February 2006
Metal Industry News

Mittal Offers $22.8 Billion
for Hostile Takeover of Arcelor
Arcelor S.A. was still celebrating its seemingly successful bid to purchase Canada’s Dofasco when the Luxembourg-based steel giant became the target of an even bigger takeover offer.

Mittal Steel N.V. made a late-January hostile takeover attempt for Arcelor, offering $22.8 billion for the company. The bid was quickly rejected by Arcelor’s board and criticized by Arcelor CEO Guy M. Dolle. Arcelor’s board members voted unanimously to reject Mittal’s offer, claiming the two companies do not share the same “strategic vision, business model and values,” according to Chairman Joseph Kinsch. As of press time, the bid had not been voted on by Arcelor’s shareholders. The takeover, if successful, would create the world’s first 100-million-ton steel producer.

At the time of the bid, Lakshmi N. Mittal, chairman and CEO of Mittal Steel, said: “The last 10 years have seen a major shift towards consolidation of the steel industry, helping to create sustainable value for all stakeholders. Both Mittal Steel and Arcelor have been at the forefront of this consolidation and share a similar vision for the future of our industry. This combination accelerates this process and leaves us uniquely positioned to benefit from the opportunities created.

“We believe the offer provides a very attractive premium and has been structured so that Arcelor shareholders have the opportunity to participate in the exciting growth potential of the combined company, whilst also receiving a generous cash element. We would encourage them to consider the merits of our compelling offer and play a part in the future of the world’s only global steel company.”

Besides Arcelor executives, the proposed deal was also greeted with little enthusiasm from several European governments, including Luxembourg.

Earlier in January, Arcelor outlasted ThyssenKrupp NA, Southfield, Mich., in the bidding war for Canadian steelmaker Dofasco, Hamilton, Ontario. After being topped once and matched once by ThyssenKrupp, with both offers endorsed by the Dofasco board, Arcelor’s final offer of $71 (Canadian) per share was accepted.

ThyssenKrupp, however, is not completely out of the Dofasco picture. As part of its takeover attempt of Arcelor, Mittal agreed to sell ThyssenKrupp all the shares purchased by Arcelor at a price of $68 (Canadian) per share.

In other action, ThyssenKrupp Materials NA advanced into Canadian distribution with the purchase of Toronto-based VPK Metal Inc. ThyssenKrupp will acquire all of VPK’s operations, including Peckover’s, Vimetal Peckover, Roy Metals Sales Inc., Vifab and O.M.I. The facilities will retain their current names and operations as part of ThyssenKrupp Materials NA’s Copper and Brass Sales division. The transaction is expected to close during the first half of 2006.

“As we continue to grow our operations throughout the NAFTA region, the acquisition of VPK Metal is an important strategic opportunity for ThyssenKrupp Materials NA, as it helps us expand our geographic presence and market penetration in Canada and complements our existing product line particularly in the area of red metals and plastics,” says ThyssenKrupp Materials’ COO Richard J. Greaves.

VPK Metal is a distributor and processor of non-ferrous metals with a primary focus on red metal products. The complete product line includes copper, brass, bronze, plastics, and aluminum. The company operates six service center locations throughout Canada and the United States and offers a wide range of processing services, including slitting, shearing, cut-to-length and precision cutting, sawing, as well just-in-time services and plastic and metal fabrication.

Prolamsa to Combine Plants, Expand Capabilities
Mexican tube supplier Prolamsa Inc. has begun a major project to streamline its operation, combining two plants into one and adopting a new computer system.

Jean-Marie Diederichs, Prolamsa general manager, says the company is planning to add 250,000 square feet to its newer Monterrey location, and then relocate equipment from its older downtown facility. Merging the two plants into a single one-million-square-foot location, with 900 employees, will offer substantial benefits, Diederichs says.

The total capacity of the combined plant will be about the same, housing a total of 24 mills, but it will be much more efficient because it will eliminate unnecessary movement of coils, he says. “Every time we move a machine, we are refurbishing or modernizing it, so when they arrive in the new plant they will be the most productive.”

Two rail spurs are being added for inbound and outbound freight. The mill expansion and merger should be completed by mid-2007, he says.

In addition, Prolamsa switched to an SAP enterprise-wide computer system Jan. 1. Integrating all the SAP modules is a process that will take two years, Diederichs says, but the system will eventually handle all the information flow for production, accounting, finance, logistics and human resources. It will also give customers quicker access to more timely information on order status, credit, and other functions.

Prolamsa has also started to apply ultraviolet-cure coatings to its hot-rolled, cold-rolled and galvanized products to prevent corrosion without oiling.

Prolamsa’s forecast for 2006 is much like 2005. “We are hoping to increase by 10 to 15 percent as a whole group,” Diederichs says.

Stelco’s Restructuring Plan Receives Court Approval
The restructuring plan for Stelco Inc., Hamilton, Ontario, has been approved by the Ontario Superior Court of Justice, clearing the way for the company’s emergence from bankruptcy protection.

The court indicated that Stelco has been in compliance with all statutory requirements and court orders in accordance with the Companies’ Creditors Arrangement Act. The court also found that the restructuring plan was fair, reasonable and equitable.

“This is wonderful news for Stelco, for our employees and retirees, for our other stakeholders, and for the communities in which we operate,” says Courtney Pratt, Stelco president and CEO. “The new Stelco that emerges from this process will be much better positioned to become a viable and competitive steel producer for the long term.”

Steel Galvanizing Company Galvex Files for Bankruptcy
New York-based Galvex Capital LLC, a steel galvanizing company, filed for bankruptcy along with affiliates Galvex Holdings Ltd., Galvex Estonia OU, Galvex Intertrade OU and Galvex Trade Ltd. after lender SPCP Group LLC issued a notice of default against it. Galvex said in its petition that it intends to auction off its assets.

An oversupply of steel and a resulting decline in steel prices forced Galvex to limit production in 2005 at its plant near Tallinn, Estonia. The company’s sales of $119.1 million in 2005 were down from $235.4 million in 2004.

MEPS Expects Asian Imports to Erode U.S. Flat-Roll Prices
Prices for North American strip mill products should remain firm for the short term, but Asian imports will arrive in large quantities before the end of winter, causing transaction values to fall quickly in spring and summer, forecast analysts at U.K.-based MEPS International. Such reductions could be hastened by lower scrap surcharges.

MEPS expects prices to stabilize at the reduced level later in the year as Asian suppliers exert more discipline on exports in the second half, or face a new wave of antidumping cases.

Demand for long products in the U.S. should hold up well through 2006. Likewise, Asian imports should prompt price reductions over the next few months.

At current price levels, freight costs remain no significant barrier to Asian exporters increasing sales to the region, MEPS says. As North American prices slide and the premium declines, the quantities of imports should subside by midyear, leading to more stable pricing—assuming stability in the scrap sector.

ThyssenKrupp’s Purchase of Hearn Group Completed
ThyssenKrupp Materials NA Inc. has completed the acquisition of The Hearn Group, including Hearn Industrial Park, Hearn Warehousing & Distribution, Hearn Logistics and Hearn Automotive. The purchase also included the former PSA Quality Systems business unit, and Summit Personnel Services Inc.

Briefs
Novamerican Steel Inc., Montreal, reported record net sales in 2005 of $834.7 million, an 8.6 percent increase. Novamerican had recorded $768.6 million in net sales in 2004. The company also recorded record tons sold (257,851) and tons processed (271,999) in the fourth quarter. The fourth quarter was the 32nd consecutive profitable quarter for Novamerican.

Bayou Steel Corp., LaPlace, La., recorded $271.1 million in sales for fiscal 2005 ended Sept. 30, an increase of 12 percent from the previous year. Bayou Steel’s net income for the year was $19.3 million. Since Bayou Steel emerged from bankruptcy in February 2004, income figures before that date are not directly comparable.

Northwest Pipe Co., Portland, Ore., has received a letter of intent from Kenny/Shea/
Traylor, a joint venture based in Wheeling, Ill., to supply $10 million of welded steel pipe for a water treatment plant. Northwest Pipe will supply approximately 56,000 feet of large-diameter steel pipe that will be used in a tunnel that is part of the Brightwater treatment plant in King County, Wash. The company expects to manufacture the pipe at its Portland division beginning in 2007, with final delivery in 2008. The contract for the tunnel and the related pipe is the first phase of this $1.4 billion wastewater treatment plant.

SeverCorr LLC has purchased 19 SM Spacemaker cranes from Houston-based KCI Konecranes for its new steel minimill in Lowndes County, Miss. The mill will produce hot-rolled, cold-rolled and coated products. The company claims it will be the first minimill in the U.S. to produce exposed automotive grade steel. SeverCorr is the first greenfield mill built in the U.S. since the mid-1990s, designed to supply the growing number of automotive producers located in the South. It is a joint venture between John Correnti, former CEO of Nucor, and Severstal Group, a Russian-based global steel producer.

Allegheny Technologies, Pittsburgh, is increasing transaction prices for cold-rolled stainless steel, sheet strip and precision rolled strip products at ATI Allegheny Ludlum. Effective on shipments beginning Feb. 20, prices will increase approximately 3 percent based on February 2006 surcharge levels. All surcharges remain in effect.

Red Bud Industries, Red Bud, Ill., will sponsor a coil slitting and cut-to-length workshop May 2 at the Radisson Hotel O’Hare in Chicago. The workshop will feature such topics as “The Geometry of Shape Variation,” “How to Make Flat-Rolled Flat,” “SCS—New Process Replaces P&O and CRS Material” and “Taking the Magic Out of Metal Slitting.” The program will conclude with a tour of MC Steel, a service center in Wheeling, Ill. For more information, call 800-851-4612 or visit www.redbudindustries.com.

Chicago Extruded Metals is installing a billet heating system for a 2,750-ton brass extrusion press at its Cicero, Ill., facility. The furnace, from Belding, Mich.-based Granco Clark, is a Model 69-65-6 Hot Jet, used to process primarily 9-inch diameter billets, providing 25,000 pounds per hour at 1,400 degrees.

Stelmi America, a mill-level producer of hard chrome plated steel bars, is planning to expand capacity at its Marshall, Mich., facility. The company has planned a capacity increase of more than 50 percent, one targeted at OEM producers of mobile hydraulics.

Alcan Inc., Pittsburgh, has agreed to sell its Froges, France, rolling mill to Industrie Laminazione Alluminio S.p.a., Sardinia, Italy. ILA specializes in continuous casting and aluminum foil rolling, providing European and Mediterranean companies with aluminum solutions for the packaging and building markets.

Whitney, a division of MegaFab, will showcase Whitney equipment advances, plus new products from all MegaFab divisions, during an open house April 19 and 20. The open house will be held in the Whitney Technology Center in Rockford, Ill. All participants are invited to attend educational seminars, view demonstrations of Whitney plasma and laser cutting equipment and talk with product development engineers. There is no cost to attend.

SigmaTEK Corp. has moved into new headquarters at 1445 Kemper Mead Drive in Cincinnati. SigmaTEK is the developer of SigmaNEST, a CAD/CAM nesting software for laser, oxyfuel, plasma, waterjet, turret punch and routing machines.

H & H Tube and Manufacturing, a nonferrous tube fabricator supported by its own redraw mill, has implemented an ISO 9001:2000 management system at its Cheboygan and Vanderbilt, Mich., facilities.

Lone Star Steel Co., Dallas has selected Pittsburgh Logistics Systems to manage truckload shipments of supplies and finished goods for Lone Star’s production facility in Lone Star, Texas. Lone Star is a manufacturer and distributor of tubular products for energy, industrial and automotive applications.

PanaSteel Building Solutions, Inc., parent company for light-gauge steel framing company PanaSteel, has relocated corporate headquarters to Stuart, Fla. PanaSteel also opened a 25,000-square-foot manufacturing facility in Port St. Lucie, Fla.

Norilsk Nickel, Russia’s largest mining company, and Rio Tinto, one of the world’s largest mining companies, announced the launch of an exploration and development joint venture in Russia. Initial exploration efforts will concentrate on opportunities in the Siberian and Far-Eastern Federal Districts of Russia.

Vista Metals Corp., Fontana, Calif., has purchased the cast plate equipment of Pechiney Cast Plate, Vernon, Calif. Vista Metals will produce cast plate products at its melting and manufacturing facility in Fontana.


Obituary
Rene Morrison, 63, president of Specialty Pipe & Tube of Texas Inc., died Dec. 14, 2005, at his home in Houston, Texas.

“Rene Morrison was a man whose industry knowledge was equaled only by his integrity and strength of character. Our industry has lost one of its great leaders, and our company has lost a dear friend,” says Steve Baroff, president of Specialty Pipe & Tube Inc., and a long-time colleague of Morrison’s. Dianne Beck, previously vice president of sales for Specialty Pipe, will assume the role of vice president and general manager.

People
Kerry A. Shiba has resigned as chief financial officer of Kaiser Aluminum. President and CEO Jack A. Hockema, and vice presidents Daniel D. Maddox and Daniel J. Rinkenberger, will share Shiba’s duties in the newly created Office of the CFO until his replacement is found.

Port of Longview Commissioners elected J. Walter Barhman to serve as president of the organization. Larry M. Larson will serve as vice-president and Daniel J. Buell will serve as secretary for two years ending in 2007. The Port of Longview is a full-service operating port with transportation connections on the deep-draft Columbia River shipping channel in southwest Washington State.

Rich Mathews has been named vice president of marketing for East Longmeadow, Mass.-based Lenox, a manufacturer of premium power tool accessories, hand tools and band saw blades.

Peter Grollmann was appointed Trumpf Inc.’s product manager for laser marking, responsible for managing the company’s line of products in North America. Additionally, Jens Bleher is the new managing director of Trumpf Laser in Ditzingen, Germany.

Michael A. Bless has replaced the retiring David Beckley as CEO of Century Aluminum Co., Monterrey, Calif. Bless was previously managing director of M. Safra & Co., a New York private investment firm.

Jeffrey Wadsworth, director of Oak Ridge National Laboratory and CEO of UT-Battelle LLC, was elected to the board of Carpenter Technology Corp., Wyomissing, Pa.

Laurence Cox was appointed to direct the new Customer Service Group at Pittsburgh Logistics Systems Inc., Rochester, Pa. Cox has been an independent metals performance improvement and strategy consultant.

Randy Sagraves has been promoted to vice president of sales for Misa Metals Inc. Sagraves had been director of sales for the South at Misa.

Hydro Aluminum has appointed Allan Bennett vice president of sales and marketing for the Ellenville (N.Y.) Extruded Products Operation. Also, Mike Byrum was named director of business development for the St. Augustine (Fla.) Extruded Products Operation.

Tim Myers has been named vice president and general manager of Alcoa Wheel Products, Commercial Vehicle Wheels. He is responsible for Alcoa truck wheel plants in Hungary, Mexico, Japan, Australia, Russia and Cleveland. Douglas T. Dietrich has been appointed vice president and general manager, Auto Wheels.

 
 

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