By MARK REUTTER

Sparrows Point management has convinced Severstal, the troubled Russian owner of the Baltimore steel plant, to keep the “L” blast furnace operating through August at reduced capacity, a union official told employees today.

 Faced with a corporate mandate to idle the furnace or reduce raw material costs, local management will run the furnace without using coal injections or ground iron dust, known as sinter. By eliminating these elements and relying only on iron ore pellets, the furnace can continue to make molten iron, although at a slower rate. The plant expects to produce between 5,000 and 7,500 tons of iron a day, or about half its 11,000-ton daily capacity. 

The decision to keep the furnace running through August, announced in an e-mail to employees by John Cirri, president of United Steelworkers Local 9477, amounts to a stay of execution for the steelmaking side of the plant. However, the closing of L furnace in September “is a strong and possible scenario,” Cirri noted.

 Shutting down a blast furnace is considered serious because, once idled, it is both technically difficult and expensive to get the equipment running again. It was understood that Severstal had planned to idle the furnace this month and import steel slabs from Russia for the plant’s finishing mills. This may still happen after August, Cirri said.

 Severstal has been beset not only by the worldwide collapse in steel demand, but by a $2.3 billion buying spree last year that left the company with millions of tons of now-useless steel capacity in Ohio and West Virginia. Most of these mills have been shut down.

The Point has remained a bright spot for the company’s North American operations as a result of strong demand for tinplate used by the canning and container industries. Tinplate is one of the few steel products that have not suffered in the recession.

 Last month, Severstal, majority-owned by billionaire Russian oligarch Alexei Mordashov, secured $300 million in credit lines from a state-owned Russian bank. The company’s sketchy financial reports indicate that about $1.4 billion in debt matures in the next 18 months and must be repaid or refinanced.

Sparrows Point has not laid off any employees this year, although work hours were reduced and a voluntary separation program is in effect. While the mill’s sinter plant is scheduled to shut down July 31, other departments that have experienced an increase in orders will absorb the hourly employees.

“We are not sure if the increased orders are just a bubble or the market is beginning to return,” Cirri said.