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Severstal to extend closing of Sparrows Point furnaces through March 2011

Company confirms earlier Brew report that WARN notices are going out

Above: Severstal officials had some bad news for Sparrows Point today.

FRIDAY MORNING UPDATE: Text of Severstal’s WARN letter to employees.

Severstal today announced that the “L” blast furnace and other steel-making facilities at Sparrows Point will remain closed through March 31, 2011. Earlier the company said it would idle the furnaces through the end of December.

Sparrows Point has not produced steel since late July. Hot-mill operations, the first step of making finished steel, will also remain idled through March, while the cold mill, galvanizing lines and coated products line will operate on drastically reduced schedules “to provide product to a limited number” of customers, the company said in a media release.

Severstal also confirmed, as first reported by The Brew, that it will issue Worker Adjustment and Retraining Notification (WARN) notices “to certain of its Sparrows Point employees.” The company did not say how many employees would receive the notice, which is required by federal law for long-term layoffs and plant closings.

Previously, the United Steelworkers Union (USW) estimated that 1,000-1,200 of the mill’s 1,800 unionized workers would be laid off.

Already, many hundreds of employees have been furloughed, although neither the company nor USW Local 9477 has released the exact number.

The cascading shutdowns leave the tin mill as the only facility now operating on a full schedule at the plant, one of the nation’s biggest steel facilities and the single largest industrial employer in greater Baltimore.

Blames “Protracted Economic Downturn”

Severstal blamed its decision to extend for three months the shutdown of the steel furnaces on “the protracted economic downturn and the impact on customer orders.”

The company said it was “hopeful” that market conditions “would improve enough in 2011 to warrant an increase in production levels.”

Sparrows Point has a rated annual capacity of 3.7 million tons, or 10,100 tons per day, making it the biggest steel mill east of Ohio and among the five biggest in the U.S.

It is also the only major steel plant to undergo substantial production cutbacks this year, although orders throughout the steel industry are weak.

Union Urges Sale of Sparrows

The USW has been urging the company to sell the plant, with the top local USW leader publicly charging that the plant has been badly mismanaged by Severstal, a Russian steelmaker that purchased the mill in 2008.

At least five parties, including the Renco Group of New York, have bid on Sparrows and two other troubled Severstal mills up for sale in the Midwest.

Severstal was supposed to inform the USW of the “lead bidder” of the plants earlier this week, but has not yet done so, according to informed sources.

On Tuesday night, USW Local 9477 President John Cirri blasted the company’s decision to issue WARN notices and told The Brew, “I do not foresee a start-up anytime soon while we remain [part of] Severstal.”

– Mark Reutter can be reached at reuttermark@yahoo.com.

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