Steel Products

CSN – Always a Bridesmaid…

February 18, 2013

CSN has been looking to expand their operations in the United States ever since they acquired the bankrupt Heartland Steel and turned it into CSN, LLC. The Terre Haute, Indiana rolling facility is capable of taking hot bands and converting them to either cold rolled or galvanized steel – with the vast majority of the tonnage being fed through the company’s galvanizing line.

In 2006, CSN was in talks to build a mill in Kentucky, according to the Pittsburgh Post-Gazette, but instead they began pursuing Wheeling-Pittsburgh Steel. At that time, CSN had international sales of $4.7 billion and produced 5.7 million tons of steel in Brazil. The company earned $904 million in 2004.

Competing against them was a Chicago Heights, IL steel processor and distributor which was founded in 2003 by brothers James and Craig Bouchard. According to the Post-Gazette article at the time they had expectations of pretax income of $33 million for 2006.

Wheeling-Pittsburgh Steel had been on shaky financial standing for some time and had emerged from bankruptcy in 2003. The company made money in 2004 (shortage year) but lost $33.8 million in 2005.

Esmark and CSN were competing for control of the board of directors. The USW threw their weight behind the Esmark bid and CSN failed to understand the impact the union would have in thwarting their attempt to gain control of Wheeling-Pittsburgh Steel. CSN lost and Esmark gained control of WP Steel.

The following year (2007) Mittal was forced by the U.S. Justice Department to sell its Sparrows Point mill due to antitrust issues in the tin plate business as part of the acquisition of Arcelor SA.

Sparrows Point had its own deep water port capable of handling ore and steel vessels. CSN saw this as a perfect fit having excess iron ore reserves which could be shipped directly to the plant.

Once again, CSN found themselves involved in a bidding process for the mill and, once again the USW threw their support behind the much smaller and under-capitalized Esmark Corp instead of the larger Brazilian company. At the time the United Steelworkers “expressed confidence that the deal could be completed with no negative effect on its members”, according to an Associated Press article written at the time. CSN was once again left behind.

It was only one year later (2008), when the Esmark group of mills were sold to Severstal with the backing of the USW. At that time, Essar Steel was the other bidder – CSN had enough of the union picking winners and losers.

CSN name has been associated with talks surrounding the Sparrows Point plant after RG Steel shut it down but, the combination of what it would cost to make the plant profitable coupled with working with a union which had spurned them in the past, did not allow for much to happen other than talking. Our understanding is CSN, which was willing to pay hundreds of millions of dollars each for Wheeling Pittsburgh and Sparrows Point, was not willing to make a bid on any of the assets at the bankruptcy auction.

Now, they are one of the three companies (or groups) suggested as the front runners to acquire the ThyssenKrupp Steel Americas assets (Calvert, AL and CSA in Brazil).

One thing they have going for them – the Calvert, AL facility is non-union. So, at least for the moment, the USW is not working against them.

What do you think? Will CSN once again be the bridesmaid or will the company finally get a bigger foothold in the North American market?