2007 Metal Industry News

U.S. Steel Purchases Stelco in $1.1 Billion Deal
United States Steel Corp. has agreed to acquire Canadian steelmaker Stelco, strengthening its position in the North American flat-rolled market. U.S. Steel will pay $36.36 per share to Stelco shareholders in a transaction valued at $1.1 billion.

The acquisition by U.S. Steel will give it an annual capacity of 33 million net tons of raw steel.

“From the increased utilization of our Minnesota Ore Operations through the conversion of slabs and hot-bands produced at Stelco by our other finishing facilities, this transaction optimizes our operations and allows us to better serve our customers,” says U.S. Steel Chairman and CEO John Surma. “With major facilities located on both sides of the Great Lakes, this acquisition will significantly increase our ability to respond to market demands and our customers’ needs.”

U.S. Steel sees Stelco’s facilities as a good complement to its own, calling Stelco’s Lake Erie Works the most modern integrated steel plant in North America. The company says the slabs produced at Stelco’s Lake Erie and Hamilton Works will expand U.S. Steel’s semi-finished steel supply chain capabilities to support finishing facilities for both flat-rolled and tubular products.

Stelco also owns several joint venture interests including iron ore operations in the United States and Canada, and a 60 percent interest in Z-Line, a hot-dip automotive-quality galvanizing line.

Shareholders owning more than 76 percent of Stelco’s outstanding shares, including CEO Rodney Mott, have approved the deal and entered agreements with U.S. Steel committing the company to the sale. “The fit with U.S. Steel is excellent. This is an outstanding deal for Stelco’s owners, employees, customers, suppliers and communities,” says Mott.

The veteran of the North American steel industry was hired in 2006 to lead Stelco out of bankruptcy. Since emerging from bankruptcy, the company has been targeted by a number of larger steelmakers as a potential acquisition.

“Our goal through the Stelco restructuring process was to re-establish Stelco as a competitive steel company and position it to be part of a larger, stronger company that can provide additional security for our employees and their communities,” Mott says. “Our transaction with U.S. Steel represents the successful conclusion of an exhaustive review of opportunities for Stelco. U.S. Steel brings the financial strength, operating experience and advanced research and technology capabilities that are critical for the continued success of the Stelco facilities.”

As part of the arrangement, U.S. Steel has made commitments to the Province of Ontario with regard to Stelco’s main pension plans and operations in the Province. U.S. Steel plans to make significant capital expenditures at the Hamilton and Lake Erie facilities and to endow a Priority Chair in the Department of Materials Science and Engineering at McMaster University to facilitate the continuing development of steelmaking technology in Ontario.

U.S. Steel is guaranteeing Stelco’s pension funding obligations under a pension agreement entered into by Stelco and the province in 2006, and is also making a voluntary contribution of approximately $31 million in the aggregate to Stelco’s main pension plans at the closing of the transaction.

U.S. Steel expects the acquisition of Stelco to result in annualized pre-tax synergies of more than $100 million by the end of 2008. Officials hope to close the transaction, which must be approved by U.S. and Canadian regulatory agencies, by the end of the year.

Kaiser Building New Facility in
$91 Million Investment Program
Kaiser Aluminum, Foothill Ranch, Calif., will construct a new facility in the Midwest as part of a $91 million investment program to improve the capabilities of its rod and bar, seamless extruded and drawn tube operations. The company will also perform upgrades at three existing facilities.

“This program will allow us to significantly improve our logistics and manufacturing efficiencies which, when coupled with our strong market position, offer attractive returns,” says Jack A. Hockema, chairman, president and CEO of Kaiser Aluminum. “When fully implemented, the program will enable us to provide Kaiser Select for our full national rod and bar product offering.”

The new facility will be equipped with two extrusion presses, a remelt operation, warehousing space, and laboratory and office facilities. The final location of the new facility will be chosen following completion of site selection work.

Additionally, the company will upgrade extrusion presses in its existing Los Angeles facility.

Complementing the rod and bar investments, the company will focus its Bellwood, Va., and Chandler, Ariz., operations on seamless extruded and drawn tubing products. Investments at these facilities will include relocation of equipment to streamline product flows as well as new ancillary equipment to increase capacity and improve efficiency.

“We’re further enhancing our strong position in rod, bar and tube products,” says Hockema. “These investments demonstrate our continued commitment to these strategically important elements of our general engineering product offering.”

Samuel Manu-Tech Buys Dofasco Elizabethtown
Samuel Manu-Tech Inc., Toronto, has agreed to purchase the voting shares of Dofasco Elizabethtown (Ky.) Inc., a manufacturer of stainless steel laser-welded tubular products, “Combined with our flagship Associated Tube Industries facility located in Markham, Ontario, and our new greenfield site, Tubos Samuel de Mexico located in Saltillo, Mexico, this acquisition is an important step in broadening Samuel’s existing stainless steel tubular products capability and geographic reach throughout North America and Mexico,” says Mark Samuel, Samuel’s chairman and CEO. Samuel will operate Elizabethtown within the Samuel Tube Group under the name Associated Tube USA Inc.

Samuel has also acquired Northland Stainless, which designs, engineers, manufactures and distributes steel pressure vessels, tank heads and components to the ethanol, pharmaceutical and chemical industries.

The acquisition complements Samuel’s existing steel pressure vessel operations, including its Silvan Industries division in Marinette, Wis., and its Steel Fab division in Abingdon, Va. The purchase allows the company to expand its high quality product range and to further grow its market share in the pressure vessel industry.

Private Firm Buys Idled Hamilton SBQ Minimill
Private equity firm Woodside Capital has purchased the assets of the Hamilton Specialty Bar Corp., Hamilton, Ontario. The minimill had been shut down in May by its former owner, Delaware Street Capital.

Woodside Capital, supported by Pinnacle Steel and Sankaty Advisors, purchased the assets of the business. The group of investors plans to start welcoming back workers to the facility as soon as possible and to be producing product later this fall.

“Prior to its most recent challenges, the facility has had a proud history of producing high quality SBQ grades for demanding customers. We’re looking forward to supporting the company’s efforts to regain that position,” says Benjamin P. Procter, a partner at Woodside Capital.

SeverCorr Melt Shop Produces First Coils
SeverCorr, Columbus, Miss., has taken the next step toward full operation as the facility’s melt shop, caster and hot mill have begun producing hot-rolled steel coils.

“This is the announcement we’ve been eagerly waiting to make since the idea of building a steel mill began four years ago. To be able to say we are making steel less than two years after breaking ground is a testament to the dedication and hard work of the entire SeverCorr team,” says CEO John Correnti.

Designed for producing high-quality exposed steels, the SeverCorr melt shop utilizes an electric arc furnace capable of melting 1.7 million tons of steel annually. Its 265-ton furnace capacity with 165 tons tapped into a ladle minimizes slag carryover.

Alcoa Selling Facilities;
Enters JV with Sapa
Pittsburgh-based Alcoa has agreed to sell its two remaining U.S. soft-alloy extrusion facilities to Golden Aluminum, Fort Lupton, Colo. Alcoa will also close its Tifton, Ga., soft-alloy facility by the end of the month, as it was unable to find a buyer for the plant.

Golden Aluminum will acquire the soft-alloy extrusion facilities in Warren, Ohio, and Plant City, Fla., for an undisclosed price.

Earlier, Alcoa turned almost all of its soft-alloy extrusion business into a joint venture with Sapa Group. The new company will have a strong position with a market share of 27 percent in North America. Net sales for the new company were $4.2 billion in 2006.

“We are creating a global market leader in aluminum profiles that has potential for further growth. The company will create value through close cooperation with our customers and efficient operations,” says Ole Enger, president and CEO of Sapa.

Hendrick Acquires
Hagen Metal Products
Perforated metals company Hendrick Manufacturing, Memphis, Tenn., has acquired the assets of Hagen Metal Products Co., Elgin, Ill., a precision sheet metal fabricator that supplies cabinetry for the telecommunications, medical, and computer industries. Hagen Metal Products will operate under its existing name as a related company under the Hendrick Midwest, LLC banner.

Hagen will also expand into the manufacturing of perforated metal products to serve a growing customer base in the Midwest. Perforating operations are scheduled to commence in the fourth quarter.

Bruce Caldwell has been promoted to general manager of Hagen Metal Products.

Fabtech Scheduled for
Nov. 11-14 in Chicago
The 2007 Fabtech International & AWS Welding Show returns to McCormick Place Nov. 11-14 in Chicago. The event is the largest in North America dedicated to showcasing metal forming, fabricating, stamping, tube and pipe, and welding equipment and technology.

Cosponsored by the American Welding Society, Fabricators & Manufacturers Association International and the Society of Manufacturing Engineers, and supported by industry partner the National Association of Manufacturers, the event is expected to attract an estimated 25,000 attendees and 1,000 exhibitors covering 475,000 square feet of exhibit space.

Briefs
Nucor Corp., Charlotte, N.C., has completed the acquisition of Alpharetta, Ga.-based Magnatrax Corp., a provider of custom-engineered metal building systems. The $280 million transaction was completed through a merger of Magnatrax with a wholly owned subsidiary of Nucor.

Republic Engineered Products Inc., Fairlawn, Ohio, has reached a tentative labor agreement with the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers Union. The agreement, which must be ratified by the union, covers employees at Republic’s Canton, Lorain and Massillon, Ohio; Gary, Ind.; and Lackawanna, N.Y. operations.

UC Rusal, the world’s largest producer of aluminum and alumina, will modernize its Bratsk aluminum smelter to reduce environmental impact and increase efficiency. The first stage of the $350 million project on the world’s largest smelter will be completed in 2011.

The Timken Company, Canton, Ohio, will serve as the exclusive supplier of tapered, spherical and cylindrical roller bearings for Arcelor Mittal’s new high-capacity hot-strip rolling mill in Krakow, Poland. Timken bearings have been installed in various locations throughout the mill, which will be commissioned later this quarter.

Pittsburgh-based U.S. Steel has announced new authorized dealers of its oil country tubular goods through its acquisition of Lone Star Technologies Inc. The company’s distributors are: Cinco Pipe & Supply Co.; Energy Tubulars Inc.; J.D. Rush Corp.; Pipeco Services; Premier Pipe LP; Red Man Pipe & Supply Co.; Republic Supply International-Alexander Steel Sales Inc.; Sooner Pipe LLC.; and Toolpushers Supply Co.

AK Steel Corp. has completed its move from its Middletown, Ohio, headquarters to a new corporate office in West Chester, Ohio, a Cincinnati suburb. The new 136,000-square-foot headquarters, located at 9227 Centre Point, West Chester, will provide office space for 300 corporate employees. The company said all headquarters telephone and fax numbers are unchanged.

Postle Extrusion, a division of Postle Aluminum Co., has chosen Granco Clark to supply the complete heating and handling system for its new 2,000-ton press line. This line, designed to process 7-foot diameter billets, will be the third at Postle’s Cassopolis, Mich., location, and will include a hot-jet log furnace and HSBC 6/9 hot-billet saw.

Cleveland Cliffs Inc., Cleveland, and joint venture partner Kobe Steel Ltd. announced plans to construct a commercial-scale iron nugget production facility at Cleveland Cliff’s Empire Mine site in Palmer, Mich. Production, projected at 500,000 tons per year, is expected to begin in early 2010.

Diamond Manufacturing Co., Wyoming, Pa., has acquired Chicago-based Stone Perforating Co., a perforated metals company. Diamond Manufacturing will also acquire Chicago EDM, an affiliate of Stone Perforating. “We are very pleased to have the Stone Perforating Co. as part of our organization. Our technological similarities make this an excellent fit,” says Rusty Flack, CEO of Diamond.

Steelscape, Kalama, Wash., has made several enhancements to the company’s online extranet information system, XtraScape. The newest enhancements to XtraScape include improved user-friendly screens and navigation; added report customization; a new coil receiving report; new coil detail screens and data; and added site searches.

Dura-Bar, a producer of continuous cast iron bar stock, has completed a revamp of its website, adding a number of online tools and information to assist engineers, designers and manufacturers.

Novelis Inc., Atlanta, has signed a multi-year supply agreement with Rexam PLC, a leading beverage can maker. Under terms of the transaction, valued at $1 billion, Novelis will supply aluminum can sheet to Rexam plants throughout Brazil, Argentina and Chile.

AK Steel, Middletown, Ohio, has implemented Maxager’s enterprise solutions. The steel company is employing the software on its hot-dipped galvanized lines at three facilities to analyze margin potential for various product offerings.

Swedish steel company SSAB opened a new plate center for warehouse and wear parts processing in China, the company’s first in the Asia-Pacific region. The company will store more than 20,000 tons of steel plate at the facility.

People
Klaus Kleinfeld has been elected president and chief operating officer of Alcoa Corp., Pittsburgh. Kleinfeld previously served as president and CEO of Siemens AG. At Alcoa, he will have responsibility over all operating activities of the company

Steve Sparks has been appointed distribution manager and George Mussotter regional manager for DoALL Sawing Products, Elk Grove Village, Ill., Sparks will be responsible for growing DoALL sales through expanded distribution and increased penetration into existing markets. Mussotter will be responsible for the company’s factory program in northern Texas, Oklahoma, Louisiana and Arkansas.

Oliver C. Mitchell, Jr. has been appointed senior vice president, general counsel and secretary for Carpenter Technology Corp., Wyomissing, Pa.

David Simonsen has been named the first chief of production at SAF West, the newest Southern Aluminum Finishing facility in Redding, Calif. Simonsen’s duties include fabrication equipment installation, operation and maintenance and customer liaison on fabrication and fabrication quoting.

FKI Logistex North America has appointed Chris Roach to the new position of vice president, customer service. Roach will be responsible for all North American parts sales, parts order fulfillment operations, and hotline technical support.