Russian Steelmaker Looks To Ohio For New Mill

Move by Russia's biggest steel manufacturer would create a $1 billion site and 1,000 jobs.

HAVERHILL, Ohio (AP) — As the head of one of Russia's biggest steelmaking companies gazes across a southeast Ohio field, state and local development officials hope he can envision a $1 billion steel mill that would create 1,000 jobs, making it Scioto County's biggest private employer.
Gov. Ted Strickland and Lt. Gov. Lee Fisher, who also is director of the Ohio Department of Development, plan to tour the Ohio River site near Portsmouth on Monday with Russian billionaire Victor Rashnikov, who controls Magnitogorsk Iron & Steel Works, known as MMK.
Fisher and Steve Schoeny, the ODOT director of economic development, flew to Russia in July to meet Rashnikov.
''Our discussions were positive, informative and productive, and I greatly enjoyed learning more about MMK's impressive operations,'' Fisher said then.
ODOT spokeswoman Kelly Hassett said Friday that the department was not ready to discuss incentives that might be offered to MMK.
Consultants hired by the Russian company have looked at the Ohio site — and probably sites elsewhere — but a decision on where to build a U.S. mill likely is months away.
''This will be the first tour of the site for most of the Russian delegation,'' said Steve Carter, executive director of the Scioto County Economic Development office. ''It will mostly be a chance to say, 'Welcome, glad you're here, thanks for looking at us.' ''
Officials are hoping for a decision by MMK by the end of the year, Carter said.
The state likely is putting together an incentive package similar to one that Alabama voters approved in June to help convince German steelmaker ThyssenKrupp to commit to building a $3.5 billion steel mill in that state.
Domestic steelmakers don't like the idea of subsidies.
''It's not that we're afraid of competition; we're not,'' said Alan McCoy, spokesman for AK Steel, based in West Chester. ''We've never been shy about meeting the competition. But if a new player comes in with significant new incentives from the state, then the state is helping subsidize the newcomer at the expense of existing companies and jobs.''
Instead, Ohio Steel Council members would like to meet with development officials to talk about a system of sharing incentives among newcomers and existing companies, McCoy said.
''We shouldn't be disadvantaged by support for new jobs,'' McCoy said. ''That shouldn't come at the expense of existing jobs.''
Schoeny has said state officials would be willing to talk about that possibility.
There is precedent for MMK's interest in having a U.S. mill to supply cold-rolled steel for the auto industry. The Russian-based Severstal Group bought Rouge Steel in 2004, and last fall Evraz Group SA bought Oregon Steel Mills Inc. for $2.3 billion, making it one of the largest investments ever by a Russian company in the U.S.
The 600-acre Scioto County site being pitched to MMK is adjacent to a $230 million coke plant expansion that will enable Sun Coke Energy Inc. to double production at the site to about 1 million tons a year.
Sun Coke, a subsidiary of the Philadelphia-based petroleum and chemical company Sunoco Inc., makes about 2.5 million tons of coke a year, or about 15 percent of the total U.S. production, at its plants in Ohio, Indiana and Virginia.
Some of the coke from the Ohio plant is used to produce steam for the nearby Sunoco facility that makes phenol. The second unit is expected to be completed next year, and the most likely customers are blast furnace operators.
Carter said it isn't known if the steel mill MMK might consider for the site would have a blast furnace.
Even if it doesn't, Sun Coke has other steel customers lined up. Severstal North America Inc., of Dearborn, Mich., and WCI Steel Inc., based in Warren, Ohio, have signed long-term contracts to buy coke from the plant.
If the coke plant isn't what's piquing the Russian interest, what is?
''What put the Russiansteel company here (for a look-see) was our site — the river, rail, highways, power, gas pipelines,'' Carter said — the same things that attracted Sunoco and Sun Coke.
A steel mill could go a long way toward lowering Scioto County's 7 percent unemployment rate, Carter said.
''We do need something in Scioto County,'' said lifelong resident Randolph Payton, 71, of Portsmouth. But he worried about the effect the proposed mill might have on his daughter and son-in-law, who live next to the site.
''What would that do to housing and people who live nearby?'' Payton said. ''They might have to move.''
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