Bethlehem Steel in Discussions With European Company

Arcelor, the European steel giant, is in early talks to buy a majority stake in the biggest unit of bankrupt U.S. steel company Bethlehem Steel Corp.

Arcelor was formed by the merger of three European steel companies – Usinor, headquartered in France; Aceralia, located in Spain; and Arbed, headquartered in Luxembourg.

According to industry reports, Arcelor approached the U.S. steel company this month about establishing a joint venture which would own Bethlehem's steel mill in Burns Harbor, Ind.

The Burns Harbour unit has the capacity to make 3.5 million metric tons of steel every year, much of which is used by the automobile industry.

Bethlehem Steel is the third largest steel producer in the United States with an annual production of nine million metric tons.

Arcelor and Bethlehem Steel are discussing a deal where the European company will invest a few hundred million dollars and take over day to day management of the unit.

Meanwhile, Bethlehem Steel is also continuing talks with Brazil's Compania Siderurgica Nacional to create another joint venture for its Sparrows Point plant near Baltimore in Maryland, the source familiar with those talks said.