Steel Development Co., Ansteel Form Joint Venture

Steel Development Co. LLC (SDC), Armory, Miss., and Anshan Iron and Steel Group Corp. (Ansteel), a China-based steel company, have executed a joint venture operating agreement. The deal also includes partners from Italy, Japan, Germany and Canada, according to a release announcing the joint venture. 

Under terms of the agreement, Ansteel will invest in and become a 14 percent partner of SDC. Ansteel also will become a member of SDC’s board of directors and will supply certain components of SDC’s technology and equipment package.

The two companies’ plans are to build and operate four steel mills to produce rebar and other bar products to be used in infrastructure applications, as well as one mill capable of producing electrical and silicon grades of steel used in energy applications. Construction already has begun on the first steel mill in Amory.

The technology for the Amory mill is being provided by a consortium of technology providers, including Danieli Corp., Tenova Core Corp., Ansteel and Marubeni Corp. Quad Engineering Inc is the lead engineer for the mill. According to the partners, the technology being used has been designed to maximize production yields and substantially reduce operating costs and energy needs while allowing for continuous operation twenty four hours a day.

In signing the agreement, Zhang Xiagang, Ansteel’s president, says, “The joint venture with Steel Development is an important step in Ansteel’s goal of continuing to be among the world leaders in terms of steel production technology, environmental protections and profitability. Steel Development has assembled a world-class group of project participants and Ansteel is proud to be joining with this group as we look to expand our activities internationally.”

When the project was first announced, earlier this year, the Congressional Steel Caucus, a group of lawmakers, called for an investigation into whether the venture should be blocked on national security grounds. To support its case, the caucus sent a letter to Treasury Secretary Timothy Geithner, saying it was “deeply concerned” that the deal threatened American jobs.

In a release by the Congressional Steel Caucus after the joint venture was announced, Congressional Steel Caucus Chairman Pete Visclosky (D-IN) and Vice Chairman Tim Murphy (R-PA) issued the following statement:
It seems all too often that we are forced to raise our voices against Chinese actions that will harm our domestic steel industry. We are disappointed that the Anshan deal appears to be moving forward. China’s investment sets a dangerous precedent that undermines our domestic steel market and could have serious ramifications for our national security. We remain steadfast in our commitment to ensuring that American steelworkers can compete on a level playing field, and we will continue working to make certain that United States authorities properly and transparently investigate all Chinese investments in our domestic steel industry.