Despite the August 17 statement released by Chinese-based Anshan Iron and Steel Group rejecting rumors that the company had lowered its investment stake in an Armory, Mississippi rebar facility, new rumors have surfaced on whether the company has retracted its position, and announced they will be pulling out from the deal entirely.
Anshan's Vice President, Chen Ming, stated to reporters Thursday, "We believe the likelihood the project will be approved is very low, so we decided to shelve the investment plan."
However, since Ming's statements, Steel Development Co., Ltd's (SDCO) Chairman and CEO, John Correnti, and the company's chief commercial officer, Mark Bula, have reportedly denied that the deal with Anshan is dead.
While there has been much speculation but not yet a clear answer as to whether the Anshan investment with SDCO will dissolve, both companies have certainly captured the steel industry's attention, and there is sure to be more commotion over the next several days as further announcements are made.
In May 2010, Angang Steel Co Ltd., which is owned by Anshan, signed a cooperation agreement with US Steel Development Co., Ltd (SDCO) to jointly build five steel mills in America, with a total investment of US$175 million by Anshan Steel.
Anshan's stake in the rebar facility was previously reported to be at 14 percent, at US$7 million. It was estimated the facility would create as many as 1,000 construction jobs and 175 permanent jobs in the small town of Armory--a relative boon for a community currently plagued with a 14.5 percent unemployment rate.
Since that time, a number of US producers have been up in arms, and debate surrounding China's direct investment in an American steel company have oftentimes been heated.
In July, a letter signed by 50 members of the Congressional Steel Caucus was sent to US Treasury Secretary Timothy Geithner requesting the Committee on Foreign Investment in the United States (CFIUS) thoroughly investigate the joint venture between the Chinese government-owned steel producer and SDCO. In the letter, the Members of the Caucus stated they were deeply concerned that Anshan's direct investment in an American steel company "threatens American jobs and our national security" by "allowing access to new steel production technologies and information regarding American national security infrastructure projects.
"China's strategic plan for its steel industry has been to create massive state-owned and controlled national champion companies like Anshan," said American Iron and Steel Institute (AISI) President and CEO Thomas J. Gibson, praising the action. "These companies operate at the direction of the highest levels of the Chinese government and benefit from massive government subsidies and other trade-distorting policies that give them an unfair advantage in international trade. Given the economic and national security issues raised by a Chinese government investment in a US steel company, this matter certainly deserves very careful and thorough review by the appropriate US authorities."
Steel Development Co. disagreed, citing that since the new facility would produce less than three-tenths of one percent of the total US market demand for concrete reinforcing steel bars, "The promotion of national security fears due to the Anshan investment [was], at best, difficult to rationalize".
Qi Xiangdong, deputy secretary general of the China Iron and Steel Association (CISA), further stated the investment should not be opposed by the US government, in that government intervention would "constitute protectionism".