Feedback

Sparrows Point furnace temporarily idled as company struggles to pay its bills

Owner Ira Rennert is trying to keep Sparrows open long enough to sell it, sources say.

L blast furnace

“L” furnace at Sparrows Point, pictured here in 2011, has been idled, reportedly for maintenance.

Photo by: Fern Shen

((2:30 p.m. UPDATE: RG Steel has issued the following statement on its website: “The L blast furnace at RG Steel’s Sparrows Point facility will be restarting this weekend after a routine maintenance outage. Production will resume at the level necessary to balance production with current market demand, and to service our customers.”))

The Sparrows Point blast furnace has been taken out of service, reportedly for maintenance, as rumors swirl that owner RG Steel is unable to pay its bills.

Sources told The Brew this morning that the furnace was temporarily idled Wednesday night and remains closed.

At present, not only the blast furnace but all primary (steelmaking) operations are suspended.

The L furnace is scheduled to reopen either over the weekend or next Tuesday.

The L furnace supplies the raw iron for all of the mill’s operations. While the plant can continue to finish steel from a backlog, other operations would be forced to close if the furnace remains closed.

Sparrows Point, which was shut down last Christmas for a month after the parent company ran out of cash, employs 1,600 union workers and more than 400 contract workers. It is the biggest steel mill in the Eastern U.S.

The furnace “take down” has led to a published report that the plant has been idled. Last night, Mark Parr, a KeyBanc steel analyst, published a note to his customers saying, “we have learned RG Steel’s Sparrows Point facility in Baltimore . . . has recently been idled.”

Parr added that, while the company has “indicated that the outage” is temporary, “it is difficult for us to believe the company is cash viable at present levels of spot carbon hot-rolled steel pricing.”

Ira Rennert Wants to Sell Mill

The Baltimore County steel plant has been beset by financial problems since it was purchased a year ago by RG Steel, a subsidiary of Ira Rennert’s Renco Group.

A billionaire financier, Rennert has been scrambling to find a new owner for Sparrows Point, according to very well-informed sources, and is trying to keep the steel plant operating – at the lowest possible cost – until a buyer is found.

“He’s not paying the vendors. He keeps it all close to his vest, but he wants to keep the plant operating because he figures he’ll get a better price if Sparrows is open and not shut down,”a source told The Brew this morning.

RG Steel’s spokesperson, Bette Kovach, did not respond to questions about the operating status of the plant.

((10:30 p.m. UPDATE: Ms. Kovach has e-mailed us back to say this about RG Steel’s payment for raw materials and other bills, “We continue to purchase raw materials in accordance to our production needs, and our standard term of payment is 60 days.”))

Sparrows Point has on the ground a large amount of iron ore shipped from overseas, but much of the ore is owned by other parties and has not been released to RG Steel because of nonpayment.

Sources say that many ore piles are circled by paint, which indicates they are not owned by RG Steel and cannot be used to feed the L blast furnace.

A confidential report obtained by The Brew indicates that, in March, Sparrows Point lost an average of $500,000 a day.

Last January, RG Steel received a $130 million cash infusion from Cerberus Capital Management, which allowed the plant to reopen after its abrupt shutdown shortly before Christmas.

Recently, RG Steel ballyhooed to the local media that management was taking a 10-25% pay cut to help the company through tough times. Sources say the story was planted to appease the bankers who have loaned money to the company.

Be sure to check our full comment policy before leaving a comment.

  • SteelDude

    MTE,

    How do you lose 30,000 gallons of rolling oil?  Wasn;t anybody minding the store?  I can tell you that if my rolling mill had already leaked 30,000 gallons I’d have somebody watching for the leak when I started up again.  This story, if it is true, is a travesty and the unit manager should have been reprimanded or fired.

    It is the responsibility of operating management to steward the assets in their department.  30,000 gallons does not leak out in an instant.

    • Common Sense

      Been leaking for 6 weeks but Ira wouldn’t authorize/pay for replacement parts.  Don’t blame the guys in the mill-they wanted to fix the problem.

      They were getting a truck every week with oil(approx. 6000 gallons)

  • msc#1operator

    any1 go to the 1190 union meeting tuesday?  anything happen or any news?

    • layedoff

      its been the same b s for three years, i dont go anymore.

    • guest222

      Ther was no meeting… Its the first and third Tuesday of every month.That Tells me how many times you have been there!!!!!

  • Dr Raymond Boothe

    In any case I have no doubt that Ira, the Flipper, would not pay a damn dime for any replacement parts. He just likes to run plants and employees into the ground.

  • Concerned

    Here’s a hint, 10 years, 5 names, same management.  Doesn’t this tell you something?

  • Kumonster

    Just got a picture from a union brother down in mingo of a semi delivering electrodes to the mingo plant. Makes u wanna think what’s up??

    • 1190

      old picture, i got one too.

  • Kumonster

    Upon further investigation from my previous post these electrodes were being loaded out and not delivered !!! Supposedly being shipped to warren to be retro-fitted for thier LMF!! Sorry for any incovience!!

More of the Daily Drip »

Below the Fold

  • March 24, 2014

    • Last Thursday, I sent an email to the Mayor’s Office of Communications asking for some basic responsiveness: Please return our emailed queries and phone calls about stories. Please send us the same routine emails you send to other members of the media. Lately, more so than usual, they haven’t been. It’s a shame because, even [...]

Twitter

Facebook