NLMK Pennsylvania pays $160 million in Section 232 tariffs while awaiting exemption ruling

Friday, 15 February 2019 23:32:55 (GMT+3)   |   San Diego

NLMK Pennsylvania has paid $160 million in tariffs since Section 232 tariffs were announced in March 2018, and according to a local media interview with the company’s president, “there is no end in sight.”

Bob Miller, president of NLMK Pennsylvania, which employs about 750 people between a steel plant in Farrell, Pennsylvania and a coatings facility in Sharon, Pennsylvania, said the company’s tariff bill would be “staggering for a steelmaker of any size.”

“We’re probably the poster child for tariffs,’’ Miller said. “I can’t imagine anybody paying more money in tariffs than we have.”

NLMK Pennsylvania is owned by Russia-based Novolipetsk Steel, and the company relies on its overseas parent company for most of the slab it uses to roll into flat rolled steel.  The company filed for a tariff exemption with the US Department of Commerce just days after the tariffs were implemented, because Miller said it’s difficult if not impossible to acquire US-produced slab. However, US steel producers including AK Steel have objected to the filing, claiming that the US steel market has the capacity to fill NLMK’s supply needs.

The DOC has not yet issued a ruling, and until then, NLMK has to pay the 25 percent tariff in order to keep operations running. If the DOC rules in the company’s favor, the decision would be retroactive and NLMK could recoup most of its tariff costs.

Additionally, before the tariffs were announced, the company announced plans to spend $600 million on upgrades to its operations over a five-year period. Miller said they had to suspend the capital expenditure program, with only preliminary engineering work completed before the halt.

Miller said a critical part of the upgrade is installing a $100 million walking beam reheat furnace, which can reheat slab much faster and less expensively than the mill’s current technology.

Miller said the project will solidify the company’s future in Farrell, and increase the company’s competitiveness. But any further progress on the project will have to wait until the DOC ruling.

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