

between 100 and 200 pounds, because 

higher volumes unfavorably lower flame 

temperatures and furnace productivity. 

Higher gas-injection rates require 

increased oxygen enrichment and 

higher hot-blast temperatures; this is not 

attainable at some blast furnaces 

because of limitations in oxygen 

processing and the capabilities of their 

hot-blast systems. In such cases, 

injecting more natural gas would require 

significant investments to upgrade 

stoves and other hot-blast components 

and to make more oxygen available. 

Compared to natural gas, PCI has a 

much less significant impact on process 

temperatures and affords a greater 

opportunity for lowering the coke rate. 

Steel mills have proven that PCI can 

replace 40 percent of a 1,000-pound 

coke requirement and can use lowercost, lower-grade coals in place of the 

high-grade metallurgical coal needed for 

cokemaking. 

The disadvantage of PCI is that, 

unlike natural-gas injection, it requires 

an initial investment of $40–50 million, 

approximately two-thirds of which can 

be required for coal preparation. Some 

blast-furnace operators already injecting 

150 pounds or more of natural gas 

consider this too high a price to pay for 

increasing injection rates an additional 

200 pounds or so by switching to PCI. 

However, most operators recognize that 

a commitment to natural gas leaves 

them vulnerable to a repeat of past runups in gas prices. 

A number of steel companies with PCI 

projects have benefited from creative 

arrangements to reduce or avoid the 

financial costs of coal preparation. PCI 

at Inland, for example, is supported by 

a coal-preparation facility jointly funded 

by Inland and Northern Indiana Public 

Service Company. National will obtain 

pulverized coal for its Ecorse, Mich., 

blast furnaces from Detroit Edison 

Company. 

Likewise, U.S. Steel reduced its PCI 

investment at Fairfield, Ala., by 

obtaining injectable coal from a 

company-owned mine some five miles 

away; the coal is transported in 

specially designed hopper cars to ensure 

it remains dry. USS/Kobe’s PCI unit 

uses coal pulverizers provided by Ohio 

Edison. 

PCI was developed in the early 1960s 

by AK Steel’s forerunner, Armco. The 

company first used the new technology 

commercially at the Ashland plant’s 

now abandoned Bellefonte blast furnace 

in 1963—the same year Armco 

completed construction of the Amanda 

furnace there. Ten years later, Armco 

installed PCI at Amanda and used it 

intermittently at varying injection rates 

until establishing in recent years an 

average rate of 200 pounds/ton. 

Twelve blast funaces in the U.S. now 

are equipped for PCI (Table 4). Their 

injection rates range from 120 to 375 

pounds/ton and average 254 pounds; 

blast furnaces can inject as much as 400 

pounds/ton, industry managers say. 

Raising PCI rates will help blast 

furnaces face future constraints on 

cokemaking capacity. 

Next year Gulf States and National 

Steel at Ecorse plan to install PCI. LTV 

is considering using PCI at its Cleveland 

and Indiana Harbor, Ind., plants, 

although it has not yet made a final 

decision. 

Startups From 1909 to 1980 

In the past few years, steelmakers 

have made some of their largest 

productivity gains at some of the oldest 

blast furnaces. U.S. Steel’s Gary No. 8 

furnace was built in 1909; rebuilt in 

1943; disabled in April 1995 by an 

explosion near the top of its stack; and 

returned to service in Aug. 1995 after 

repairs and an unscheduled reline. No. 

8 now produces 40 percent more iron 

than it did a few years ago. Equipped to 

use PCI at a rate of some 235 pounds/ 

ton, the No. 8 blast furnace has seen its 

coke rate decline to the 0.390 level, 

which makes it more efficient at using 

coke than some of its counterparts built 

60–70 years later. 

Roughly 75 percent of the active 

furnace population is under 30 years of 

age, and 25 percent over (see Table 1). 

Startup dates of current U.S. blast 

furnaces range from the first decade of 

the century to 1980. 

Clearly, blast furnaces that have been 

rebuilt and retrofitted to take advantage 

of technological improvements over the 

years have proven capable of operating 

indefinitely, and doing so very 

effectively. As the furnace population 

has been rationalized and the least 

efficient units removed from service, age 

has become a less relevant indicator of 

useful furnace life. Rather, the most 

significant influence on future decisions 

to maintain or discontinue blast-furnace 

ironmaking will derive from 

environmental regulations that result in 

additional cuts in U.S. cokemaking 

capacity. 

Father William Hogan of the Society 

of Jesus has been a leading authority on 

the steel industry for the past 45 years. 

His numerous books include 

Productivity in the Blast Furnace, The 

Development of Heavy Industry in the 

Twentieth Century, Economic History of 

the Iron and Steel Industry in the 

United States (a five-volume work), and, 

most recently, Steel in the 21st Century: 

Competition Forges a New World Order 

(1994). The International Iron and Steel 

Institute has named only two honorary 

members since its founding in 1967: Fr. 

Hogan and Herbert Gienow. 

Frank Koelble has worked as a steel 

economist and consultant for the past 30 

years. His books include Purchased 

Ferrous Scrap, An Analysis of the U.S. 

Metallurgical Coke Industry, and Direct 

Reduction as an Ironmaking Alternative 

in the United States. Hogan is director 

and Koelble associate director of the 

Industrial Economics Research Institute 

of Fordham University (Bronx, N.Y.). 

THE 43 BLAST FURNACES IN THE U.S. TODAY (TABLE 1) 

Co. & capacity coke capacity 

(mil. net tpy) 1 Plant Furnace Dia. 2 Rate 3 Year 4 (net tpd) 5

Acme (1.17) ................................. S. Chicago, Ill ............................. A .................. 25′0′′ 0.365 1964R 3,200 

..................................................... B .................. 19′8′′ .................... 1970R (1,200)(S) 

AK Steel (4.12) ............................ Ashland, Ky ................................. Amanda ....... 33′5′′ 0.388 1963B 5,300 

Middletown, Ohio ........................ 3 .................. 29′4′′ 0.353 1984R 6,000 

Bethlehem (8.53) ......................... Burns Harbor, Ind ....................... C ................. 38′3′′ 0.359 1972B 7,030 

..................................................... D .................. 35′9′′ 0.397 1969B 6,590 

Sparrows Pt., Md ........................ L .................. 44′3′′ 0.430 1977B 9,750 

Geneva (2.45) ............................. Geneva, Utah .............................. 1 .................. 26′6′′ 0.448 1963R 2,275 

..................................................... 2 .................. 26′6′′ 0.450 1963R 2,250 

..................................................... 3 .................. 26′6′′ 0.455 1963R 2,180 

Gulf States (1.08) ........................ Gadsden, Ala .............................. 2 .................. 26′0′′ 0.490 1966R 2,965 

Inland (5.24) ................................ E. Chicago, Ind ........................... 5 .................. 26′6′′ 0.393 1974R 2,500 

..................................................... 6 .................. 26′6′′ 0.448 1976R 2,450 

..................................................... 7 .................. 45′0′′ 0.330 1980B 9,400 


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Federal Register / Vol. 72, No. 67 / Monday, April 9, 2007 / Notices 17661 

THE 43 BLAST FURNACES IN THE U.S. TODAY (TABLE 1)—Continued 

Co. & capacity coke capacity 

(mil. net tpy) 1 Plant Furnace Dia. 2 Rate 3 Year 4 (net tpd) 5

LTV (7.68) ................................... Cleveland, Ohio .......................... C1 ................ 27′6′′ 0.413 1972R 3,440 

..................................................... C5 ................ 29′6′′ 0.407 1990R 4,150 

..................................................... C6 ................ 29′6′′ 0.412 1989R 4,350 

Ind. Harbor, Ind ........................... H3 ................ 29′6′′ 0.400 1988R 3,950 

..................................................... H4 ................ 32′9′′ 0.421 1987R 5,150 

McLouth 6 (1.24) .......................... Trenton, Mich .............................. 1 .................. 28′6′′ .................... 1956B (3,000)(S) 

..................................................... 2 .................. 28′6′′ 0.475 1958B 3,400 

National (6.46) ............................. Ecorse, Mich ............................... A .................. 30′6′′ 0.470 1954B 3,450 

..................................................... B .................. 29′0′′ 0.463 1951B 3,350 

..................................................... D .................. 28′10′′ 0.440 1952B 2,800 

Granite City, Ill ............................ A .................. 27′3′′ 0.378 1956B 3,900 

..................................................... B .................. 27′3′′ 0.380 1961B 4,200 

Rouge (2.62) ............................... Dearborn, Mich ........................... B .................. 20′0′′ 0.375 1958R 2,275 

..................................................... C .................. 29′0′′ 0.385 1959R 4,900 

U.S. Steel (12.00) ....................... Fairfield, Ala ................................ 8 .................. 32′0′′ 0.420 1978B 6,000 

Gary, Ind ..................................... 4 .................. 28′10′′ 0.368 1950R 3,700 

..................................................... 6 .................. 28′0′′ 0.388 1947R 3,750 

..................................................... 8 .................. 28′0′′ 0.390 1943R 3,800 

..................................................... 13 ................ 36′6′′ 0.290 1974B 9,425 

Mon Valley, Pa ........................... 1 .................. 28′10′′ 0.448 1943R 3,230 

..................................................... 3 .................. 25′3′′ 0.443 1930R 2,975 

USS/Kobe (2.30) ......................... Lorain, Ohio ................................ 3 .................. 28′6′′ 0.355 1959R 3,600 

..................................................... 4 .................. 29′0′′ 0.453 1962R 2,700 

WCI (1.50) ................................... Warren, Ohio .............................. 1 .................. 28′0′′ 0.470 1980R 4,100 

Weirton (2.54) ............................. Weirton, WV ................................ 1 .................. 27′0′′ 0.403 1984R 3,770 

..................................................... 3 .................. 26′3′′ 0.418 1983R 3,200 

..................................................... 4 .................. 27′0′′ .................... 1977R (3,100)(S) 

Wheel-Pitt (2.30) ......................... Steubenville, Ohio ....................... 1N ............... 25′0′′ 0.405 1991R 2,900 

..................................................... 5S ................ 23′10′′ 0.430 1995R 3,400 

1 Capacity of active blast furnaces, representing potential maximum productive capability. 

2 Hearth diameter of furnace. 

3 Coke rate at full ironmaking capacity is expressed as the net tons of coke input per net ton of iron output. 

4Years are designated B for the year built and R for the year in which a major rebuild was last completed. Relinings are not considered rebuilds. 5 ( ) indicates idle capacity; (S) indicates standby furnaces. 

6Plant temporarily idled in March 1996; company has been sold to Hamlin Holdings Inc., with operations scheduled to restart in early 1997. 

REDUCING THE NUMBER OF U.S. BLAST FURNACES (TABLE 2) 

Date 1 Active Idle Total 

2/86 .......................................................................................................................................................... 48 35 83 

5/87 .......................................................................................................................................................... 45 32 77 

9/88 .......................................................................................................................................................... 47 25 72 

10/89 ........................................................................................................................................................ 45 25 70 

6/90 .......................................................................................................................................................... 46 24 70 

8/91 .......................................................................................................................................................... 38 19 57 

8/92 .......................................................................................................................................................... 40 11 51 

8/93 .......................................................................................................................................................... 40 10 50 

8/94 .......................................................................................................................................................... 40 9 49 

9/95 .......................................................................................................................................................... 41 4 45 

7/96 .......................................................................................................................................................... 40 3 43 

1 Dates of surveys conducted by Industrial Economics Research Institute, Fordham University. 

LOWERING THE COKE RATE (TABLE 3) 

[Million of net tons] 

Year 

U.S. blastfurnace 

production 

Coke 

consumed Coke rate 1

1975 ......................................................................................................................................................... 79.9 48.8 0.611 

1976 ......................................................................................................................................................... 86.9 51.6 0.594 

1977 ......................................................................................................................................................... 81.3 48.5 0.597 

1978 ......................................................................................................................................................... 87.7 51.3 0.585 

1979 ......................................................................................................................................................... 87.0 50.0 0.574 

1980 ......................................................................................................................................................... 68.7 39.1 0.569 

1981 ......................................................................................................................................................... 73.6 40.5 0.55 

1982 ......................................................................................................................................................... 43.3 23.3 0.538 

1983 ......................................................................................................................................................... 48.7 26.3 0.540 


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17662 Federal Register / Vol. 72, No. 67 / Monday, April 9, 2007 / Notices 

LOWERING THE COKE RATE (TABLE 3)—Continued 

[Million of net tons] 

Year 

U.S. blastfurnace 

production 

Coke 

consumed Coke rate 1

1984 ......................................................................................................................................................... 51.9 27.4 0.528 

1985 ......................................................................................................................................................... 50.4 26.6 0.508 

1986 ......................................................................................................................................................... 44.0 22.3 0.507 

1987 ......................................................................................................................................................... 48.4 25.5 0.527 

1988 ......................................................................................................................................................... 55.7 29.4 0.528 

1989 ......................................................................................................................................................... 55.9 29.2 0.522 

1990 ......................................................................................................................................................... 54.8 27.5 0.502 

1991 ......................................................................................................................................................... 48.6 24.8 0.510 

1992 ......................................................................................................................................................... 52.2 25.0 0.479 

1993 ......................................................................................................................................................... 53.1 23.7 0.446 

1994 ......................................................................................................................................................... 54.4 24.2 0.445 

1995 ......................................................................................................................................................... 56.1 24.5 0.437 

1 Data are from American Iron and Steel Institute; coke rate indicates the tons of coke consumed per ton of blast-furnace iron produced. 

PULVERIZED-COAL INJECTION (TABLE 4) 

Company Plant Furnace Year 

started up 

Rate 

(lbs./ton) 1

AK Steel ............................................................ Ashland ............................................................. Amanda ....... 1973 200 

Bethlehem ......................................................... Burns Harbor 2 .................................................. C ................. 1994 180 

........................................................................... D .................. 1994 260 

Gulf States Inland ............................................. Gadsden ........................................................... 2 .................. 1997 

E. Chicago ........................................................ 5 .................. 1993 245 

........................................................................... 6 .................. 1993 120 

........................................................................... 7 .................. 1993 320 

National ............................................................. Ecorse ............................................................... A .................. 1997 350P 

........................................................................... B .................. 1997 250P 

........................................................................... D .................. 1997 250P 

U.S. Steel .......................................................... Fairfield 2 ........................................................... 8 .................. 1995 270 

Gary .................................................................. 4 .................. 1993 295 

........................................................................... 6 .................. 1993 235 

........................................................................... 8 .................. 1993 235 

........................................................................... 13 ................ 1993 375 

USS/Kobe .......................................................... Lorain ................................................................ 3 .................. 1994 315 

1 Injection rate; P is projected; all others are average rates during 1995. 

2Plant based on granular-coal injection. 

Attachment 9—See How a Blast 

Furnace Works, AISI 

The attachment is available at the 

following Web site, http://

www.steel.org/AM/Template.

cfm?Section=Home&template=/CM/

HTMLDisplay.cfm&ContentID=12305 

Attachment 10—Ironmaking Process 

Alternative Screening Study—Volume 

I, Summary Report, Lockwood Greene 

study for the Department of Energy 

(Oct. 2000) 

The attachment is available at the 

following Web site, http://www.ornl.

gov/~webworks/cppr/y2001/rpt/

122325.pdf 

Attachment 11—ISG to Repair, Restart 

Second Blast Furnace at Weirton Unit, 

American Metal Market (July 12, 2004) 

The attachment is available at the 

following Web site, http://www.

findarticles.com/p/articles/mi_m3MKT/

is_28-1_112/ai_n6106694. 

Attachment 12—Mittal Steel USA 

Works to Restore Furnace at Sparrows 

Point, PRNewswire (July 14, 2006) 

The attachment is available at the 

following Web site, http://

www.mittalsteel.com/NR/rdonlyres/

20253936-859A-42A8-8DECDBC284FDFB6A/1161/

LFurnacerecoveryNR071406.pdf. 

Attachment 13—Ispat Inland 

Accelerates Maintenance Outages, Ispat 

Inland Press Release (March 7, 2005) 

The attachment is available at the 

following Web site, http:// 

metalsplace.com/metalsnews/?a=942 

Attachment 14—Weirton Workers 

Buyout from Online NewsHour, 

September 23, 1983 

The attachment is available at the 

following Web site, http://www.pbs.org/ 

newshour/bb/business/july-dec83/

steel_9-23-83.html. 

Attachment 15—High Production Costs 

Hamper AK Steel’s Middletown Works, 

Steel Business Briefing (Aug. 10, 2006) 

High Production Costs Hamper AK 

Steel’s Middletown Works 

Thursday, 10 August 2006 

AK Steel, trying to lower its labour 

costs, is pointing to a year-old analyst’s 

report that says slab-making costs at its 

flagship Middletown, Ohio works are 

nearly the highest on the globe, Steel 

Business Briefing has learned. 

In a communique ́ sent out earlier this 

week, AK says a report authored by 

World Steel Dynamics’ Peter Marcus, 

rates Middletown 147th out of 151 slab 

mills in terms of cost per ton of slab. 

The steelmaker is attempting to 

illustrate that its labour costs have to 

come down in order for the plant to be 

competitive, not only in North America 

but throughout the globe. 

An AK spokesman tells SBB, 

however, ‘‘We’re not saying all of that 


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Federal Register / Vol. 72, No. 67 / Monday, April 9, 2007 / Notices 17663 

is employment’’ costs. He declined to 

discuss what the works’ per-ton slab 

production costs are. 

Steel industry analyst Charles 

Bradford says AK likely has a cost 

disadvantage on iron ore alone of about 

$30/short ton. He says the steelmaker 

also probably has a cost penalty on coal, 

too. ‘‘Even if they could get competitive 

raw materials, they would have a freight 

penalty,’’ he adds. But Bradford notes 

that care has to be taken in such an 

analysis because there is a cost 

difference to produce commodity hotrolled coil versus an interstitial-free HR 

coil. 

In addition to AK, other North 

American steelmakers at the bottom of 

the Marcus list include Mittal Steel 

USA’s Weirton, West Virginia works, 

which has since shut its hot end, as the 

world’s most costly slab producer. 

Severstal North America’s River Rouge 

works was found to be the next highest 

cost producer in the June 2005 report. 

Attachment 16—Dofasco Seals $251m 

Purchase of Canadian Iron Ore Miner 

QCM, American Metal Market (July 26, 

2005) 

The attachment is available at the 

following Web site, http:// 

www.findarticles.com/p/articles/ 

mi_m3MKT/is_29-2_113/ai_n14842699. 

Attachment 17—Force Majeure 

Clobbers Coke-Short Steelmakers: 

Weirton Eyes Option, Blast Furnace 

Closure, American Metal Market (Jan. 

9, 2004) 

The attachment is available at the 

following Web site, http:// 

www.findarticles.com/p/articles/ 

mi_m3MKT/is_1-5_112/ai_112104367. 

Attachment 18—Heat Back on Steel 

Makers, The Plain Dealer (February 

26, 2004) 

The attachment is available at the 

following Web site, http:// 

cleve.live.advance.net/indepth/steel/ 

index.ssf?/indepth/steel/more/ 

1077791716314950.html. 

Attachment 19—Furnace Will Stay 

Idle at Weirton Steel Mill, Associated 

Press (Dec. 2, 2005) 

Friday, December 2, 2005 

Furnace Will Stay Idle at Weirton Steel 

Mill 

Bad Site, High Costs and Age Are Cited 

By Vicki Smith, Associated Press 

Historically high production costs, an 

inconvenient location and old, 

inefficient facilities have apparently 

doomed hopes of revitalizing a West 

Virginia steel mill that once employed 

13,000 people and now has just 1,300 

union workers. 

Mittal Steel, the world’s largest 

steelmaker, idled the blast furnace at its 

Weirton division this summer, laying off 

some 750 workers for what the 

Independent Steelworkers Union hoped 

would be a temporary wait for business 

to pick up. But late Tuesday, Mittal told 

the union that the furnace will remain 

cold, and as many as 800 jobs will be 

permanently lost. 

‘‘This was a very difficult decision, 

since the Independent Steelworkers 

Union and all employees have worked 

so hard to beat the odds trying to 

maintain steelmaking at Weirton,’’ said 

Louis Schorsch, chief executive of 

Mittal Steel USA. ‘‘However, the 

structural disadvantages of Weirton for 

these processes entail costs that are too 

high to support competitive 

downstream facilities.’’

Analyst Michael Locker, president of 

Locker Associates in New York, said the 

small blast furnace and the steelmaking 

Mittal has elsewhere combined to seal 

Weirton’s fate. 

He said, ‘‘The negative of the 

consolidation process is that you have a 

comparison going on of plants * * * 

within the Mittal family. If they come 

out on the short end of the stick, they 

can’t justify standing alone—even with 

all the hopes of cost reduction and 

efforts by the union, which were 

mighty. 

‘‘You have good finishing facilities at 

Weirton that are going to survive, but 

the source of the steel is going to be 

elsewhere.’’

Analyst Charles Bradford of Bradford 

Research-Soleil Securities in New York, 

sees Mittal’s flexibility as a benefit of 

the industry’s global consolidation. 

‘‘When there is softness in the market, 

you close the high-cost ones first. Mittal, 

just within North America, has more 

than a dozen blast furnaces, so they 

have the ability to cut one or two and 

moderate their business.’’

Mittal, a Netherlands company, took 

control of Weirton in April through a 

$4.5 billion purchase of former owner 

International Steel Group of Richfield, 

Ohio. ISG had won a bidding war for 

Weirton, the nation’s No. 2 tin producer, 

in bankruptcy court in 2004. 

Weirton’s steel-production costs have 

been among the highest at Mittal, which 

has other mills capable of producing 

enough steel to meet demand through 

2006. 

Union spokesman David Gossett said 

raw materials are at the root of 

Weirton’s problem. Weirton does not 

have a coke plant and must buy it at a 

high cost on the open market. 

Weirton also must buy iron ore and 

have it shipped by rail. Mittal’s 

Cleveland mill can get it shipped in 

cheaper on Lake Erie. 

Weirton is also struggling with high 

gas prices in a mill that Gossett said 

doesn’t use fuel as efficiently as it 

could. 

Bradford predicts Weirton’s blast 

furnace will only be restarted if and 

when every other Mittal furnace is at 

capacity. 

But ISU President Mark Glyptis said 

he believes Mittal is committed to 

maintaining an operation in Weirton, 

and that the mill is a key part of its 

strategy to sell tin. 

Schorsch acknowledged in a 

statement that Mittal wants to 

reconfigure the Weirton plant around 

tinplate. 

Attachment 20—The shipping news & 

forecast: District ports face many 

competitive challenges, but whether 

they sink or swim over the long term 

will likely depend on infrastructure 

improvements, Minneapolis Federal 

Reserve fedgazette (January 2003) 

The attachment is available at the 

following Web site, http://www.

minneapolisfed.org/pubs/fedgaz/03-01/

shipping.cfm. 

Attachment 21—Weirton Files for Ch. 

11; 1,000 Ohio Jobs Affected, 

Associated Press (May 20, 2003) 

Tuesday, May 20, 2003 

Weirton Steel Files for Ch. 11 

1,100 Ohio Jobs Affected 

By Vicki Smith 

The Associated Press 

WEIRTON, W.Va.—Weirton Steel Corp., 

the nation’s sixth-largest integrated steel 

maker and No. 2 producer of tin, filed 

for Chaper 11 bankruptcy protection 

Monday. 

The employee-owned company 

located across the Ohio River from 

Steubenville, Ohio, held on while an 

import crisis took down dozens of 

competitors, but racked up more than 

$700 million in losses over five years. 

Weirton Steel employs 1,100 Ohioans. 

President and CEO John Walker said 

the company has obtained a $225 

million financing package that will 

allow it to keep operating while it 

reorganizes. 

Walker had been in the middle of a 

plan to cut costs by $120 million when 

Weirton Steel’s board of directors voted 

Monday to file for bankruptcy. 

‘‘In the past year, we did everything 

we could do outside the bankruptcy 

venue before taking this necessary 


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step,’’ Walker said. ‘‘Our previous 

initiatives strengthened the company, 

but it became increasingly evident in 

the current industry climate that 

Chapter 11 reorganization is the only 

remaining solution to address our 

liability issues.’’

In its bankruptcy filing, Weirton Steel 

said it had about $654.5 million in 

assets and about $1.41 billion in debts 

as of March 31. The company expects to 

file a reorganization plan within about 

six months. 

Walker said the recent U.S. SteelNational Steel and International Steel 

Group-Bethlehem Steel mergers, along 

with a federal $250 million loan 

package awarded to WheelingPittsburgh Steel, left his company with 

no options for expansion. 

Weirton’s survival strategy had 

centered on having the nation’s largest 

tin mill. Only U.S. Steel produces more 

tin-plated steel than Weirton, where tin 

accounts for 38 percent of production 

and 50 percent of revenues. 

Monday’s filing surprised a steel 

analyst who said Weirton Steel had 

seemed to ‘‘be bumping along.’’

But the company was squeezed by 

rising energy and material costs and 

declining prices for tin products, said 

Michael Locker, president of Locker 

Associates Inc. and author of the Steel 

Industry Update Newsletter. 

The Independent Steelworkers Union 

had helped Walker trim $38 million, 

approving a one-year contract that cut 

pay 5 percent, canceled a planned raise 

and froze accrued pension benefits. The 

company planned to cut an additional 

$34 million by asking the 3,600 active 

employees and 4,600 retirees and 

dependents for health-care givebacks. 

Retirees, however, had been slow to 

embrace the request, which asked that 

they help cover the cost of health 

insurance with a $200 monthly 

deduction from their pension checks. 

They also faced higher co-payments for 

prescription drugs and doctor visits. 

Weirton Steel is seeking court approval 

to create a committee of retirees to 

address the pension issues. 

ISU president Mark Glyptis, who sits 

on the board of directors, opposed the 

bankruptcy filing. 

‘‘Today, our senior management 

effectively gave up and conceded 

defeat,’’ he said. ‘‘But the working 

people of Weirton Steel will never 

surrender. We will not give up.’’

Attachment 22—Testimony of Bill 

Stephans, Division Manager for TMP at 

Mittal Steel USA’s Weirton Facility 

from Hearing Transcript, In the 

Matter Of: Tin and Chromium 

Coated Steel Sheet from Japan, Inv. 

No. 731–TA–860 (Review) (April 27, 

2006) 

The attachment is available at the 

following Web site, http:// 

www.usitc.gov/trade_remedy/731_

ad_701_cvd/investigations/2005/tin_

chromium_steel/PDF/Tin%20and%

20chromium%20steel%2004-27-06.pdf. 

Attachment 23—ISU Irked by Mittal 

Steel’s Plan To Shut Weirton 

Galvanizing Line, American Metal 

Market (Feb. 3, 2006) 

ISU Irked by Mittal Steel’s Plan To 

Shut Weirton Galvanizing Line 

By Sam Kusic 

PITTSBURGH—Mittal SteeL USA Inc. 

plans to shut down the galvanizing line 

at its Weirton, W.Va., plant, eliminating 

25 to 40 jobs, and refocus the facility 

entirely on tinplate products. 

The move comes two months after the 

company sent official notices to workers 

that the plant’s blast furnace, idle for 

much of last year, would be closed 

permanently. 

‘‘The (galvanizing) line does not fit 

into the plans,’’ a Mittal Steel USA 

spokesman said, adding that the 

Wierton line costs more to operate than 

other comparable facilities it owns. 

But Mark Glyptis, president of the 

Independent Steelworkers Union (ISU) 

at Weirton, said the union had been 

working toward lowering the line’s 

operating costs. ‘‘ Its a good line and one 

that ought to be running in this 

organization,’’ he said. ‘‘We did a great 

deal of work to keep that line in 

operation.’’

The closure, set to take place in two 

to three months, follows the layoff of 

about 450 people when the Chicagobased company decided to indefinitely 

close its iron and steelmaking 

operations there in November. The hot 

end previously had been temporarily 

idled since May, when steel prices were 

falling due to bloated inventories 

nationwide. 

The closure ends nearly 100 years of 

steelmaking at the plant, which was a 

founding piece of Weirton Steel Corp. in 

1909. In 1984, its employees bought the 

plant, at the time making it the world’s 

largest wholly employee-owned 

company. In 2003, International Steel 

Group Inc. (ISG) purchased the 

business, and Mittal bought ISG in a 

multibillion-dollar deal in April 2005. 

With the closures, only the plant’s 

hot- and cold-rolled mills and its 

tinplating operations remain intact. If 

there is good news, Glyptis said, it’s that 

the union was able to work with the 

company to keep the hot-roll mill open, 

saving about 200 jobs. 

Mittal had been reviewing whether to 

shutter the hot-roll mill, but ultimately 

decided against it. ‘‘It’s one of the better 

hot mills in operation,’’ Glyptis said, 

adding that as the plant increases its 

tinplating operations, jobs are being 

added. ‘‘It’s kind of a roller coaster of 

good news and not-so-good news.’’

Attachment 24—Excerpts of Testimony 

from Hearing Transcript, In the 

Matter Of: Tin and Chromium 

Coated Steel Sheet from Japan, Inv. 

No. 731–TA–860 (F) (June 29, 2000) 


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Attachment 25—Brazil Slab Hits 

$555/T In Tight Export Market, 

American Metal Market (June 5, 2006) 

Brazil Slab Hits $555/T in Tight Export 

Market 

By Diana Kinch 

Vitoria, Brazil—Export prices for steel 

slab have risen to $555 a tonne f.o.b. 

Brazil and could continue to rise due to 

tight world supplies, Cia. Sider A ̃ ßrgica 

de TubarA ̃ £o (CST) said late Thursday. 

The slab producer, majority owned by 

Luxembourg-based steelmaker Arcelor 

SA, said it had just closed a deal to sell 

slab to a U.S. buyer at $555 a tonne, 

although the tonnage was not disclosed. 

‘‘Pressure continues on prices 

following the Chinese pulling out of the 

slab export market due to China’s 

charging of export taxes,’’ a CST source 

said. 

(In fact, China apparently has delayed 

implementation of higher export taxes 

on steel products until at least July 1. 

But Chinese exporters reduced slab and 

billet offers in May in anticipation of the 

anticipated 5- to 10-percent tax, and as 

yet there is no sign of any rebound in 

slab exports, according to reports out of 

China.) 

The other major factor influencing 

Brazilian export prices is the loss of the 

No. 3 blast furnace at Cia. Sider A ̃ ßrgica 

Nacional (CSN) in January in what was 

described at the time as a minor 

accident involving a dust collection 

system. The furnace, responsible for 60 

percent of CSN’s raw steel output of 6 

million tonnes per year, was expected to 

return to service in June, but now 

sources said they don’t expect it to 

restart until next month at the earliest. 

CSN reportedly has ordered 1 million 

tonnes of slab to replace the lost 

production but so far has received only 

300,000 tonnes because of the market 

tightness, sources said. 

CST did not confirm whether it sees 

the delay in bringing on-stream its new 

No. 3 blast furnace as a market factor. 

The new 2.5-million-tonne-per-year 

furnace, which is now more than 90 

percent complete, will probably be 

inaugurated in early 2007 because of the 

impact on a recent construction 

workers’ strike at the site, a source close 

to the furnace project said (see story, 

page 6). 

Attachment 26—Wheeling-Pittsburg 

Makes Loss, Despite Rising Market, 

Steel Business Briefing (May 11, 2006) 

Wheeling-Pittsburgh Makes Loss, 

Despite Rising Market 

Thursday, 11 May 2006 

Wheeling-Pittsburgh Corp, the 

holding company of WheelingPittsburgh Steel, is reporting a $2.1m 

net loss for the first quarter, compared 

with $8m in earnings in the first quarter 

of 2005. The sheet steel producer had a 

$49m cost increase, Steel Business 

Briefing understands. 

Wheeling-Pittsburgh, in talks with 

Brazil’s CSN to form a slab rolling 

alliance, shipped 681,000 short tons in 

Q1, up substantially from 523,000 s.t 

shipped in Q1 2005 when the company 

suffered an equipment failure. However, 

sales were made at an average of $739/ 

s.t a year ago, declining to $680/s.t in 

the most recently completed quarter. 

CSN is interested in having its slabs 

rolled by Wheeling-Pittsburgh, which 

has about 600,000 s.t/year of excess hotrolling capacity. CSN is also discussing 

taking a minority stake in the West 

Virginia steelmaker. 

‘‘While our first quarter loss 

represented an improvement from the 

fourth quarter of 2005, it was a 

disappointment given current demand 

for our products,’’ says company CEO 

James Bradley. 

Attachment 27—Esmark To Shut 

Wheeling-Pitt BF If Bid Succeeds, 

Steel Business Briefing (Aug. 23, 2006) 

Esmark To Shut Wheeling-Pitt BF If Bid 

Succeeds 

Wednesday, 23 August 2006 

Esmark, the U.S. service centre 

consolidator in a proxy fight for control 

of Wheeling-Pittsburgh Steel, plans to 

shutter the sheet producer’s Mingo 

Junction, Ohio blast furnace and rely 

solely on its new electric furnace, in 

addition to purchased slabs, Steel 

Business Briefing understands. 

In a television interview with a 

Wheeling, West Virginia television 

station, brothers James and Craig 

Bouchard of Esmark say they plan to 

shut the BF because it is not costeffective. SBB could not reach the 

Bouchards for further comment. Esmark 

has not filed documents with regulators 

detailing its plans. 

The interview preceded WheelingPittsburgh’s response to a United 

Steelworkers assertion that the 

steelmaker violated its labour contract 

by not giving the union the same 

amount of time to make a competing bid 

for the company that Brazilian suitor 

CSN was given. 

In a 21 August letter to USW officials, 

Wheeling-Pittsburgh CEO James Bradley 

notes the union has known about the 

potential hook-up with CSN since early 

July and that the USW ‘‘has no 

compelling basis’’ to request more time 

given its support of the Esmark 

proposal. He also again criticises the 

Esmark bid as inferior to CSN’s 

proposal. 

Attachment 28—Arcelor Brasil Sets 

Sights on New Slab Plant, American 

Metal Market (March 22, 2006) 

Arcelor Brasil Sets Sights on New Slab 

Plant 

By Diana Kinch 

Vitoria, Brazil—Arcelor Brasil SA is 

studying the possibility of building a 

3.5-million-tonne-a-year steel slab-forexport plant, probably in conjunction 

with Cia. Vale do Rio Doce (CVRD), at 

Anchieta in Espirito Santo state. 

The plant would be about 60 

kilometers (37 miles) from the existing 

Cia. SiderA ̃ ßrgica de TubarA ̃ £o (CST)- 

Arcelor Brasil slabmaking and hotrolled coil plant, company executives 

said during a press conference. 

CVRD announced a month ago that it 

was seeking partners for a new 

slabmaking venture at Anchieta, in 

which it would like to hold a minority 

participation. According to the CVRD 

announcement, the final capacity of 

such a plant would be around 5 million 

tonnes a year. 

‘‘We would probably start off with 3 

million to 3.5 million tonnes per year,’’

a spokesman said. 

Usinas SiderA ̃ ßrgicas de Minas Gerais 

SA (Usiminas), based in Belo Horizonte, 

which also is considering building new 

slabmaking capacity in Brazil, 

reportedly isn’t involved in the 

Anchieta project talks. 

CST-Arcelor Brasil is expected to 

expand its own steelmaking capacity to 

9 million tonnes a year by 2012, after 

which its current site at TubarA ̃ £o will 

be saturated, the spokesman said. 

CST-Arcelor Brasil later this year will 

bring on-stream its third blast furnace, 

boosting its annual steelmaking capacity 

from 5 million tonnes currently to 7.5 

million tonnes, of which some 5 million 

tonnes will be used for merchant slab 

production. 

The steelmaker currently produces 

some 2.5 million tonnes of hot-rolled 

coil a year and is expected to double its 

hot-rolled coil mill capacity by 2008 in 

what should be a relatively economic 

investment. 

Attachment 29—CST to Hike Slab 

Sales to Dofasco, American Metal 

Market (March 22, 2006) 

The attachment is available at the 

following Web site, http:// 

www.findarticles.com/p/articles/ 

mi_m3MKT/is_11–3_114/ai_n16119523. 


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Attachment 30—Gerdau Acominas 

Charging Into Slab Mart, American 

Metal Market (June 30, 2006) 

Gerdau Ac ̧ominas Charging Into Slab 

Mart 

By Diana Kinch 

Ouro Branco, Brazil—Gerdau 

AA ̄ §ominas SA will step up production 

of merchant slab, particularly of special 

grades, by installing its first continuous 

slab caster. 

The 3-million-tonne-per-year slab 

caster will operate initially at a rate of 

1.5 million tonnes annually when it 

starts up in two years, with output 

directed at the export market, Jorge 

Gerdau Johannpeter, Gerdau SA 

chairman and president, announced 

Wednesday. 

Currently, Gerdau AA ̄ §ominas, 

located at Ouro Branco, Minas Gerais 

state, produces less than 200,000 tonnes 

of merchant slab per year. Most of its 

current 3 million tonnes of annual raw 

steel output is sold as billet, bloom, wire 

rod and sections. 

‘‘The move into slab is in response to 

market demand,’’ Gerdau AA ̄ §ominas 

sales director Alberto Huallem said, 

adding that talks have already taken 

place with possible clients abroad. 

The move into large-scale slab export 

will bring Gerdau AA ̄ §ominas into 

direct competition with both Cia. 

SiderA ̄ ßrgica de Tubarao and Cia. 

SiderA ̄ ßrgica Nacional, Huallem said. 

‘‘But the market is big enough for 

everyone,’’ he added. 

The plant is working to boost its raw 

steel output to 4.5 million tonnes per 

year beginning in the second half of 

2007, when its No. 2 blast furnace using 

Chinese technology, currently under 

construction, is due on-stream as part of 

a $1.5-billion investment. 

The extra capacity will be used 

initially to produce more billet, and 

later slab for export once the slab caster 

comes on-stream in 2008, Gerdau 

AA ̄ §ominas industrial director Manoel 

Vitor de MendonA ̄ §a said. 

‘‘The slab caster is a new 

development, recently approved by the 

board, and will cost $275 million,’’

Gerdau Johannpeter said. Proposals 

from potential suppliers are still being 

considered and the supplier should be 

confirmed by the end of this year. 

Luiz AndrA ̄ e ́ Rico Vicente, Gerdau 

AA ̄ §ominas president, said that the 

caster will make only high-value grades. 

‘‘Our company trend is to steer away 

from commodity grades. We want to 

produce API and interstitial-free grades 

because the market is hungry for these 

products,’’ he said. 

Currently, Gerdau AA ̄ §ominas sells 

70 percent of its products for export, 

billet being its principal product. But its 

relatively new sections rolling mill is 

aimed principally at the domestic 

construction industry. 

Gerdau Johannpeter indicated that the 

installation of a 3-million-tonne slab 

caster is to prepare for possible future 

expansions of the Gerdau AA ̄ §ominas 

works, which was envisioned as a 10- 

million-tonne-per-year steelmaker when 

it was originally set up 20 years ago by 

the Brazilian state. 

‘‘We are already studying the 

possibility of a further expansion to 6 

million or 6.5 million tonnes of crude 

steel capacity,’’ Rico Vicente said. ‘‘We 

are being advised by (Japan’s JFE Steel 

Corp.) on these studies, which should 

be completed by the end of this year.’’

Attachment 31—CSA Steel Project 

Receives License, American Metal 

Market (July 6, 2006) 

CSA Steel Project Receives License 

By Diana Kinch 

Rio de Janeiro—Cia. SiderA ̃ ßrgica do 

AtlA ̃ ¢ntico (CSA), the 4.4-milliontonne-per-year slab-for-export joint 

venture to be built in Sepetiba, Rio de 

Janeiro state, by Germany’s 

ThyssenKrupp Stahl AG and Brazil’s 

Cia. Vale do Rio Doce, has been granted 

a preliminary environmental license 

despite protests by local fishermen. 

Notice that Rio de Janeiro state 

environmental authority FundaA ̃ §A ̃ £o 

Estadual de Engenharia do Meio 

Ambiente granted the license to CSA 

was published in the state’s official 

gazette Monday. 

The preliminary environmental 

license basically determines the site of 

the new works and will enable the 

steelmaking project to proceed with 

equipment purchases. The $2.4-billion 

CSA is slated for start-up in 2008, with 

all output aimed for export. 

Attachment 32—North America at 

Top of TK’s Agenda, American Metal 

Market (August 11, 2006) 

North America at Top of TK’s Agenda 

By Scott Robertson 

Pittsburgh—ThyssenKrupp AG, 

Du ̈ sseldorf, Germany, is sharpening its 

focus on North America, with plans to 

take a significant share of the U.S. 

carbon and stainless steel markets. 

The company said Friday it had 

approved a project development budget 

of $50 million, in effect a feasibility 

study into building a $2.9-billion carbon 

and stainless steel mill in the southern 

United States. 

ThyssenKrupp executives termed the 

proposal to build a mill a ‘‘backup plan’’

in case the company’s deal to acquire 

Dofasco Inc., Hamilton, Ontario, from 

Arcelor SA-Mittal Steel Co. NV falls 

through. But it seems likely the project 

will move forward, given the protective 

measures Arcelor took to secure Dofasco 

as it attempted to fight off a Mittal 

takeover in early negotiations. 

‘‘Our first priority is the acquisition of 

Dofasco,’’ Ekkehard D. Schulz, 

executive board chairman of 

ThyssenKrupp, said. ‘‘But in case that is 

not possible, we have to look for 

opportunities to develop our (North 

American) strategy.’’

That would appear to make building 

a mill the likely option, especially given 

that ThyssenKrupp’s announcement 

comes less than a week after Gonzalo 

Urquijo, senior executive vice president 

and chief financial officer of Arcelor, 

said it appears ‘‘impossible’’ for Dofasco 

to be sold given its control by a ‘‘Dutch 

trust.’’

ThyssenKrupp has been looking to 

increase its position in North America 

for years and reportedly had eyed the 

purchase of AK Steel Corp., 

Middletown, Ohio, or some form of tieup with U.S. Steel Corp., Pittsburgh. 

The company also reportedly looked at 

acquiring the Sparrows Point, Md., 

plant of Mittal Steel USA Inc. if the 

Dofasco deal fell through. 

Now it has turned its focus to a 

greenfield project that would comprise 

carbon and stainless steel 

manufacturing. The plan contemplates 

the construction of a hot strip mill by 

ThyssenKrupp Steel AG that would be 

used to process slab from 

ThyssenKrupp’s new Cia. Siderurgica 

do Atlantico (CSA) steel mill in Brazil. 

The new U.S. plant also would feature 

cold-rolling and hot-dip galvanizing 

capacity for carbon flat products. The 

1.8-billion-euros ($2.3-billion) carbon 

plant would produce about 4.5 million 

tonnes of steel per year. 

At the same time, ThyssenKrupp 

Stainless AG would spend around 500 

million euros ($636 million) to build a 

melt shop with an annual capacity of up 

to 1 million tonnes of slab, which would 

be processed on the hot strip mill. A 

cold-rolling facility also would be 

included, which in its initial phase 

would be designed to produce 325,000 

tons of cold strip and 100,000 tons of 

pickled hot strip. In addition, 

ThyssenKrupp Mexinox would be 

supplied with hot strip from the United 

States as starting material. 

ThyssenKrupp said sites in Alabama, 

Arkansas and Louisiana are under 

consideration for the project, but gave 

no timetable as to when construction 

might begin. Locating in that region 

would place the company in a 

geographic position to supply steel to 


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automotive transplant companies 

throughout the Southeast. It also would 

place the proposed mill in direct 

competition with SeverCorr LLC, a 

carbon steel mini-mill now under 

construction in Columbus, Miss., that 

plans to supply the automotive 

transplants. SeverCorr is on track to 

begin production in late 2007. 

ThyssenKrupp executives stressed 

that negotiations aimed at acquiring 

Dofasco would continue over the next 

few days and that the mill project would 

be undertaken only if those negotiations 

fail. 

‘‘Dofasco is our top priority,’’ said A. 

Stefan Kirsten, chief financial officer 

and a member of the executive board of 

ThyssenKrupp. ‘‘The greenfield strategy 

is a backup strategy. We need a Nafta 

strategy. If there is any chance that we 

do not get Dofasco, we do not want to 

be unprepared. We do not want to put 

our steel strategy into the hands of a 

third party. What we have done is fund 

a feasibility study. We have not agreed 

to build a steel plant in the U.S. This is 

a prudent company.’’

ThyssenKrupp has been prudent 

enough, Kirsten said, to review what 

adding such capacity would mean to the 

U.S. market. He said the U.S. steel 

industry does not produce all the steel 

the country needs and relies on imports 

to provide anywhere from 8 million to 

12 million tons per year to make up the 

difference. ThyssenKrupp’s plan, he 

said, is to displace those imports. 

The entire plan could be scrapped, 

Kirsten said, if ThyssenKrupp gets 

Dofasco. ‘‘If we get Dofasco, we will 

revisit our strategy,’’ he said. ‘‘We 

already have achieved a strong position 

in stainless (in the Nafta region) with 

our Mexican plant. This strategy (to 

build a new mill) is something we 

would be sure to revisit when the 

moment comes.’’

Attachment 33—Groundwork Laid 

For Brazil’s Ceara Slab Project, 

American Metal Market (September 1, 

2006) 

The attachment is available at the 

following Web site, http:// 

www.findarticles.com/p/articles/ 

mi_m3MKT/is_49-5_113/ai_n15981124. 

Attachment 34—CSN May Lift Slab 

Capacity Of Two Projects, American 

Metal Market (September 1, 2006) 

The attachment is available at the 

following Web site, http:// 

www.findarticles.com/p/articles/ 

mi_m3MKT/is_35-1_114/ai_n16726710. 

Attachment 35—Brasil’s Usiminas 

Casts Sights Abroad For New Slab 

Project Partner, American Metal 

Market (August 29, 2006) 

The attachment is available at the 

following Web site, http:// 

www.findarticles.com/p/articles/ 

mi_m3MKT/is_34-3_114/ai_n16715616. 

Attachment 36—Russia’s Severstal 

Wants to Ship More Steel to U.S., 

Reuters (February 2, 2004) 

Russia’s Severstal Wants To Ship More 

Steel to U.S. 

Reuters, 02.02.04, 7:56 AM ET 

Moscow, Feb 2 (Reuters)—Russian 

steel giant Severstal <CHMF.RTS> 

<CHMF.RTS>, fresh from its first 

acquisition in the United States, said on 

Monday it would ask the U.S. 

Commerce Department to allow it to 

ship more steel to the United States. 

Last Friday, Severstal completed the 

acquisition of bankrupt U.S. firm Rouge 

Industries Inc, one of the largest 

suppliers of steel to car giants such as 

Ford Motor (nyse: F—news—people) 

Co. 

The purchase, likely to increase 

Severstal’s presence in the global car 

market, was the second move by a major 

Russian metals company into the U.S. 

market after Norilsk Nickel 

<GMKN.RTS> <GMKN.RTS> took over 

U.S.-based platinum firm Stillwater 

Mining (nyse: SWC—news—people) Co. 

‘‘We would like to present Rouge 

Industries (nyse: ROU—news—people) 

with a plan for its financial 

revitalisation by this spring,’’ said 

Severstal spokeswoman Olga Yezhova. 

‘‘As part of this plan we intend to ask 

the U.S. Commerce Department to allow 

us to supply more steel slab there.’’

Severstal, one of Russia’s biggest 

exporters of steel, had previously said 

foreign firms with U.S. assets tended to 

obtain such permission. The company 

shipped a mere 2,000 tonnes of steel 

and products to the United States last 

year. 

But Washington’s recent decision to 

abolish three-year steel import duties 

that the United States slapped on 

countries including Russia, is likely to 

trigger major export growth from Russia. 

Dmitry Goroshkov, Severstal’s sales 

director, said in a recent media 

interview that Severstal could sell 

‘‘hundreds of thousands of tonnes of 

steel’’ to the United States this year as 

a result. 

Yezhova said Severstal had never 

supplied slab to Rouge before. Severstal 

plans to invest up to $45 million a year 

in its U.S. partner. 

A U.S. bankruptcy court has allowed 

the sale of Rouge to Severstal for about 

$285.5 million. Through its U.S. 

vehicle, Severstal has also bought 

Rouge’s 50 percent stake in Double 

Eagle Steel Coating Company—the 

world’s largest electro-galvanising line 

that produces galvanised sheet steel for 

cars. Severstal North America has also 

acquired Rouge’s 48 percent stake in 

Spartan Steel Coating, a hot dip 

galvanizing firm. 

Attachment 37—Tin and Chromium 

Coated Steel Sheet from Japan, Inv. 

No. 731–TA–860 (Review), USITC Pub. 

3860 (June 2006) at V–8 

The attachment is available at the 

following Web site, http:// 

hotdocs.usitc.gov/docs/pubs/701_731/ 

pub3860.pdf. 

Attachment 38—Tin and Chromium 

Coated Steel Sheet from Japan, Inv. 

No. 731–TA–860 (Review), USITC Pub. 

3860 (June 2006) at Table III–8 

The attachment is available at the 

following Web site, http:// 

hotdocs.usitc.gov/docs/pubs/701_731/ 

pub3860.pdf. 

Attachment 39—Mittal Shows Little 

Interest in Weirton Furnace Sale, 

American Metal Market (May 5, 2006) 

Mittal Shows Little Interest in Weirton 

Furnace Sale 

By Scott Robertson 

Pittsburgh—Mitchell A. Hecht, former 

chief financial officer at International 

Steel Group Inc., wants to buy and 

restart two idle blast furnaces in 

Weirton, W.Va. Standing in his way, he 

says, is the inattention of the furnaces’

current owner, Mittal Steel Co NV., the 

world’s largest steelmaker. 

‘‘I know right now they have bigger 

fish to fry,’’ Hecht said about Mittal 

Steel’s efforts to acquire Arcelor SA, the 

world’s second-largest steel producer. 

‘‘But I think once they can focus on this, 

they’ll find it’s a win-win-win 

situation’’ for Mittal, for Hecht’s 

recently formed Hamsphire Steel 

Investments and for as many as 200 

unemployed steelworkers in West 

Virginia. 

Hecht confirmed Thursday that he has 

made an offer to buy the former Weirton 

Steel Corp. blast furnaces from Mittal 

Steel USA Inc. Those furnaces were 

idled a year ago when Mittal decided to 

reduce steel production to better align it 

with demand at the time. The company 

never brought back the furnaces—

among the highest cost in Mittal’s 

arsenal—in-stead redirecting efforts on 

the Weirton plant’s tinplate business. 

Hecht envisions starting a new 

company around the furnaces with an 

initial investment of about $10 million, 


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including the purchase price. 

Additional working capital would be 

needed as well. 

Employees of the new company 

would receive an unspecified 

ownership interest. Hecht said 

employee involvement would not be on 

the order of an employee stock 

ownership plan (ESOP), the likes of 

which once operated at Weirton Steel. 

‘‘It’s not going to be an ESOP. But I want 

the employees to be involved,’’ he said. 

‘‘The furnaces are in good shape,’’

Hecht said. ‘‘They would require some 

prep work to bring them back. We’re not 

talking about major dollars initially. 

Long-term, I think we are looking at 

investment on the level of several tens 

of millions of dollars.’’

His plan is to sell pig iron produced 

on-site and invest further in alternative 

methods of ironmaking. 

‘‘We think it is a win for all parties,’’

he said. ‘‘It’s a win for the (Independent 

Steelworkers Union) in that it would 

bring people back to work. It’s a win for 

Mittal because it would allow them to 

enhance their good standing with the 

union, in the community and in the 

region. And it would be a win for us 

because we think we can make money 

selling pig and trying to invest in 

alternate methods of ironmaking. I have 

become intrigued over the past year 

with advances in alternative ironmaking 

that are being made in other countries. 

I think there are some positive things 

that can be done in that area.’’

The ISU, which represents hourly 

workers at what is now known as Mittal 

Steel-Weirton, expects 80 jobs would be 

created by restarting one furnace and as 

many as 200 jobs if both furnaces are 

operating, according to Mark Glyptis, 

president of the ISU. About 1,000 union 

jobs have been eliminated at Mittal 

Steel-Weirton since the furnaces were 

idled. 

Glyptis indicated that Mittal Steel 

appeared unwilling to part with the 

assets. 

Hecht expressed a more positive view. 

‘‘I have made an offer to them and they 

have responded to that offer with some 

questions,’’ he said. ‘‘I have responded 

to their questions and we are moving 

the process forward. Frankly, they are 

thinly staffed at this point and their 

attention is diverted to what they are 

doing with Arcelor. I think once they get 

through (dealing with Arcelor) and have 

a chance to focus on this offer, they’ll 

see it as something positive.’’

Hecht said he has not heard anything 

negative from Mittal with regard to his 

offer. ‘‘We are going through the 

process. Mittal Steel USA is a relatively 

small part, about 10 percent, of the 

global company. Right now (the parent 

company) has their attention elsewhere. 

I am confident that once they turn their 

attention and get focused on this offer, 

we’ll be able to get something done.’’

Hecht’s Hampshire Steel Investments 

is a private hedge fund that aims to 

invest in steel equities. Before becoming 

involved with International Steel Group, 

which was acquired by steel mogul 

Lakshmi N. Mittal last year and merged 

with his other U.S. holdings to form 

Mittal Steel USA, Hecht spent time with 

Bankers Investment, PaineWebber Inc. 

and as an independent consultant. 

Attachment 40—Mittal Plans to Sell 

Dofasco, Hecht Waits for Weirton, 

Steel Business Briefing (August 16, 

2006) 

Mittal Still Plans To Sell Dofasco, Hecht 

Waits for Weirton 

Wednesday, 16 August 2006 

Whilst the Arcelor side of the Arcelor 

Mittal merger maintains that Dofasco 

cannot be sold to ThyssenKrupp, there 

still appears to be a differing opinion 

coming from the Mittal camp. In fact, 

that opinion seems strong enough that 

Mittal Steel USA declines to say if one 

of its other tinplate plants will be sold 

to satisfy regulators’ concerns. 

A Mittal Steel USA spokesman tells 

Steel Business Briefing that no decision 

is forthcoming shortly on whether the 

Sparrows Point, Maryland works or the 

Weirton, West Virginia works will be 

sold to comply with U.S. Justice 

Department concerns over a controlling 

interest in the U.S. tin mill products 

market place. 

He says that’s because European 

management—at least those from the 

Mittal side of the equation—still believe 

Dofasco can be sold to TK under an 

agreement the two sides forged in 

January. 

Meanwhile, Mitch Hecht, the former 

ISG executive who has expressed an 

interest in Weirton’s now-shuttered hot 

end, tells SBB he’s still interested in the 

slab making operation and that he is 

also willing to partner with the works’

independent union to purchase the 

rolling operations as well if Mittal is 

keen to sell them. 

Saying the Weirton hot strip mill ‘‘is 

a very attractive asset,’’ Hecht says he 

will bring in financial partners to again 

combine the rolling and finishing 

operations with the hot end to make the 

works profitable. 

He adds, however, ‘‘We’re sitting here 

waiting to see which way Mittal will 

go’’ with the sale of one of the 

properties. 

Attachment 41—‘‘HHI Impact of 

Alternative Divestiture Scenarios’’

Arcelor-Mittal Merger—Competitive 

Impact for U.S. Tin Consumers 

HHI Impact of Alternative Divestiture 

Scenarios 

We calculate the HHI for the U.S. tin 

market using market shares reported in 

the DOJ Competitive Impact Statement. 

Market shares for the two foreign 

suppliers (Rasselstein and Corus) was 

estimated using U.S. import statistics. 

Prior to the Mittal-Arcelor merger we 

estimate the market shares as follows: 

Market 

share 

(percent) 

USS .............................................. 44 

Mittal ............................................. 31 

Ohio Coatings ............................... 8 

Dofasco-Arcelor-EU ...................... 6 

Rasselstein ................................... 5 

Corus ............................................ 6 

Mittal’s market share (31%) can be 

divided into Weirton (18.6%) and 

Sparrows Point (12.4%). Arcelor’s 

market share can be divided into 

Dofasco (4.0%) and Arcelor-EU (2.0%). 

In the following pages we present a 

separate HHI calculation for each 

potential divestiture. Given that certain 

options involve the high likelihood that 

a U.S. firm will fail, we are forced to 

make an assumption about how the 

surviving firms’ market share will be 

reallocated. For simplicity we assume 

that the surviving firms’ market share 

will grow in proportion to their current 

share. 

For instance, if Weirton is divested by 

Mittal-Arcelor but subsequently fails, 

18.6% of the tin market will disappear 

and 81.4% survives. We assume that the 

surviving firms’ market share will 

remain in proportion to their current 

shares. That is, USS’s current market 

share is 44%; our assumption implies 

that USS’s market share following the 

failure of Weirton would be 44%/ 

(81.4%) = 54.05% 

We stress that our assumption is very 

optimistic (i.e., pro-competitive) as it 

implies the foreign suppliers’ market 

share also increases. Given the U.S. tin 

industry’s protectionist history, such 

market share increases could easily 

result in an antidumping petition 

against foreign suppliers. As 

exemplified by the 2000 tin case against 

Japan antidumping actions often result 

in the foreign country exiting the U.S. 

market. This prospect makes it even 

more imperative that the DOJ pursue a 

divestiture that maximizes that chance 

that all U.S. production will remain 

viable. 


sroberts on PROD1PC70 with NOTICES
17674 Federal Register / Vol. 72, No. 67 / Monday, April 9, 2007 / Notices 

HHI TIN MARKET—SUMMARY TABULATION

[Eastern U.S. Regional Market] 

HHI Loss of Mkt 

size (%) 

Market Condition (Pre-merger) ........................................................................................................................................ 3,058 ....................

Market Condition (Post-merger)—No Divestiture ............................................................................................................ 3,446 ....................

Change in HHI .......................................................................................................................................................... 388 ....................

Market Condition (Post-merger)—Weirton Divested (independent): 

Weirton Survives (highly unlikely) ............................................................................................................................ 2,761 ....................

Weirton Fails (very likely) ......................................................................................................................................... 3,645 18.6 

Market Condition (Post-merger)—Sparrows Point Divested (independent): 

Weirton Survives (unlikely beyond the very short term) .......................................................................................... 2,836 ....................

Weirton Fails (likely within a few years) ................................................................................................................... 3,421 18.6 

Market Condition (Post-merger)—Sparrows Point Divested (independent): 

S–Point TMP Operations Survive ............................................................................................................................ 2,836 ....................

S–Point TMP Operations Shuttered ......................................................................................................................... 3,495 12.4 

Market Condition (Post-merger)—Sparrows Point Divested (to USS): 

S–Point TMP Operations Survive ............................................................................................................................ 3,927 ....................

S–Point TMP Operations Shuttered ......................................................................................................................... 3,495 12.4 

Market Condition (Post-merger)—Dofasco Divested (independent) 3,182 ....................

Market Condition (Post-merger)—Dofasco Divested to TK 3,222 ....................

Prepared by WFG Competitive Impact Analysis: 

Alternative Remedies 

HHI Tin Market 

Eastern U.S. Regional Market 

MARKET CONDITION (PRE-MERGER) 

Mkt share MShr-Sqr 

USS .......................................................................................................................................................................... 44% 0.19360 

Mittal ........................................................................................................................................................................ 31% 0.09610 

Ohio Coatings .......................................................................................................................................................... 8% 0.00640 

Dofasco-Arcelor-EU ................................................................................................................................................. 6% 0.00360 

Rasselstein .............................................................................................................................................................. 5% 0.00245 

Corus ....................................................................................................................................................................... 6% 0.00366 

HHI ........................................................................................................................................................................... 3,058 ........................

MARKET CONDITION (POST-MERGER)—NO DIVESTITURE

Mkt share MShr-Sqr 

USS .......................................................................................................................................................................... 44% 0.19360 

Mittal-Arcelor ............................................................................................................................................................ 37% 0.13690 

Ohio Coatings .......................................................................................................................................................... 8% 0.00640 

Rasselstein .............................................................................................................................................................. 5% 0.00245 

Corus ....................................................................................................................................................................... 6% 0.00366 

100% ........................

HHI ........................................................................................................................................................................... 3,430 ........................

KEY MARKET SHARES

Weirton ................................................................................................................................................................................................. 18.6% 

Sparrows Point .................................................................................................................................................................................... 12.4% 

Dofasco ................................................................................................................................................................................................ 4.0% 

Arcelor-EU ........................................................................................................................................................................................... 2.0% 

MARKET CONDITION (POST-MERGER)—WEIRTON DIVESTED (INDEPENDENT) 

Weirton survives Weirton fails 

Mkt share MShr-Sqr Mkt share MShr-Sqr 

USS .................................................................................................................. 44.0% 0.19360 54% 0.29218 

Mittal-Arcelor .................................................................................................... 18.4% 0.03386 23% 0.05110 

Ohio Coatings .................................................................................................. 8.0% 0.00640 10% 0.00966 

Weirton ............................................................................................................. 18.6% 0.03460 ........................ ........................

Rasselstein ...................................................................................................... 5% 0.00245 6% 0.00370 


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MARKET CONDITION (POST-MERGER)—WEIRTON DIVESTED (INDEPENDENT)—Continued 

Weirton survives Weirton fails 

Mkt share MShr-Sqr Mkt share MShr-Sqr 

Corus ............................................................................................................... 6% 0.00366 7% 0.00552 

HHI ................................................................................................................... 2,746 ........................ 3,622 ........................

Eastern U.S. Regional Market 

MARKET CONDITION (POST-MERGER)—SPARROWS POINT DIVESTED (INDEPENDENT) 

Weirton Survives Weirton fails 

Mkt share MShr-Sqr Mkt share MShr-Sqr 

USS .................................................................................................................. 44.0% 0.19360 54% 0.29218 

Mittal-Arcelor .................................................................................................... 24.6% 0.06052 7.4% 0.00543 

Ohio Coatings .................................................................................................. 8.0% 0.00640 10% 0.00966 

Sparrows Point ................................................................................................ 12.4% 0.01538 15% 0.02321 

Rasselstein ...................................................................................................... 5% 0.00245 6% 0.00370 

Corus ............................................................................................................... 6% 0.00366 7% 0.00552 

HHI ................................................................................................................... 2,820 ........................ 3,397 ........................

MARKET CONDITION (POST-MERGER)—SPARROWS POINT DIVESTED (INDEPENDENT) 

S–Point TMP operations remain 

in operation 

S–Point TMP operations 

shuttered 

Mkt share MShr-Sqr Mkt share MShr-Sqr 

USS .................................................................................................................. 44.0% 0.19360 50% 0.25229 

Mittal-Arcelor .................................................................................................... 24.6% 0.06052 28% 0.07886 

Ohio Coatings .................................................................................................. 8.0% 0.00640 9% 0.00834 

Sparrows Point ................................................................................................ 12.4% 0.01538 ........................ 0.00000 

Rasselstein ...................................................................................................... 5% 0.00245 6% 0.00319 

Corus ............................................................................................................... 6% 0.00366 7% 0.00477 

HHI ................................................................................................................... 2,820 ........................ 3,475 ........................

MARKET CONDITION (POST-MERGER)—SPARROWS POINT DIVESTED (TO USS) 

S–Point TMP operations remain 

in operation 

S–Point TMP operations 

shuttered 

Mkt share MShr-Sqr Mkt share MShr-Sqr 

USS .................................................................................................................. 56.4% 0.31810 50% 0.25229 

Mittal-Arcelor .................................................................................................... 24.6% 0.06052 28% 0.07886 

Ohio Coatings .................................................................................................. 8.0% 0.00640 9% 0.00834 

........................ ........................ 0% 0.00000 

Rasselstein ...................................................................................................... 5% 0.00245 6% 0.00319 

Corus ............................................................................................................... 6% 0.00366 7% 0.00477 

HHI ................................................................................................................... 3,911 ........................ 3,475 ........................

MARKET CONDITION (POST-MERGER)—DOFASCO DIVESTED (INDEPENDENT) 

Mkt share MSr-Sqr 

USS .......................................................................................................................................................................... 44%0 0.19360 

Mittal-Arcelor ............................................................................................................................................................ 33% 0.10890 

Ohio Coatings .......................................................................................................................................................... 8% 0.00640 

Rasselstein .............................................................................................................................................................. 5% 0.00245 

Corus ....................................................................................................................................................................... 6% 0.00366 

Dofasco .................................................................................................................................................................... 4% 0.00160 

HHI ........................................................................................................................................................................... 3,166 ........................

MARKET CONDITION (POST-MERGER)—DOFASCO DIVESTED TO THYSSENKRUPP

Mkt share MSr-Sqr 

USS .......................................................................................................................................................................... 44% 0.19360 


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MARKET CONDITION (POST-MERGER)—DOFASCO DIVESTED TO THYSSENKRUPP—Continued 

Mkt share MSr-Sqr 

Mittal-Arcelor ............................................................................................................................................................ 33% 0.10890 

Ohio Coatings .......................................................................................................................................................... 8% 0.00640 

Rasselstein-Dofasco (TK) ........................................................................................................................................ 9% 0.00801 

Corus ....................................................................................................................................................................... 6% 0.00366 

HHI ........................................................................................................................................................................... 3,206 ........................

Prepared by WFG Competitve Impact Analysis: 

Alternative Remedies 

HHI Tin Market 

Eastern U.S. Regional Market 

MARKET CONDITION (PRE-MERGER) 

Mkt 

shareCHED 

H=’1’≤MShrSqr 

USS .......................................................................................................................................................................... 44% 0.19360 

Mittal ......................................................................................................................................................................... 31% 0.09610 

Ohio Coatings .......................................................................................................................................................... 8% 0.00640 

Dofasco-Arcelor-EU ................................................................................................................................................. 6% 0.00360 

Rasselstein ............................................................................................................................................................... 5% 0.00245 

Corus ........................................................................................................................................................................ 6% 0.00366 

HHI ........................................................................................................................................................................... 3,058 .......................

MARKET CONDITION (POST-MERGER)—NO DIVESTITURE

Mkt share MShr-Sqr 

USS .......................................................................................................................................................................... 44% 0.19360 

Mittal-Arcelor ............................................................................................................................................................ 37% 0.13690 

Ohio Coatings .......................................................................................................................................................... 8% 0.00640 

Rasselstein .............................................................................................................................................................. 5% 0.00245 

Corus ....................................................................................................................................................................... 6% 0.00366 

100% ........................

HHI ........................................................................................................................................................................... 3,430 ........................

KEY MARKET SHARES

Weirton ................................................................................................................................................................................................. 18.6% 

Sparrows Point .................................................................................................................................................................................... 12.4% 

Dofasco ................................................................................................................................................................................................ 4.0% 

Arcelor-EU ........................................................................................................................................................................................... 2.0% 

MARKET CONDITION (POST-MERGER)—WEIRTON DIVESTED (INDEPENDENT) 

Weirton survives Weirton fails 

Mkt share MShr-Sqr Mkt share MShr-Sqr 

USS .................................................................................................................. 44.0% 0.19360 54% 0.29218 

Mittal-Arcelor .................................................................................................... 18.4% 0.03386 23% 0.05110 

Ohio Coatings .................................................................................................. 8.0% 0.00640 10% 0.00966 

Weirton ............................................................................................................. 18.6% 0.03460 ........................ ........................

Rasselstein ...................................................................................................... 5% 0.00245 6% 0.00370 

Corus ............................................................................................................... 6% 0.00366 7% 0.00552 

HHI ................................................................................................................... 2,746 ........................ 3,622 ........................

MARKET CONDITION (POST-MERGER)—SPARROWS POINT DIVESTED (INDEPENDENT) 

Weirton survives Weirton fails 

Mkt share MShr-Sqr Mkt share MShr-Sqr 

USS .................................................................................................................. 44.0% 0.19360 54% 0.29218 

Mittal-Arcelor .................................................................................................... 24.0% 0.06052 7.4% 0.00543 

Ohio Coatings .................................................................................................. 8.0% 0.00640 10% 0.00966 


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MARKET CONDITION (POST-MERGER)—SPARROWS POINT DIVESTED (INDEPENDENT)—Continued 

Weirton survives Weirton fails 

Mkt share MShr-Sqr Mkt share MShr-Sqr 

Sparrows Point ................................................................................................ 12.4% 0.01538 15% 0.02321 

Rasselstein ...................................................................................................... 5% 0.00245 6% 0.00370 

Corus ............................................................................................................... 6% 0.00366 7% 0.00552 

HHI ................................................................................................................... 2,820 ........................ 3,397 ........................

MARKET CONDITION (POST-MERGER)—SPARROWS POINT DIVESTED (INDEPENDENT) 

S–Point TMP operations remain 

in operation 

S–Point TMP operations 

shuttered 

Mkt share MShr-Sqr Mkt share MShr-Sqr 

USS .................................................................................................................. 44.0% 0.19360 50% 0.25229 

Mittal-Arcelor .................................................................................................... 26.6% 0.06052 28% 0.07886 

Ohio Coatings .................................................................................................. 8.0% 0.00640 9% 0.00834 

Sparrows Point ................................................................................................ 12.4% 0.01538 ........................ 0.00000 

Rasselstein ...................................................................................................... 5% 0.00245 6% 0.00319 

Corus ............................................................................................................... 60% 0.00366 7 0.00477 

HHI ................................................................................................................... 2,820 ........................ 3,475 ........................

MARKET CONDITION (POST-MERGER)—SPARROWS POINT DIVESTED (TO USS) 

S–Point TMP operations remain 

in operation 

S–Point TMP operations 

shuttered 

Mkt share MShr-Sqr Mkt share MShr-Sqr 

USS .................................................................................................................. 56.4% 0.31810 50% 0.25229 

Mittal-Arcelor .................................................................................................... 24.6% 0.06052 28% 0.07886 

Ohio Coatings .................................................................................................. 8.0% 0.00640 9% 0.00834 

........................ ........................ 0% 0.00000 

Rasselstein ...................................................................................................... 5% 0.00245 6% 0.00319 

Corus ............................................................................................................... 6% 0.00366 7% 0.00477 

HHI ................................................................................................................... 3,911 ........................ 3,475 ........................

MARKET CONDITION (POST-MERGER)—DOFASCO DIVESTED (INDEPENDENT) 

Mkt share MShr-Sqr 

USS .......................................................................................................................................................................... 44% 0.19360 

Mittal-Arcelor ............................................................................................................................................................ 33% 0.10890 

Ohio Coatings .......................................................................................................................................................... 8% 0.00640 

Rasselstein .............................................................................................................................................................. 5% 0.00245 

Corus ....................................................................................................................................................................... 6% 0.00366 

Dofasco .................................................................................................................................................................... 4% 0.00160 

HHI ........................................................................................................................................................................... 3,166 ........................

MARKET CONDITION (POST-MERGER)—DOFASCO DIVESTED TO THYSSENKRUPP

Mkt share MShr-Sqr 

USS .......................................................................................................................................................................... 44% 0.19360 

Mittal-Arcelor ............................................................................................................................................................ 33% 0.10890 

Ohio Coatings .......................................................................................................................................................... 8% 0.00640 

Rasselstein-Dofasco (TK) ........................................................................................................................................ 9% 0.00801 

Corus ....................................................................................................................................................................... 6% 0.00366 

HHI ........................................................................................................................................................................... 3,206 ........................

Attachment 42—‘‘Probability That 

Divestiture Will Improve Competition’’


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17680 Federal Register / Vol. 72, No. 67 / Monday, April 9, 2007 / Notices 

Attachment 43—ITC Prehearing Staff 

Report, Certain Carbon Steel 

Products From Australia, Belgium, 

Brazil, Canada, Finland, France, 

Germany, Japan, Korea, Mexico, 

Poland, Romania, Spain, Sweden, 

Taiwan, and the United Kingdom, 

Inv. Nos. AA1921–197 (Second 

Review); 701–TA–319, 320, 325–328, 

348, and 350 (Second Review); 701–TA–

319, 320, 325–328, 348, and 350 

(Second Review); and 731–TA–573, 574, 

576, 578, 582–587, 612, and 614–618 

(Second Review) (September 25, 2006) 

at Tables CORE–III–8 and CTL III–9 

Public Version 

UNITED STATES INTERNATIONAL 

TRADE COMMISSION 

Washington, DC 

Certain Carbon Steel Products From 

Australia, Belgium, Brazil, Canada, Finland, 

France, Germany, Japan, Korea, Mexico, 

Poland, Romania, Spain, Sweden, Taiwan, 

and the United Kingdom 

Prehearing Report to the Commission 

on Investigation Nos. AA1921–197 

(Second Review); 701–TA–319, 320, 

325–328, 348, and 350 (Second Review); 

and 731–TA–573, 574, 576, 578, 582–

587, 612, and 614–618 (Second Review). 

Staff assigned: 

Elizabeth Haines, Investigator (205–

3200), 

Michael Szustakowski, Investigator 

(205–3188), 

Gerald Houck, Industry Analyst (205–

3392), 

Heather Sykes, Industry Analyst (205–

3436), 

Kelly Clark, Economist (205–3166), 

Mary Klir, Accountant (205–3247), 

June Brown, Attorney (205–3042), 

David Fishberg, Attorney (708–2614), 

Douglas Corkran, Supervisory 

Investigator (205–3057). 

Staff gratefully acknowledge the 

contributions of the following 

individuals: 

Mara Alexander; Gabriel Ellenberger; 

Lita David-Harris; Carolyn Holmes; 

Steven Hudgens; Susan Louie; Mark 

Rees; Fred Ruggles; Lemuel Shields; and 

Darlene Smith in January–June 2006 

than in January–June 2005. Ten of the 

18 producers operating continuously 

from 2000 to 2003 reported better 

operating profits while the other eight 

producers reported a decline in 

operating profits. As discussed in table 

CORE–III–9, data for 2003 are impacted 

by limitations in information available 

to * * * regarding the operations of 

* * *. 

TABLE CORE–III–8—CORROSION-RESISTANT STEEL: RESULTS OF OPERATIONS OF U.S. PRODUCERS, 2000–05, 

JANUARY–JUNE 2005, AND JANUARY–JUNE 2006 

Item 

Fiscal year January–June 

2000 2001 2002 2003 2004 2005 2005 2006 

Quantity (short tons) 

Total net sales ................................... 20,077,026 19,561,875 20,890,841 19,290,267 21,916,288 20,389,803 10,108,023 11,349,571 

Value ($1,000) 

Total net sales ................................... 11,060,117 9,766,640 10,955,956 10,324,538 14,847,617 14,495,023 7,428,201 8,258,842 

COGS ................................................ 10,487,543 9,843,595 10,699,028 9,711,362 12,768,311 13,267,367 6,587,267 7,606,927 

Gross profit (loss) .............................. 572,574 (76,955 ) 256,928 613,176 2,079,306 1,277,656 840,934 651,915 

SG&A expenses ................................ 424,888 412,539 435,110 459,562 456,432 448,921 215,626 224,073 

Operating income (loss) .................... 147,686 (489,494 ) (178,182 ) 153,614 1,622,874 778,735 625,308 427,842 

Interest expense ................................ 270,797 281,813 219,501 184,218 190,862 147,755 71,222 79,063 

CDSOA income ................................. 0 8,240 5,125 14,416 17,235 6,593 0 0 

Other income (expense) ................... 50,357 6,953 29,850 (58,033 ) (95,415 ) (101,884 ) (54,609 ) (45,711 ) 

Net income (loss) .............................. (72,754 ) (756,114 ) (362,708 ) (74,221 ) 1,353,832 535,689 499,477 303,068 

Depreciation ...................................... 629,065 632,189 556,215 433,982 413,178 396,836 204,831 213,797 

Cash flow .......................................... 556,311 (123,925 ) 193,507 359,761 1,767,010 932,525 704,308 516,865 

Ratio to net sales (percent) 

COGS: 

Raw materials ............................ 42.1 45.3 44.3 49.4 51.9 55.8 55.0 58.3 

Direct labor ................................. 11.3 11.5 9.3 9.8 8.0 7.9 7.8 7.7 

Other factory costs ............................ 41.5 44.0 44.0 34.9 26.0 27.9 25.9 26.1 

Total COGS ........................ 94.8 100.8 97.7 94.1 86.0 91.5 88.7 92.1 

Gross profit (loss) .............................. 5.2 (0.8 ) 2.3 5.9 14.0 8.5 11.3 7.9 

SG&Aexpenses ................................. 3.8 4.2 4.0 4.5 3.1 3.1 2.9 2.7 

Operating income (loss) .................... 1.3 (5.0 ) (1.6 ) 1.5 10.9 5.4 8.4 5.2 

Net income (loss) .............................. (0.7 ) (7.7 ) (3.3 ) (0.7 ) 9.1 3.7 6.7 3.7 

Unit value (per short ton) 

Total net sales ................................... $551 $499 $524 $535 $677 $711 $735 $728 

COGS: 

Raw materials ............................ 232 226 233 264 352 396 404 424 

Direct labor ................................. 62 58 49 52 54 56 57 56 

Other factory costs ............................ 228 220 231 187 176 198 191 190 

Total COGS ........................ 522 503 512 503 583 651 652 670 

Gross profit (loss) .............................. 29 (4 ) 12 32 95 60 83 57 


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TABLE CORE–III–8—CORROSION-RESISTANT STEEL: RESULTS OF OPERATIONS OF U.S. PRODUCERS, 2000–05, 

JANUARY–JUNE 2005, AND JANUARY–JUNE 2006—Continued 

Item 

Fiscal year January–June 

2000 2001 2002 2003 2004 2005 2005 2006 

SG&Aexpenses ................................. 21 21 21 24 21 22 21 20 

Operating income (loss) .................... 7 (25 ) (9 ) 8 74 38 62 38 

Net income (loss) .............................. (4 ) (39 ) (17 ) (4 ) 62 26 49 27 

Number of firms reporting 

Operating losses ............................... 5 10 7 6 1 4 2 6 

Data ................................................... 18 19 19 19 19 19 19 19 

Souce: Compiled from data submitted in response to Commission questionnaires. 

The industry-wide financial results 

improved sharply from 2003 to 2004. 

Per-unit operating income substantially 

improved as the increase in per-unit net 

sales values ($142 per short ton) was 

greater than the combined effects of an 

increase in unit cost of goods sold 

(‘‘COGS’’) ($79 per short ton) and a 

decline in selling, general, and 

administrative (‘‘SG&A’’) expenses ($3 

per short ton). The 2003 to 2004 

improvements in operating income was 

reflected in 18 of 19 reporting firms’

financial data. 

The domestic industry’s total and perunit operating income again declined 

from 2004 to 2005 and was lower in 

January—June 2006 than in January—

June 2005; however, 2005 operating 

income was still higher than in 2000–

03. In 2005, the increase in per-unit net 

sales values ($33 per short ton) was 

smaller than the increase in COGS ($68 

per short ton) and SG&A expenses ($1 

per short ton). The overall decline from 

2004 to 2005 was experienced by the 

majority (17 of 19 producers) of the 

industry. 

Per-unit net sales values were lower 

($7 per short ton) while per-unit costs 

and expenses were higher ($17 per short 

ton) in January—June 2006 as compared 

to January—June 2005. The overall 

decline. 

TABLE CTL–III–9—CTL PLATE: RESULTS OF OPERATIONS OF U.S. MILLS AND PROCESSORS, 2000–05, JANUARY–JUNE

2005, AND JANUARY–JUNE 2006 

Item 

Fiscal year January–June 

2000 2001 2002 2003 2004 2005 2005 2006 

Quantity (short tons) 

Total net sales ................................... 4,747,122 4,308,921 4,769,611 5,263,108 5,691,810 5,762,736 2,859,260 3,389,491 

Value ($1,000) 

Total net sales ................................... 1,731.020 1,467,318 1,627,675 1,906,404 3,609,040 4,213,623 2,202,648 2,486,482 

COGS ................................................ 1,782,446 1,562,873 1,644,041 1,903,185 2,711,059 3,018,911 1,548,290 1,782,419 

Gross profit (loss) .............................. (51,426 ) (95,555 ) (16,366 ) 3,219 897,981 1,194,712 654,358 704,423 

SG&A expenses ................................ 111,043 104,762 97,260 136,865 104,440 122,899 58,079 70,415 

Operating income (loss) .................... (162,469 ) (200,317 ) (113,626 ) (133,646 ) 793,541 1,071,813 596,279 634,009 

Interest expense ................................ 40,553 50,098 43,096 44,338 43,747 45,283 18,184 15,062 

CDSOA income ................................. 0 827 146 1,508 2,677 413 0 0 

Other income/(expense) .................... 5,466 (1,824 ) 19,237 18,185 17,809 23,559 (382 ) 10,989 

Net income/(loss) .............................. (197,556 ) (251,412 ) (137,339 ) (158,291 ) 770,281 1,050,502 577,713 629,935 

Depreciation ...................................... 109,461 114,677 127,946 121,969 116,779 116,072 58,565 60,141 

Cash flow .......................................... (88,095 ) (136,735 ) (9,393 ) (36,322 ) 887,060 1,166,574 636,278 690,077 

Ratio to net sales (percent) 

COGS: 

Raw materials ............................ 44.0 43.7 43.9 48.8 46.6 45.8 44.8 43.7 

Direct labor ................................. 14.7 14.4 12.2 11.8 5.5 5.0 4.4 5.2 

Other factory costs ..................... 44.2 48.4 44.9 39.3 23.0 20.8 21.1 22.8 

Total COGS ........................ 103.0 106.5 101.0 99.8 75.1 71.6 70.3 71.7 

Gross profit (loss) .............................. (3.0 ) (6.5 ) (1.0 ) 0.2 24.9 28.4 29.7 28.3 

SG&A expenses ................................ 6.4 7.1 6.0 7.2 2.9 2.9 2.6 2.8 

Operating income (loss) .................... (9.4 ) (13.7 ) (7.0 ) (7.0 ) 22.0 25.4 27.1 25.5 

Net income (loss) .............................. (11.4 ) (17.1 ) (8.4 ) (8.3 ) 21.3 24.9 26.2 25.3 

Unit value (per short ton) 

Total net sales ................................... $365 $341 $341 $362 $634 $731 $770 $734 

COGS: 

Raw materials ............................ 161 149 150 177 295 335 345 320 

Direct labor ................................. 54 49 41 43 35 37 34 38 

Other factory costs ..................... 161 165 153 142 146 152 162 167 


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1Although Mittal and Arcelor are now known as 

Arcelor Mittal, we refer to each by their pre-merger 

names in these comments to avoid confusion, 

unless otherwise indicated. 2As defined in the Proposed Final Judgment, 

‘‘Tin Mill Products’’ means collectively black plate, 

i.e., light-gauge cold-rolled bare steel sheet; 

electrolytic tin plate, i.e., black-plate electrolytically 

coated with tin; and tin free steel, i.e., black plate 

electrolytically coated with chromium. Proposed 

Final Judgment, II.M. 

TABLE CTL–III–9—CTL PLATE: RESULTS OF OPERATIONS OF U.S. MILLS AND PROCESSORS, 2000–05, JANUARY–JUNE

2005, AND JANUARY–JUNE 2006—Continued 

Item 

Fiscal year January–June 

2000 2001 2002 2003 2004 2005 2005 2006 

Total COGS ........................ 375 363 345 362 476 524 542 526 

Gross profit (loss) .............................. (11 ) (22 ) (3 ) 1 158 207 229 208 

SG&A expenses ................................ 23 24 20 26 18 21 20 21 

Operating income (loss) .................... (34 ) (46 ) (24 ) (25 ) 139 186 209 187 

Net income (loss) .............................. (42 ) (58 ) (29 ) (30 ) 135 182 202 186 

Number of firms reporting 

Operating losses ............................... 8 8 9 10 1 0 1 0 

Data ................................................... 14 13 14 15 16 15 15 15 

Source: Compiled from data submitted in response to Commission questionnaires. 

The industry-wide financial decline 

reversed from 2003 to 2005. Per-unit 

operating income substantially 

improved as the increase in per-unit net 

sales values ($369 per short ton) was 

much greater than the combined effects 

of an increase in unit cost of goods sold 

(‘‘COGS’’) ($162 per short ton) and a 

decline in selling, general, and 

administrative (‘‘SG&A’’) expenses ($5 

per short ton). While * * * enjoyed 

some of the largest increases in 

operating profitability from 2003 to 

2005, the 2003 to 2005 increase cut 

across the industry, as all mills 

(individually) and processors 

(collectively) operating continuously 

during this time frame reported 

increased operating profits or smaller 

losses. 

The domestic industry’s operating 

income was also higher in January–June 

2006 than in January–June 2005 due to 

the increase in net sales quantity; 

however, on a per-unit basis, lower net 

sales values ($37 per short ton) were 

greater in magnitude than the net 

reduction in COGS (lower by $16 per 

short ton) and SG&A expenses (higher 

by $0.50 per short ton). The higher 

operating income level in January–June 

2006 was generally reflected across the 

industry, as a majority (10 of 15) of 

firms reported greater operating income 

than in January–June 2005. 

Attachment 44—Certain Hot-Rolled 

Flat-Rolled Carbon-Quality Steel 

Products From Brazil, Japan, and 

Russia, Inv. Nos. 701–TA–384 and 

731–TA–806–808 (Review), USITC Pub. 

3767 (April 2005) at Table III–11 

The attachment is available at the 

following Web site, http:// 

hotdocs.usitc.gov/docs/pubs/701_731/

pub3767.pdf. 

Exhibit 2 

Weil, Gotshal & Manges LLP 

November 15, 2006 

Maribeth Petrizzi, Esq., 

Chief, Litigation II Section, U.S. 

Department of Justice, Antitrust 

Division, 1401 H St., NW., Suite 

3000, Washington, DC 20530. 

Re: Comments of ThyssenKrupp A.G. 

Regarding The Proposed Final 

Judgment In United States v. Mittal 

Steel Company N.V. (Civil Case No. 

1:06–CV01360–ESH) 

Dear Ms. Petrizzi: Pursuant to the 

Section 2(b) of the Antitrust Procedures 

and Penalties Act, 15 U.S.C. § 16, 

ThyssenKrupp A.G. hereby submits 

comments on the Proposed Final 

Judgment in the above-referenced 

matter. 

Sincerely, 

James F. Lerner. 

Encl. 

Comments of Thyssenkrupp A.G. 

Regarding the Proposed Final Judgment 

in United States v. Mittal Steel 

Company N.V. (Civil Case No. 1:06–

CV01360–ESH) 

Pursuant to Section 2(b) of the 

Antitrust Procedures and Penalties Act; 

15 U.S.C. 16, ThyssenKrupp A.G. 

(‘‘ThyssenKrupp’’) hereby files these 

comments demonstrating that the 

remedies proposed as alternatives to the 

divestiture of Dofasco Inc. (‘‘Dofasco’’) 

to ThyssenKrupp, set forth in the 

Proposed Final Judgment intended to 

resolve the Complaint filed by the 

United States to prevent the acquisition 

by Mittal Steel Company N.V. (‘‘Mittal’’) 

of Arcelor, S.A. (‘‘Arcelor’’), do not 

adequately replace the competition lost 

in the Tin Mill Products market from 

the elimination of Dofasco as a 

significant competitor to Mittal.1

Because the remedies proposed as 

alternatives to the divestiture of Dofasco 

do not address adequately the harm 

alleged by the Department of Justice 

(‘‘DOJ’’) in the Complaint, entry of the 

Proposed Final Judgment is not in the 

public interest. 

Divestiture of Mittal’s Sparrows Point 

Business or Mittal’s Weirton Business 

Will Not Preserve Competition in the 

Market for Tin Mill Products in the 

Eastern United States 

As set forth in the DOJ’s August 1, 

2006 Complaint, ‘‘Mittal Steel’s 

proposed acquisition of Arcelor would 

eliminate Arcelor, including its 

subsidiary Dofasco, as an independent 

competitor in the sale of Tin Mill 

Products in the Eastern United States, 

further consolidating an already highly 

concentrated market. * * *’’ The 

acquisition would remove current 

constraints on coordination and 

increase the incentives of the two largest 

firms to coordinate their behavior. The 

acquisition would thus substantially 

increase the likelihood of coordination 

and would likely lead to higher prices, 

lower quality, less innovation, and less 

favorable delivery terms in the Tin Mill 

Products market in the Eastern United 

States.’’ 2 Complaint, at ¶¶ 4, 5. 

The Proposed Final Judgment and 

Competitive Impact Statement both 

make clear that the divestiture of 

Dofasco to ThyssenKrupp is the 

preferred remedy for the competitive 

harm alleged to arise from Mittal’s 


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acquisition of Arcelor. Mittal is ordered 

to use its best efforts to divest the 

Dofasco Business as expeditiously as 

possible, Proposed Final Judgment, 

IV.A, and only in the event that Mittal 

is unable to accomplish the divestiture 

of Dofasco is Mittal then required to 

divest either the Sparrows Point or the 

Weirton Business (the ‘‘Selected 

Business’’), with the decision as to 

which of these two alternative 

businesses is to be divested resting with 

the United States. 

The Competitive Impact Statement 

states that the divestiture of either 

Dofasco or the Selected Business ‘‘is 

designed to enable whoever acquires 

such divested business to be ’’viable and 

active competitor in the Eastern United 

States Tin Mill Products market,’’

Competitive Impact Statement, at 2, and 

goes on to assert that whether the 

Dofasco Business or a Selected Business 

is divested, ‘‘the preserved competitor 

would have modern and efficient 

facilities located close enough to 

customers in the Eastern United States 

to compete effectively.’’ Competitive 

Impact Statement, at 11. Despite this 

assertion, it is ThysdenKrupp’s 

assessment that neither Sparrows Point 

nor Weirton has the ‘‘modern and 

efficient’’ facilities necessary to compete 

in the Tin Mill Products market in a 

manner that adequately would replace 

the competition lost by Mittal’s 

acquisition of Arcelor, including 

Dofasco. 

ThyssenKrupp received several 

comments from their key US tinplate 

customers expressing their concerns 

with the alternative divestiture, 

stressing that divestiture of either of the 

US Mittal tinplate facilities would not 

have the same effect in addressing their 

competitive concerns. These customers 

indicated that the divestiture of Dofasco 

to ThyssenKrupp is highly preferred to 

the divestiture of either of the Mittal 

facilities (i.e., Sparrows Point or 

Weirton) and is the most-competitive 

solution. 

In line with its customers, it is 

ThyssenKrupp’s firm conviction that 

only direct access to an integrated 

network ensuring strong R&D support, 

and close coordination across a fullfledged and reliable steel production 

chain (including state-of-the art 

metallurgy—blast furnaces, melt shops, 

continuous casting—hot and cold 

rolling, annealing and coating) will 

enable a tinplate producer to compete 

effectively and to meet the increasing 

demands of its customers in regard to 

Tin Mill Products with thinner gauges 

and higher surface quality. 

In terms of virtually all of the process 

steps and critical success factors for the 

successful production of tin plate, both 

Sparrow Point and Weirton fall far short 

of the capabilities of Dofasco. An 

acquirer of either Sparrows or Weirton 

would not, without a substantial 

investment that would take time (and 

still might not yield the desired results), 

be able to replace immediately the Tin 

Mill Product competition lost by 

allowing Mittal to retain Arcelor and 

Dofasco. Therefore, ThyssenKrupp will 

certainly not acquire Sparrows Point nor 

Weirton. 

In contrast to this, ThyssenKrupp’s 

acquisition of Dofasco will preserve a 

strong local tinplate competitor which 

will be able to continue to provide 

quality Tin Mill products and preserve 

meaningful competition for tinplate 

customers in the Eastern US. 

Accordingly, entry of a Proposed 

Final Judgement that permits Mittal to 

divest either Sparrows Point or Weirton 

rather than requiring the divestiture of 

Dofasco will not adequately address the 

competitive concerns alleged in the 

DOJ’s Complaint. 

Dated: November 15, 2006. 

A. Paul Victor, 

Dewey Ballantine LLP, 1301 Avenue of the 

Americas, New York, NY 10019, and 

Steven P. Bernstein, 

James F. Lerner, 

Weil, Gotshal & Manges LLP, 767 Fifth 

Avenue, New York, NY 10153. 

Attorneys for Thyssen Krupp, A.G. 

Exhibit 3 

Hogan & Hartson 

Hogan & Hartson LLP, Columbia Square, 555 

Thirteenth Street, NW, Washington, DC 

20004, +1.202.637.5600 Tel, +1.202.637.5910 

Fax, www.hhlaw.com. 

November 15, 2006 

Maribeth Petrizzi, Esquire, 

Chief, Litigation II Section, Antitrust 

Division, U.S. Department of Justice, 

1401 H Street, NW., Suite 3000, 

Washington, DC 20530. 

Re: DaimlerChrysler Tunney Act Comments 

Dear Maribeth: DaimlerChrysler submits 

that the United States Department of Justice 

antitrust Division (the ‘‘Division’’ or 

‘‘Antitrust Division’’) should renegotiate its 

proposed consent decree with Arcelor Mittal 

to ensure that Dofasco is either divested as 

planned or operated separately until it can be 

sold. The alternative divestitures in the 

proposed consent decree do not adequately 

address the competitive problems created by 

Arcelor-Mittal merger. 

Introduction 

The Tunney Act requires that a proposed 

consent decree negotiated between the 

Antitrust Division and the parties be 

published in the Federal Register, with a 60 

day period for public comment. 15 U.S.C. 16. 

The Act also requires a federal court to 

determine if the entry of final judgment on 

the terms agrees to in the proposed consent 

decree, is in the public interest. Id. 

DaimlerChrysler is aware of the Division’s 

position that Tunney Act review requires 

only an examination of whether the relief 

proposed satisfactorily remedies the 

competition issues pleaded in the Complaint. 

In this case, the Complaint identified 

competitive issues in the market for Eastern 

United States Tin Mill Products. However, 

this settlement is worthy of reconsideration 

by the Division for several reasons. 

• First, although both the Division and 

Mittal apparently believe that Dofasco could 

be divested, that turns out not to be true. The 

directors of Strategic Steel Stichting, the 

Dutch foundation holding Dofasco’s shares 

(‘‘Dutch trust’’), have refused to dissolve the 

Dutch trust and relinquish the shares. 

• Second, recent events demonstrate that 

the automotive issues resulting from the 

merger are far more important for the 

automobile industry than they first appeared. 

• Third, the alternative divestitures are not 

likely to preserve competition in either the 

market alleged in the Complaint, Eastern 

United States tin Mill Products, or the North 

American Hot dipped Galvanized Steel 

market. 

DaimlerChrysler submits these comments 

in support of the Division’s preferred 

remedy—the divestiture of Dofasco—and to 

explain the infirmities in the alternative 

divestiture candidates. 

The Arcelor-Mittal Merger 

A. Merger Chronology 

In January 2006, Mittal Steel Company 

N.V. (‘‘Mittal’’) announced its intention to 

launch a hostile tender offer to acquire 

Arcelor S.A. (‘‘Arcelor’’). In an attempt to 

preempt potential antitrust objections to the 

proposed combination in the United States, 

Mittal simultaneously announced that if it 

acquired Arcelor, it intended to sell Arcelor’s 

subsidiary, Dofasco Inc. (‘‘Dofasco’’), which 

Arcelor was in the process of acquiring at 

that time, to ThyssenKrupp, a German-based 

steel corporation. Arcelor initially resisted 

Mittal’s takeover attempt vigorously and, as 

part of that resistance, transferred its interest 

in Dofasco to the Dutch trust as a defense 

measure against Mittal’s tender offer. After 

the Dofasco transfer, Arcelor’s Board agreed 

to recommend Mittal’s improved 433 billion 

offer to its shareholders on June 25, 2006, 

and the combination of Arcelor and Mittal is 

now under way. See Paul Glader, Mittal’s 

Founder Asserts Control as Steelmaker, Wall 

St. J., (Nov. 7, 2006). On November 13, 2006, 

Arcelor announced that the directors of the 

Dutch trust had decided not to dissolve the 

Dutch trust and this action has blocked 

Arcelor Mittal’s divestiture of Dofasco—the 

Division’s preferred remedy. See Press 

Release, Arcelor Mittal Press Release on 

Dofasco (Nov. 13, 2006) available at: http:// 

www.arcelormittal.com/index.php?lang=en&

page=49&tbPress=here&tb0=10. 

B. Complaint and Proposed Consent Decree 

In May 2006, the Division negotiated a 

‘‘pocket consent decree’’ with Mittal in 

which Mittal agreed to divest Dofasco. At 

that time, it appears that neither the Division 

nor Mittal fully appreciated the obstacles to 


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17684 Federal Register / Vol. 72, No. 67 / Monday, April 9, 2007 / Notices 

the Dofasco divestiture created by the Dutch 

trust. On August 1, 2006, the Antitrust 

Division filed a Complaint, proposed consent 

decree, and Competitive Impact Statement 

with the United States District Court for the 

District of Columbia, conditionally approving 

Mittal’s proposed acquisition of Arcelor. 

1. Alleged Anticompetitive Effects on Tin 

Mill Products 

In the Complaint and Competitive Impact 

Statement, the Division alleged that Mittal’s 

acquisition of Arcelor would substantially 

lessen competition in the market for Tin Mill 

Products in the Eastern United States in 

violation of Section 7 of the Clayton Act. The 

Division alleged that the relevant geographic 

market for Tin Mill Products is the Eastern 

United States because of a number of factors, 

including shipping costs and anti-dumping 

duties on Tin Mill Products from Japan that 

effectively close the United States market to 

competition from Japan. Applying this 

geographic market definition to Tin Mill 

Products, the Division determined that the 

market for Tin Mill Products in the Eastern 

United States is highly concentrated and is 

dominated by Mittal and ‘‘another integrated 

steelmaker’’ (United States Steel). According 

to the Complaint, Mittal accounted for 31 

percent of the Tin Mill product tonnage sold 

in this geographic market in 2005, and 

United States Steel accounted for more than 

44 percent. The Complaint alleges that 

Mittal’s acquisition of a combined Arcelor/ 

Dofasco would significantly increase 

concentration in the already concentrated 

market for Eastern United States Tin Mill 

Products. The Complaint also alleges that the 

remaining competitors lack the ability and 

incentive to defeat anticompetitive price 

increases and that de novo or foreign entry 

is neither feasible nor likely. 

2. The Proposed Remedies 

The proposed Final Judgment (‘‘the 

proposed consent decree’’) aims to preserve 

competition in the Eastern United States Tin 

Mill Products market by requiring Arcelor 

Mittal to use its best efforts to sell its Dofasco 

mill in Canada to ThyssenKrupp or another 

approved buyer. In the event that Mittal is 

unable to dissolve the Dutch trust—which 

now appears to be the case—Mittal may sell 

either Mittal’s Sparrows Point or Weirton 

facilities (collectively ‘‘alternative 

divestitures’’). While the proposed consent 

decree clearly reveals the Division’s 

preference that Mittal divest Dofasco, it states 

that divestiture of either Weirton or Sparrows 

Point is sufficient to preserve competition. 

DaimlerChrysler agrees that the divestiture of 

Dofasco solves the competitive problems 

created by the Arcelor-Mittal merger, but 

disagrees with the Division’s view that either 

of the alternative divestitures would be 

sufficient to preserve competition. 

C. DaimlerChrysler’s Interest—Hot Dipped 

Galvanized Steel 

DaimlerChrysler is an automobile 

manufacturer that sources its steel from a 

number of North American steel producers 

including Mittal and Dofasco. 

DaimlerChrysler does not, however, utilize 

Tin Mill Products in its production of 

automobiles, nor do the other North 

American automobile manufacturers. If Tin 

Mill Products were the only problematic 

product market, DaimlerChrysler and the rest 

of the automobile industry would have little 

interest in Mittal’s and the Division’s choice 

of remedies. However, DaimlerChrysler and 

other automobile manufacturers are keenly 

interested in which facility is divested 

because the market for Hot Dipped 

Galvanized Steel would be even more 

adversely affected by Mittal’s acquisition of 

Arcelor. DaimlerChrysler utilizes up to a ton 

of Hot Dipped Galvanized Steel per vehicle 

produced. 

DaimlerChrysler fully supports the 

Division’s preferred divestiture of Dofasco, 

but submits that the alternative divestitures 

would not preserve necessary competition. 

The divestiture of Dofasco would ensure that 

Dofasco remains an independent competitive 

restraint on the increasingly consolidated Hot 

Dipped Galvanized Steel market. Further, 

this divestiture would allow for continued 

regional competition in Canada. 

D. Alternative Divestiture Remedies Should 

Be Rejected 

Divestiture of either Sparrows Point or 

Weirton likely will not preserve competition 

for Eastern United States Tin Mill Products 

and certainly will not prevent the merger’s 

anticompetitive effects in the Hot Dipped 

Galvanized Steel market. Neither Sparrows 

Point nor Weirton is attractive to potential 

buyers, nor do they have the ability to 

compete in either market as an independent 

company. Instead, each is a candidate for 

closure, especially during economic 

downturns. Weirton’s steel making capability 

has already been shut down, making Weirton 

only a rolling mill and coating facility that 

is dependent upon a source of hot bands, 

which presently are in short supply. 

Sparrows Point still has the ability to make 

steel, but it has never demonstrated that it is 

viable as a stand-alone facility; it has always 

been part of a larger, multi-facility 

corporation. Dofasco, unlike either of the 

alternative divestiture candidates, was a 

profitable stand-alone company as late as 

January 2006. 

North American Hot Dipped Galvanized 

Steel 

DaimlerChrysler recognizes that the 

Division’s Complaint and proposed consent 

decree focus on the anticompetitive impact of 

the merger on the Eastern United States Tin 

Mill Products market and not the North 

American Hot Dipped Galvanized Steel 

market. However, this view should be 

reconsidered. 

A. Product Market 

The automotive industry requires various 

steel alloys for frame, shell, and various parts 

that make up a complete automobile. Because 

of their exposure to the elements, 

automobiles require steel that resists 

corrosion. But, automobile manufacturers 

cannot utilize all grades of corrosion resistant 

steel. Automobile-grade exposed corrosion 

resistant steel must also be of high strength 

and high enough quality to apply paint. 

While corrosion resistant steel of lower 

grades can be used in construction or 

products like home appliances, only 

sufficiently high quality, automotive-grade 

corrosion resistant steel can be used by the 

automobile industry. The most cost-efficient 

material to provide this protection is steel 

that is coated with a rust-inhibiting layer, 

usually composed primarily of zinc, which is 

referred to as Galvanized Steel. 

DaimlerChrysler utilizes up to a ton of 

Galvanized Steel per vehicle. 

Two methods of galvanization are used to 

provide protection from corrosion—

Electroplate Galvanizing and Hot Dipped 

Galvanizing. In Electroplate Galvanizing, 

steel is passed through a zinc-rich bath at 

ambient air temperature. An electric current 

is passed through the steel, which attracts 

particles of zinc to the steel’s surface thereby 

plating it. In Hot Dipped Galvanizing, heated 

steel sheet is passed through a bath of molten 

zinc resulting in a thin coating of an 

essentially pure zinc layer on the steel. The 

post-coating application of heat to the zinc 

coated steel promotes a reaction between the 

iron in the steel and the zinc in the coating, 

creating the zinc-iron compound known as 

‘‘Galvanneal.’’ In contrast, the iron and zinc 

do not react in electroplate galvanization and 

thus do not produce the desirable properties 

characteristic of Galvanneal. 

1. Hot Dipped vs. Electrogalvanizing 

Automotive-grade Hot Dipped Galvanized 

Steel constitutes a separate product market 

from galvanized steel generally because 

Electroplate Galvanized Steel has more 

limited uses and applications, especially in 

the automotive industry. Hot Dipped 

Galvanizing is less costly than 

Electrogalvanizing and requires substantially 

less energy to produce. Hot Dipped 

Galvanizing also impacts desirable high 

strength to the steel without the addition of 

costly alloying elements. Even if 

Electrogalvanizing proved to be adequate for 

automotive needs, the differences in 

stamping properties for automotive uses 

would require major investments in 

stamping, painting and other processes by 

automobile manufacturers that sought to 

switch from one process to another. As a 

result, Hot Dipped Galvanized Steel and 

Electroplate Galvanized Steel cannot easily 

be substituted by automobile manufacturers. 

Automotive uses also require much higher 

grade of steels, which Hot Dipped 

Galvanization can best supply. For example, 

automotive uses require a smooth finish and 

very precise alloy chemistries. Hot Dipped 

Galvanneal has better cosmetic corrosion 

performance than Electrogalvanized Steel 

which typically has more surface defects. 

Automotive use also requires very tight 

width and thickness tolerances that Hot 

Dipped Galvanization can better provide. As 

a result, production yields for automotivegrade Galvanized Steel are much lower than 

for other end uses. 

2. Substitutes for Galvanized Steel 

As explained above, steel can be 

galvanized two ways—by the hot dipped or 

electroplating processes. Automotive 

companies have explored other materials, but 

none is likely to replace galvanized/ 

galvannealed steel in the foreseeable future. 

Like electrogalvanized steel, available 

alternatives are not adequate for automotive 


sroberts on PROD1PC70 with NOTICES
Federal Register / Vol. 72, No. 67 / Monday, April 9, 2007 / Notices 17685 

1Certain Carbon Steel Products from Australia, 

Belgium, Brazil, Canada, Finland, France, Germany, 

Japan, Korea, Mexico, Poland, Romania, Spain, 

Sweden, Taiwan and the United Kingdom, USITC 

Inv. Nos. 701–TA–319, 320, 325–328, 348 and 350 

(Second Review) and 731–TA–573, 574, 576, 578, 

582–587, 612, and 614–618 (Second Review) 

Hearing Transcript at 426 (testimony of Ms. 

DeSandre) (Oct. 17, 2006). 

2A fourth supplier, Nucor Corp., is not a practical 

alternative supplier to the auto industry for exposed 

automotive-grade corrosive resistant steel because 

its production method, which utilizes recycled 

scrap metal, produces steel that does not meet the 

tolerances required by automobile makers for 

substrate. 

uses. Non-coated steel is much less 

corrosion-resistant and fails to meet 

minimum automotive standards for quality. 

Painted steels similarly fail to meet such 

standards. Stainless steel, while able to meet 

quality standards, is far too costly to serve as 

a viable alternative to Hot Dipped Galvanized 

Steel. As a result, Hot Dipped Galvanized 

Steel is a separate relevant product market. 

B. The Relevant Geographic Market 

For DaimlerChrysler and other North 

American automobile manufacturers, the 

only practical Hot Dipped Galvanized Steel 

suppliers are in North America. 

1. Logistical Limitations 

Reliance on overseas imported steel is not 

economically feasible because of the 

logistical obstacles presented by the product 

itself. As Susan DeSandre, Director of Body 

and Chassis Purchasing, North America for 

Ford Motor Company characterized it in 

proceedings before the United States 

International Trade Commission, ‘‘it’s heavy, 

it’s bulky, and it rusts on water.’’1

Automobile producers require continuous 

supply to keep the production lines running 

and it is not economically feasible to 

transport steel by air to accommodate 

unforeseen variations in demand. 

2. Tariffs on Imported Steel 

Currently, Australia, Canada, France, 

Germany, Japan, and Korea are subject to 

antidumping and/or countervailing duties on 

corrosion resistant flat steel products, 

including Hot Dipped Galvanized Steel. On 

October 17, 2006, the International Trade 

Commission heard testimony on whether it 

should renew tariffs on the foreign supply of 

Corrosion Resistant Steel, which are 

currently being reviewed. The six largest 

automobile producers in North America have 

advocated removal of the duties on Corrosion 

Resistant Steel because the domestic steel 

industry is healthy and would not be 

materially injured by their removal. In 

addition, automobile producers have argued 

that non-U.S. sources of corrosion-resistant 

steel are not readily available anyway 

because these products are in heavy demand 

in foreign markets. 

Although Dofasco is not a U.S. producer, 

an independent Dofasco would indirectly 

constrain anticompetitive price increases in 

the United States. It would be an alternate 

supply to DaimlerChrysler’s Canadian 

operations and thus reduce the company’s 

dependence on the few remaining United 

States suppliers of Hot Dipped Galvanized 

Steel. If antidumping duties are lifted on 

Canadian Corrosion Resistant Steel, as 

DaimlerChrysler believes is appropriate, a 

divested Dofasco has the capacity to compete 

directly with the three remaining North 

American Hot Dipped Galvanized Steel 

producers, US Steel, Arcelor Mittal, and AK 

Steel.2 If Dofasco were controlled by Mittal, 

there would be no incentive for it to do so. 

C. Market Concentration 

Today, the market for North American Hot 

Dipped Galvanized Steel is highly 

concentrated with the top two firms 

representing approximately 73% of capacity 

and the top three firms representing nearly 

90%. Arcelor Mittal alone represents nearly 

half of North American capacity for Hot 

Dipped Galvanized Steel with its acquisition 

of Arcelor (including Dofasco’s Canadian 

facilities). Unless Dofasco is divested, the 

post-merger Herfindahl-Hirschman Index for 

the North American Hot Dipped Galvanized 

Steel market will rise from a premerger total 

of 2171 to more than 3200—well above the 

Guidelines’ threshold of 1800 for a highly 

concentrated market. The change in 

concentration resulting from the merger 

would be over 1000 points—again well above 

the Guidelines’ threshold for concern. 

1. Concentration Through Consolidation 

Only five years ago, DaimlerChrysler had a 

choice of nine suppliers to choose from to 

meet its demand for Hot Dipped Galvanized 

Steel. In 2001, Mittal represented a mere 8% 

of North American Hot Dipped Galvanized 

Steel capacity. LTV’s bankruptcy in 2001 and 

subsequent combination with Bethlehem 

Steel into International Steel Group in 2002 

ushered in a wave of consolidation that 

continues today. In 2003, US Steel acquired 

National Steel, leaving only seven suppliers 

of North American Hot Dipped Galvanized 

Steel. Mittal increased its share from 8% to 

30% with its acquisition of ISG in 2005. 

Mittal achieved market leadership with its 

acquisition of Arcelor and its Dofasco 

facilities in Canada, and DaimlerChrysler 

estimates that Arcelor Mittal now has 47% of 

North American Hot Dipped Galvanized 

Steel capacity. 

Unprintable graph appears here, it purports 

to show 2006 North America hot dip auto 

capacity by company. A copy of the graph is 

available for inspection at the Department of 

Justice Antitrust Division, 325 Seventh 

Street, NW., Room 200, Washington, DC 

20530. 

2. Effect of Consolidation on Prices 

Although it is too early to detect the effect 

that Mittal’s acquisition of Arcelor and 

Dofasco will have on prices, rising prices 

over the last five years, coupled with 

comments to industry analysts and the press 

by Mittal, indicate that higher prices are to 

come. Indeed, Mr. Lakshmi Mittal has noted 

that ‘‘[c]onsolidation of the industry has 

accelerated * * * [l]eading to a new market 

oriented behavior * * * [a]nd a new 

fundamental price dynamic.’’ See ‘‘New Steel 

Paradigm and Future Challenges,’’

Presentation by Lakshmi Mittal to Merrill 

Lynch Conference (May 11, 2006). 

Over the past six years, the average price 

for Galvanized Steel has risen from about 

$500 per ton in 2000 to nearly $900 per ton 

earlier this year. DaimlerChrysler expects 

significant price increases for contracts 

starting in 2007. Over this same period, the 

number of industry participants dwindled. 

Thus, industrial production has decreased 

while prices increased to a new, higher band. 

Comments to industry analysts and press 

by Mittal leave little doubt that the goal and 

likely result of consolidation is the continued 

rise in prices to consumers. The Automotive 

News observed in October of this year that 

‘‘Mittal has taken steps to stave off price cuts 

caused by a recent run-up in steel 

inventories.’’ It added, ‘‘Mittal is prepared. 

The company has told analysts that it will 

prop up prices by reducing production at one 

plant during that period.’’ A Ton of Trouble, 

Automotive News (Oct. 2, 2006). ‘‘Mr. Mittal 

also hopes that a new, larger group may be 

able to set a lead for the rest of the industry—

sending signals about when to moderate 

production, and so smooth the peaks and 

troughs in demand that have bedeviled the 

steel business.’’ Steel: Age of Giants, The 

Economist (Feb. 2, 2006) (emphasis added). 

As a result, there is reason for concern 

about the effect of the merger on output and 

prices for North American Hot Dipped 

Galvanized Steel. These effects would be 

reduced by divestiture of Dofasco—and the 

Division should insist on its original 

preferred remedy. 

Neither Alternative Divestiture is Viable 

Although the unique circumstances 

existing here warrant reconsideration of this 

transaction’s effects on the North American 

Hot Dipped Galvanized Steel market, the 

alternative divestiture remedies also fail to 

remedy the Division’s legitimate concerns 

regarding the transaction’s effect on the 

Eastern United States Tin Mill Products 

market. 

A. Alternative Divestitures Will Fail To 

Preserve Competition in Either Tin Mill or 

Hot-Dipped Galvanized Steel Markets 

Weirton has struggled since the 1970s and 

has nearly closed several times. In 1982, 

National Steel announced that it would not 

make the capital improvements needed for 

Weirton to remain competitive. In efforts to 

save the company, Weirton was purchased by 

its employees in 1984. Public offerings in 

1989 and 1994 raised funds needed to 

modernize the plant. However, the steel 

import crisis that began in 1998 

‘‘significantly reduced the company’s 

production output, harmed its ability to 

control pricing and severely hampered its 

financial performance.’’ See Weirton Steel 

Corporation: History, available at: http:// 

www.weirton.com/company/about/hist.html. 

Weirton lost nearly $800 million from 1998 

until it declared Chapter 11 bankruptcy in 

2003. ISG purchased Weirton in 2004, and 

ISG was acquired by Mittal in 2005. In 

November 2005, Mittal shut down Weirton’s 

steelmaking operations altogether and laid off 

800 employees. 

Today Weirton produces no steel and 

instead relies on other Mittal facilities to 

supply the substrate it uses in its production 

of tin plate. It is unlikely that Weirton will 

produce steel going forward. See Vicki 


sroberts on PROD1PC70 with NOTICES
17686 Federal Register / Vol. 72, No. 67 / Monday, April 9, 2007 / Notices 

Smith, Furnace Will Stay Idle at Weirton 

Steel Mill, Courier-Journal (Louisville, Ky.) 

(Dec. 2, 2005). In any event, Weirton will 

almost certainly never play a role in 

disciplining price increases in North 

American Hot Dipped Galvanized Steel 

because it cannot produce that product. Its 

inability efficiently to produce the steel 

substrate it needs for tin mill production, 

coupled with relatively high transportation 

and raw materials costs, do not bode well for 

its tin mill production prospects either. In 

fact, Weirton is likely to be a victim of the 

increased concentration in the North 

American Steel market rather than a 

disciplining force. Since Weirton does not 

produce Hot Dipped Galvanized Steel at all, 

it is totally unable to discipline any output 

restrictions in that market. 

Sparrows Point has also struggled. In 

October 2001, Bethlehem, which employed 

about 3,400 workers at Sparrows Point, filed 

for Chapter 11 bankruptcy. By May 2006, the 

plant employed only 2,500 employees and 

had changed hands three times in the past six 

years. Despite cutting costs and the 

introduction of new ‘‘efficiencies and 

innovations, Sparrows Point is one of Mittal’s 

most expensive plants to run because of high 

energy costs and more environmental 

regulations owing to its location on the 

Chesapeake Bay.’’ Allison Connolly, Feeling 

Pressure for Profits, Balt. Sun, 1C (May 14, 

2006). ‘‘[W]orkers worry that Mittal will take 

away their incentives or force them to make 

other concessions to keep the plant open.’’

Id. ‘‘They also worry about layoffs if certain 

parts of the plant are idled, for example, if 

Mittal sends the tin work back to Weirton.’’

Id. Today, Sparrows Point is used primarily 

to supply other Mittal plants with substrate. 

It is unlikely to produce Hot Dipped 

Galvanized Steel for use by the automobile 

industry and is unlikely ever to be able to 

operate as a stand-alone entity. 

B. Divestiture of Dofasco Is the Only Viable 

Option To Preserve Competition 

Unlike either Sparrows Point or Weirton, 

Dofasco has recently been a successful stand 

alone steel company and continues to thrive 

independently today (pursuant to the Hold 

Separate Order). If not for the Dutch trust 

issue, Dofasco could clearly be sold to 

ThyssenKrupp or a number of other potential 

suitors. Indeed, analysts agree that Dofasco is 

by far the most attractive of the three mills 

and that Mittal has little incentive to divest 

it. ‘‘Right now time is on their side, and they 

are generating a lot of cash flow. * * * At 

the end of the day, if they can keep [Dofasco], 

really the winners will be Arcelor Mittal, and 

the losers will be ThyssenKrupp,’’ says Alain 

William, an analyst for Societe Generale. 

Heather Thomas, Poison Pill Is Among the 

Reasons Mittal Steel Deal Remains a MultiCompany Tangle, N.Y. Times (Nov. 3, 2006). 

Sparrows Point and Weirton, on the other 

hand, will be difficult to divest, and 

incapable of operating as stand-alone 

businesses. ‘‘The problem is, who would 

want to buy either of the two? Mittal will 

have to decide which one to sell, but you 

can’t manufacture a customer,’’ said Charles 

Bradford, an independent steel analyst for 

Soleil Securities in New York. See Merger 

Proviso Gives Hope to Weirton Steel, 

Pittsburgh Tribune Rev. (Aug. 3, 2006). 

‘‘Weirton and Sparrow’s Point are not good 

plants. Dofasco is * * *. Dofasco’s good 

company and I’m not so sure that Mittal 

wouldn’t rather have it than Weirton or 

Sparrow’s Point.’’ Romino Maurino, Mittal 

Steel Sets Deadline for Sale of Dofasco, Inc., 

Winnipeg Free Press, (Sept. 28, 2006). 

The Division, with its investigative 

resources, has better access than 

DaimlerChrysler does to the underlying facts 

that support these comments. It has 

prudently reserved the right to determine 

whether a divestiture of either Sparrows 

Point or Weirton would be feasible. The 

Division should revisit its view that 

divestiture of either Weirton or Sparrows 

Point would be sufficient. 

Conclusion 

An independent Dofasco can discipline 

anticompetitive price increases for Tin Mill 

Products. But even more important from 

DaimlerChrysler’s point of view, it can also 

act as a competitive constraint on 

anticompetitive output restrictions on the 

supply of North American Hot Dipped 

Galvanized Steel. Thus, DaimlerChrysler 

urges the Division to reconsider its 

acceptance of one of the alternative 

divestiture candidates and instead to insist 

on the divestiture of Dofasco. If the Dutch 

trust proves to be an immovable obstacle to 

the sale of Dofasco, it could simply be spun 

off as a freestanding entity, to operate 

independently, as it did as recently as 

January 2006. If an adequate remedy requires 

renegotiation of the consent decree, we urge 

the Division to take the steps that are 

necessary to maintain competition in the 

steel industry. 

Sincerely, 

Thomas B. Leary. 

Janet L. McDavid. 

cc: Allan M. Huss, Senior Counsel, Antitrust/ 

Regulatory Affairs, DaimlerChrysler 

Corporation. 

[FR Doc. 07–1321 Filed 4–6–07; 8:45 am] 

BILLING CODE 4410–11–M 


sroberts on PROD1PC70 with NOTICES