[Federal Register Volume 72, Number 67 (Monday, April 9, 2007)]
[Notices]
[Pages 17634-17686]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 07-1321]



[[Page 17633]]

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Part II





Department of Justice





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Antitrust Division



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Public Comment and Response on Proposed Final Judgement; Notice

  Federal Register / Vol. 72, No. 67 / Monday, April 9, 2007 / 
Notices  

[[Page 17634]]


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DEPARTMENT OF JUSTICE

Antitrust Division


Public Comment and Response on Proposed Final Judgment

    Pursuant to the Antitrust Procedures and Penalties Act, 15 U.S.C. 
16(b)-(h), the United States hereby publishes below the comments 
received on the proposed Final Judgment in United States v. Mittal 
Steel Company, No. 1:06-CV-1360-ESH, which were filed in the United 
States District Court for the District of Columbia, on February 13, 
2007.
    Copies of the comments and the response are available for 
inspection at the Department of Justice Antitrust Division, 325 Seventh 
Street, NW., Room 200, Washington, DC 20530, (telephone (202) 514-
2481), and at the Office of the Clerk of the United States District 
Court for the District of Columbia, 333 Constitution Avenue, NW., 
Washington, DC 20001. Copies of any of these materials may be obtained 
upon request and payment of a copying fee.

J. Robert Kramer II,
Director of Operations Antitrust Division.

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

United States of America, Plaintiff, v. Mittal Steel Company N.V., 
Defendant

[Civil Action No. 1: 06CV01360-ESH]

Response of Plaintiff United States to Public Comments

    Pursuant to the requirements of the Antitrust Procedures and 
Penalties Act, 15 U.S.C. section 16(b)-(h) (``APPA'' or ``Tunney 
Act''), the United States hereby responds to the public comments 
received regarding the proposed final Judgment in this case. After 
careful consideration of the comments, the United States continues to 
believe that the proposed Final Judgment will provide an effective and 
appropriate remedy for the antitrust violations alleged in the 
Complaint. The United States will move the Court for entry of the 
proposed Final Judgment after the public comments and this Response 
have been published in the Federal Register, pursuant to 15 U.S.C. 
section 16(d).
    On August 1, 2006, the United States filed the Complaint in this 
matter alleging that the proposed acquisition of Arcelor S.A. 
(``Arcelor'') by defendant Mittal Steel Company N.V. (``Mittal Steel'') 
would violate Section 7 of the Clayton Act, 15 U.S.C. section 18. 
Simultaneously with the filing of the Complaint, the United States 
filed a proposed Final Judgment and a Hold Separate Stipulation and 
Order (``HSSO'') signed by plaintiff and Mittal Steel consenting to the 
entry of the proposed Final Judgment after compliance with the 
requirements of the Tunney Act, 15 U.S.C. section 16. Pursuant to those 
requirements, the United States filed its Competitive Impact State 
(``CIS'') in this Court on August 1, 2006; published the proposed Final 
Judgment and CIS in the Federal Register on August 24, 2006, see United 
States v. Mittal Steel Company N.V., 71 Fed. Reg. 50084, 2006 WL 
2431068; and published summaries of the terms of the proposed Final 
Judgment and CIS, together with directions for the submission of 
written comments relating to the proposed Final Judgment, in The 
Washington Post for seven days beginning on September 10, 2006 and 
ending on September 16, 2006. The 60-day period for public comments 
ended on November 15, 2006, and three comments were received as 
described below and attached hereto.

I. The Investigation and Proposed Resolution

    On January 27, 2006, Mittal Steel announced its intention to 
commence a tender offer to acquire control of Arcelor. At the same 
time, Mittal Steel announced that it would subsequently sell Arcelor's 
recently acquired Canadian subsidiary, Dofasco Inc. (``Dofasco'') to 
ThyssenKrupp A.G. (``ThyssenKrupp'') if it acquired control of Arcelor. 
For six months following the announcement of the tender offer, the 
United States Department of Justice (``Department'') conducted an 
extensive, detailed investigation into the competitive effects of the 
Mittal/Arcelor transaction. As part of this investigation, the 
Department obtained substantial documents and information from Mittal 
Steel and issued eight Civil Investigative Demands to third parties. 
The Department received and considered more than 45,000 pages of 
material. More than fifty interviews were conducted with customers, 
competitors, and other individuals with knowledge of the industry. The 
investigative staff carefully analyzed the information provided and 
thoroughly considered all of the issues presented. The Department 
considered the potential competitive effects of the transaction with 
respect to a number of steel products, obtaining information about 
these products from customers, competitors, and other knowledgeable 
parties. The Department concluded that the combination of Mittal Steel 
and Arcelor likely would lessen competition in one market--Tin Mill 
Products (``TMP'') sold to customers in the United States, east of the 
Rocky Mountains (``Eastern United States''.) TMP are finely rolled 
steel sheets, usually coated with a thin protective layer of tin or 
chrome. TMP include black plate, electrolytic tin plate (``ETP''), and 
tin free steel (``TFS''). Black plate is a light-guage cold-rolled bare 
steel sheet that serves as a substrate for production of ETP and TFS. 
Black plate is coated with tin to produce ETP and with chrome to 
produce TFS. Both ETP and TFS are used primarily in manufacturing steel 
cans for packaging a wide range of food products, such as soup, fruits, 
and vegetables, and non-food products, such as paints, aerosols, and 
shaving cream. For most TMP purchasers, particularly food can makers, 
there are no close substitutes for TMP. Packaging alternatives, such as 
plastic containers, are not viewed as close product substitutes. A 
small but significant increase in price would not likely cause 
sufficient TMP can customers to switch products or otherwise curtail 
their TMP usage so as to render the increase unprofitable.
    More than 89 percent of TMP sold in the Eastern United States is 
manufactured by firms located either in the Eastern United States or 
eastern Canada. A small but significant increase in price for TMP would 
not cause TMP customers in the United States to substitute purchases 
from outside the Eastern United States in sufficient quantities to make 
such a price increase unprofitable. Mittal Steel, Arcelor, and 
Arcelor's subsidiary Dofasco sell TMP to customers in the Eastern 
United States.
    As explained more fully in the Complaint and CIS, the acquisition 
of Arcelor and Dofasco by Mittal Steel would substantially increase 
concentration and lessen competition in the production and sale of TMP 
in the Eastern United States, giving the top two TMP producers, 
including Mittal Steel, a market share of more than 81 percent of 
sales. Therefore, the Department filed its Complaint alleging 
competitive harm in the TMP market in the Eastern United States and 
sought a remedy that would ensure that such harm is prevented.
    The proposed Final Judgment in this case is designed to preserve 
competition in the production, manufacture, and sale of TMP in the 
Eastern United States. The proposed Final Judgment requires the 
divestiture of sufficient assets to prevent the increase in 
concentration that resulted from the combination of Mittal Steel's 
capacity and Arcelor's capacity to supply TMP to the Eastern United 
States market. The proposed Final Judgment requires the

[[Page 17635]]

divestiture of a significant steel mill that manufactures TMP for sale 
in the Eastern United States. Specifically, it directs a sale of 
Dofasco to ThyssenKrupp or an alternative purchaser acceptable to the 
United States. At the time the proposed Final Judgment was filed with 
the Court, Mittal Steel already had executed a letter of intent to sell 
Dofasco to ThyssenKrupp when and if Mittal Steel acquired Arcelor, at a 
price comparable to the price Arcelor itself paid to acquire Dofasco in 
early 2006. Dofasco, which has a history of successful operation as an 
independent entity, has not been integrated into Arcelor and thus 
remains a viable divestiture candidate.
    Mittal Steel's announced plan to sell Dofasco to ThyssenKrupp upon 
its acquisition of Arcelor would have mitigated the increase in post-
merger concentration in the Eastern United States that would have 
resulted from its acquisition of Arcelor. As part of an effort by 
Arcelor's Board of Directors to impede the tender offer, however, 
Arcelor sought to prevent any figure effort by Mittal Steel to divest 
Dofasco by transferring Arcelor's Dofasco legal title to an independent 
Dutch foundation, known as the Strategic Steel Stichting (``S3''). 
Since Mittal completed its acquisition of Arcelor, Arcelor and Mittal 
Steel have requested that the S3 dissolve itself so as to permit the 
sale of Dofasco to ThyssenKrupp. The board of the S3 nevertheless has 
decided not to dissolve itself.
    In negotiating the proposed Final Judgment, the parties recognized 
that the existence of the S3 could prevent Mittal Steel from divesting 
Dofasco in a timely manner. For this reason, the Department determined 
that alternative assets, owned by Mittal Steel and not burdened with 
any restrictions on sale, should be designated to accomplish the 
intended preservation of TMP competition in the event that Mittal Steel 
was unable to divest Dofasco within the time allowed by the decree. The 
proposed Final Judgment requires Mittal Steel to divest one of two 
steel mills--Sparrows Point or Weirton--if, despite its best efforts to 
do so, it has not been able to carry out the divestiture of Dofasco 
within the period allowed by the decree. Sparrows Point is a fully 
integrated steel mill located near Baltimore, Maryland, which produces 
a diversified portfolio of products, including hot-rolled sheet, cold-
rolled sheet, galvanized sheet, Galvalume, and TMP, for construction, 
steel service center, container, appliance, and other end-use markets. 
Weirton, located in Weirton, West Virginia, operates primarily as a TMP 
finishing facility, converting steel slabs obtained from Mittal's 
Sparrows Point and Cleveland plants.
    In the Department's judgment, divestiture of Dofasco to 
ThyssenKrupp or another qualified purchaser would remedy the violation 
alleged in the Complaint because Dofasco is an integrated steel mill 
that has the demonstrated capacity to make significant TMP sales in the 
Eastern United States. In the event that Mittal fails to sell Dofasco 
in a timely manner due to legal impediments arising from its control by 
the S3 and the S3's refusal to permit its sale, the proposed Final 
Judgment provides that the Department will determine whether Sparrows 
Point or Weirton should be divested to remedy the violation alleged in 
the Complaint. The Department is confident that these options allow it 
to select an alternate facility the divestiture of which to a viable 
qualified purchaser would remedy the violation. Each mill currently 
makes substantial TMP sales in the Eastern United States, and the 
successful continued operation of either mill by a viable qualified 
purchaser would remedy the violation. The Department is currently 
assessing which of these two mills is most likely to continue as an on-
going vigorous competitor for TMP sales in the event that Dofasco 
cannot be divested. Sparrows Point is an integrated facility that 
produces a variety of steel products in addition to TMP, and it 
manufactures its own steel slabs, which are the basic raw material for 
TMP fabrication. Weirton currently operates as a TMP finishing facility 
that converts slabs obtained from Mittal Steel's Sparrows Point and 
Cleveland mills. Mittal recently idled Weirton's slab-making facilities 
because they were considered to be less efficient than other slab 
manufacturing locations within the Mittal Steel organization, and the 
Department is assessing whether those facilities could be reactivated 
to produce slabs at Weirton on a cost-effective basis in the event of 
Weirton's divestiture. Even if the Department concludes that cost-
effective slab production at Weirton is not likely to be feasible, 
there still may be sources from which Weirton could obtain slabs with a 
degree of consistency and reliability, and at a cost that would enable 
it to compete successfully as an independent supplier of TMP to the 
Eastern United States market. The Department will consider the 
availability of slabs to Weirton and other relevant considerations in 
determining whether Sparrows Point or Weirton should be divested to 
remedy the violation alleged in the Complaint, and it will select the 
mill that is most likely to continue to compete successfully for TMP 
sales in the Eastern United States following its divestiture by Mittal 
Steel. The proposed Final Judgment would permit this process to go 
forward if Dofasco cannot be sold in a timely manner. Although entry of 
the proposed Final Judgment would terminate this action, the Court 
would retain jurisdiction to construe, modify, or enforce the 
provisions of the proposed Final Judgment and punish violations 
thereof.\1\
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    \1\ The merger closed on August 1, 2006. In keeping with the 
United States's standard practice, neither the HSSO nor the proposed 
Final Judgment prohibited closing the merger. See ABA Section of 
Antitrust Law, Antitrust Law Developments 387 (5th ed. 2002) (noting 
that ``[t]he Federal Trade Commission (as well as the Department of 
Justice) generally will permit the underlying transaction to close 
during the notice and comment period''). Such a prohibition could 
interfere with many time-sensitive deals and prevent or delay the 
realization of substantial efficiencies. In consent decrees 
requiring divestitures, it is also standard practice to include a 
``preservation of assets'' clause in the decree and to file a 
stipulation to ensure that the assets to be divested remain 
competitively viable. That practice was followed here. Proposed 
Final Judgment Sec.  VIII. In addition, the HSSO has been filed and 
entered by the Court in this case. That Order requires Mittal Steel 
to preserve Weirton and Sparrows Point and to hold separate Dofasco, 
pending the divestiture contemplated by the proposed Final Judgment.
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II. Summary of Public Comments and Responses

    During the 60-day public comment period, the United States received 
comments from Silgan Containers Corporation (``Silgan''), ThyssenKrupp, 
and DaimlerCyrysler Corporation (``DaimlerChrysler''). Upon review, the 
United States believes that nothing in the comments warrants a change 
in the proposed Final Judgment or is sufficient to suggest that the 
proposed Final Judgment is not in the public interest. The comments 
include concerns relating to whether the proposed Final Judgment 
adequately remedies the harms alleged in the Complaint. The United 
States addresses these concerns below and explains how the remedy is 
appropriate.

A. Public Comment Submitted by Silgan

1. Summary of Silgan's Comment
    Silgan, the largest food can producer and the largest consumer of 
TMP in the United Stats, submitted a 42-page comment with 44 
attachments (attached hereto as Exhibit 1). Silgan's submission asserts 
that only the divestiture of Dofasco has any prospect for success, and 
that neither the divestiture of Weirton nor the divestiture of Sparrows 
Point will be effective.

[[Page 17636]]

    Silgan's comments may be summarized in three points. First, Silgan 
argues that Weirton cannot long survive as an independent producer of 
TMP, because it cannot produce slabs--the essential TMP substrate--at a 
competitive cost and cannot obtain slabs from elsewhere at a 
competitive cost. Thus, Weirton should not be divested.
    Second, Silgan further asserts that, although Sparrows Point is 
capable of surviving as a stand-along producer of TMP, it currently 
provides 45 percent of the slabs used by Weirton. If Sparrows Point is 
divested, Weirton will be separated from a significant portion of its 
supply of slabs and will be unable to obtain a sufficient number of 
slabs from other sources. Thus, if Sparrows Point is divested, Weirton 
may cease TMP production even if it is kept in the Mittal Steel group.
    Finally, Silgan concludes that since divestiture of either Weirton 
or Sparrows Point likely will lead to the demise of Weirton as a TMP 
producer, neither Mittal Steel mill should be divested. Instead, Silgan 
argues that Dofasco should be divested even if accomplishing that 
objective must await the expiration of the S3, and that the Final 
Judgment should be modified to extend the period for divesting Dofasco 
by several years. This would require that the stipulated HSSo, under 
which Dofasco now is operating, be modified to extend for the entire 
duration of the S3.\2\
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    \2\ Silgan assets in its comment that the S3 has a 5-year term. 
Although the actual term of the S3 is not public information, it is 
many times longer than the period the proposed Final Judgment gives 
Mittal Steel to effect the divestiture of one of the three mills.
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2. Response of United States to Silgan's Comment
    The United States has carefully considered Silgan's concern that 
Weirton will go out of business if the United States chooses Weirton or 
Sparrows Point as an alternative divestiture, but disagrees.
    Silgan's conclusion rests crucially on an assumption that slabs 
suitable for use in TMP production would be readily or economically 
available to Weirton from sources other than Sparrows Point. The United 
States agrees that the supply of slabs is an important issue, but the 
concerns raised by Silgan are overstated. If Sparrows Point is 
divested, and Weirton remains part of Mittal Steel, for example, there 
would be no concern about the availability to the divested mill. 
Sparrows Point is a fully integrated steel mill that does not depend on 
other Mittal Steel facilities for significant operational resources or 
supplies and indeed, in recent years has produced more slabs than it 
consumes. With respect to Wierton, even if the new owner of Sparrows 
Point refused to sell slabs on reasonable terms to Mittal Steel for use 
at Weirton, Mittal Steel would still own even blast furnaces in North 
America, five of which are now operating, giving it ample ability to 
supply Wierton with slabs. Further, Mittal could obtain additional 
slabs for Weirton on the open market. If Weirton were divested from 
Mittal and sought to acquire all of its slabs from other sources, the 
supply of slabs would be somewhat less certain, but there is some 
indication that Weirton could obtain sufficient slabs, including from 
imports. Dofasco, as Silgan points out, obtains about 750,000 tons of 
slabs per year from other firms, 400,000 tons of which comes from CST 
in Brazil. Some of those slabs are used to make tin mill products. The 
fact that Dofasco itself successfully imports a significant volume of 
tin-quality slabs suggests that an independent Weirton might have 
sufficient alternative sources for such slabs. The Department continues 
to investigate the likelihood that a divested Weirton would be able to 
manufacturer or purchase tin-quality slabs on a cost-efficient basis. 
If the Department concludes for any reason that the lack of certainty 
regarding Weirton's viability makes divestiture of Sparrows Point 
preferable, the Final Judgment permits the Department to direct Mittal 
Steel to divest Sparrows Point.
    Silgan proposes that, in lieu of diverting Weirton or Sparrows 
Point, the proposed Final Judgment be amended to provide that Dofasco 
be held separate for five years, which Silgan asserts is the duration 
of the S3, after which it could and should be sold.\3\ This proposal 
presents significant problems. To ensure Dofasco's operation separately 
from Mittal Steel for such an extended period of time would be 
difficult, if not impossible. Moreover, under the HSSO, ordinary and 
customary business decisions that would be made promptly by an 
independent entity cannot be made by Dofasco without certain notices 
and approvals and, in some circumstances, Court permission. This 
situation is tolerable as a temporary solution to effectuate a prompt 
divestiture and to limit interference or collusion pending that 
divestiture. As a long-term operating arrangement, however, it could 
adversely affect the ability of Dofasco to operate efficiently. Given 
that a prompt remedy is in the public interest and that the Final 
Judgment provides a mechanism by which the Department can assure that 
adequate and viable Mittal Steel assets are divested, there is no 
reason to require the extraordinary and unprecedented imposition of a 
long-term HSSO.
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    \3\ The Department understands that Silgan's objective would 
require an extension only for the duration of the S3, but Silgan is 
correct that this would require an extension of multiple years.
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B. Public Comment Submitted by ThyssenKrupp

1. Summary of ThyssenKrupp's Comment
    ThyssenKrupp is a large German steel manufacturer that has an 
agreement in principle with Mittal Steel to purchase Dofasco. 
ThyssenKrupp currently exports TMP to customers in the United States. 
In its comment, attached hereto as Exhibit 2, ThyssenKrupp states that 
only the divestiture of Dofasco will adequately remedy the alleged 
anticompetitive effects set forth in the Complaint and that divestiture 
of Weirton or Sparrows Point cannot remedy those anticompetitive 
effects. ThyssenKrupp asserts that the proposed Final Judgment and CIS 
``make clear that divestiture of Dofasco to ThyssenKrupp is the 
preferred remedy for the competitive harm alleged to arise from Mittal 
[Steel]'s acquisition of Arcelor[.]'' Ex. 2, ThyssenKrupp Comment at 3. 
ThyssenKrupp's comment, however, does not address the question of what 
should be done if Dofasco cannot be divested due to the existence of 
the S3. ThyssenKrupp claims that neither Weirton nor Sparrows Point has 
sufficiently modern and efficient facilities to compete in the TMP 
market in a manner that would replace competition lost as a result of 
the challenged acquisition. In this respect, ThyssenKrupp's comments 
mirror those of Silgan.
2. Response of United States to ThyssenKrupp's Comment
    The response of the United States to the Silgan Comment is equally 
applicable to the comments made by ThyssenKrupp. In sum, for the 
reasons given in Part II.A.2 above, the United States believes that the 
Final Judgment provides a mechanism to ensure that assets sufficient to 
remedy the violation alleged in the Complaint will be divested.
    Notwithstanding ThyssenKrupp's evaluation of the equipment and 
facilities at Weirton and Sparrows Point, the Weirton and Sparrows 
Point assets have proved adequate consistently to supply large 
quantities of TMP to the Eastern United States market. In 2005, Weirton 
and Sparrows Point sold more

[[Page 17637]]

TMP in the Eastern United States than Arcelor and Dofasco combined. 
While capacity to manufacture TMP for sale in the Eastern United States 
is not the only factor, it is certainly a highly relevant factor in 
assessing the competitive significance of mill assets. In determining 
which alternate mill should be divested pursuant to the Final Judgment, 
the Department will focus on questions relating to the relative ability 
of Sparrows Point and Weirton to operate independently of Mittal Steel 
as future suppliers of TMP to the Eastern United States market. The 
fact that both mills have successfully supplied substantial quantities 
of TMP to the market with their current equipment supports the 
conclusion that the alternate mill that the United States selects to be 
divested would accomplish the objectives of the Final Judgment.
    As to ThyssenKrupp's statement that divestiture of Dofasco is the 
``preferred'' remedy, we agree. As discussed above, Dofasco is an 
attractive divestiture candidate for a number of reasons, and the 
proposed Final Judgment requires Mittal Steel in the first instance to 
use its best efforts to divest Dofasco. However, nothing in the 
proposed Final Judgment or the Competitive Impact Statement indicates 
that Dofasco is the only suitable divestiture candidate. Both Mittal 
Steel and the Department realized that Mittal Steel might be unable to 
accomplish the divestiture of Dofasco in a timely manner because the S3 
might prevent its sale. Accordingly, the parties crafted alternative 
relief--the divestiture of Sparrows Point or Weirton--that also would 
preserve competition. Although the United States is satisfied that 
divestiture of Dofasco would remedy the violation alleged in the 
Complaint, if Dofasco cannot be sold within the period prescribed by 
the proposed Final Judgment, the United States will decide which of the 
two alternatives should be divested.

C. Public Comment Submitted by DaimlerChrysler

1. Summary of DaimlerChrysler's Comment
    DaimlerChrysler is an automobile manufacturer in North America that 
sources its steel from a number of North American steel producers, 
including Mittal Steel and Dofasco. See DaimlerChrysler Comment 
(attached hereto as Exhibit 3). DaimlerChrysler does not use TMP in the 
production of automobiles and does not purchase TMP. It does, however, 
use another type of flat steel product called hot dipped galvanized 
steel, which it buys from Mittal Steel and Dofasco, and DaimlerChrysler 
claims that the proposed acquisition will adversely affect competition 
for that product. DaimlerChrysler asserts that consolidation in the 
steel industry since 2001 has reduced the number of North American 
manufacturers of hot dipped galvanized steel from nine to five, and 
that after the acquisition of Dofasco, Mittal Steel will have 
approximately 47 percent of North American capacity for this product. 
DaimlerChrysler also states that there are no adequate substitutes for 
this product, and that foreign producers are not suitable suppliers. 
DaimlerChrysler asserts that the alleged harm to competition would be 
alleviated if Mittal Steel were required to divest Dofasco, but that 
the divestiture of either Sparrows Point or Weirton would not remedy 
the harm because neither facility produces hot dipped galvanized steel 
suitable for automotive purposes.
    Although DaimlerChyrsler has no direct interest in the TMP market, 
the company nevertheless asserts that the divestiture of Weirton or 
Sparrows Point will not restore competition in TMP because neither 
facility is capable of operating as a stand-alone facility. 
DaimlerChrysler cites past financial troubles of Weirton when it was a 
stand-alone company and Sparrows Point when it was operated by the 
former Bethlehem Steel Company. DaimlerChrysler asserts that either 
alternative facility is likely to close after divestiture. The result, 
according to DaimlerChrysler, would be less competition in the market 
for TMP.
2. Response of United States to DaimlerChrysler's Comment
    DaimlerChrysler's principal argument is that the United States' 
focus on TMP is misplaced, and that the United States should also have 
alleged harm to competition for hot dipped galvanized steel. During its 
investigation, the United States carefully and thoroughly reviewed the 
competitive implications of Mittal Steel's acquisition of Arcelor (and 
Dofasco) for a number of different potential relevant geographic and 
product markets, including hot dipped galvanized products. Upon 
completion of its review, the United States determined that it should 
allege a violation and seek relief only with regard to sales to TMP in 
the Eastern United States, and the Complaint filed in this case 
reflects that determination. The decision regarding the filing of a 
complaint as to any particular market lies within the prosecutorial 
discretion of the United States.
    With respect to the market for TMP, the United States disagree with 
the DaimlerChrysler comments relating to the adequacy of a divestiture 
of either of the alternative assets. As discussed more thoroughly 
above, the United States has considered the capabilities and economic 
viability of each of the alternative facilities and is confident that 
these options allow it to select an alternate facility the divestiture 
of which to a viable qualified purchaser would be sufficient to restore 
competition to the market for the sale of TMP in the Eastern United 
States.

III. Conclusion

    The issues raised in the public comments were among the many 
considered during the United States' extensive and through 
investigation. The United States has determined that the proposed Final 
Judgment as drafted provides an effective and appropriate remedy for 
the antitrust violations alleged in the Complaint, and is therefore in 
the public interest. The United States will move this Court to enter 
the proposed Final Judgment after the comments and response are 
published.

    Dated: February 13, 2007.

Respectfully submitted,

Lowell R. Stern (D.C. Bar 440487),
Attorney, United States Department of Justice, Antitrust Division, 
Litigation II Section, 1401 H Street, NW., Suite 3000, Washington, 
DC 20530, Telephone: (202) 307-0924, Facsimile: (202) 307-6283.

Certificate of Service

    I hereby certify that on the 13th day of February, 2007, I caused a 
copy of the foregoing Plaintiff United States's Response to Public 
Comments to be mailed, by U.S. mail, postage prepaid, to the attorneys 
listed below and I caused the attachments thereto to be delivered by 
electronic transmission to the attorneys listed below:

Lowell R. Stern,

For Mittal Steel Company N.V.:
    Mark Leddy, Esquire; Brian Byrne, Esquire; Jeremy J. Calsyn, 
Esquire; Cleary Gottlieb Steen & Hamilton LLP., 2000 Pennsylvania 
Avenue, NW., Washington, DC 20006.
For Arcelor S.A.:
    John M. Nannes, Esquire; Michael V. Sosso, Esquire; Skadden, 
Arps, Slate, Meagher & Flom LLP., 1440 New York Avenue, NW., 
Washington, DC 20005.
For Silgan Containers Corporation:
    Daniel L. Porter, Esquire; Vinson & Elkins LLP., 1455 
Pennsylvania Avenue, NW., Suite 600, Washington, DC 20004-10009.
For ThyssenKrupp A.G.:
    Steven K. Bernstein, Esquire; James F. Lerner, Esquire; Weil, 
Gotshal & Manges LLP., 767 Fifth Avenue, New York, NY 10153-0119.


[[Page 17638]]


    A. Paul Victor, Esquire; Dewey Ballantine LLP., 1301 Avenue of 
the Americas, New York, NY 10019-6092.
For DaimlerChyrsler Corporation:
    Thomas B. Leary, Esquire; Janet L. McDavid, Esquire; Hogan & 
Hartson LLP., Columbia Square, 555 Thirteenth Square, NW., 
Washington, DC 20004.

Exhibit 1

Willkie Farr and Gallagher LLP

Theodore Case Whitehouse, 202 303 1118, [email protected], 1875 
K Street, NW., Washington, DC 20006-1238, Tel: 202 303 1000, Fax: 
202 303 2000.

23 October 2005

By Hand Delivery

Maribeth Petrizzi, Esq., Chief, Litigation II Section, Antitrust 
Division, U.S. Department of Justice, Suite 3000, 1401 H Street, 
NW., Washington, DC 20530

Re: Comments of Silgan Containers Corp. on Proposed Consent Decree 
in United States v. Mittal Steel Co., NV, No. 1:06-CV-01360-ESH 
(D.D.C.)

Dear Ms. Petrizzi:

    Transmitted with this letter, on behalf of Silgan Containers 
Corporation (``Silgan'') and pursuant to the Antitrust Procedures 
and Penalties Act (15 U.S.C. 16), are Silgan's comments on the 
proposed consent decree submitted by the Division to the United 
States District Court for the District of Columbia in August 2006.
    Silgan and its counsel would be pleased to enlarge upon or 
explain any aspect of Silgan's comments and would be pleased to meet 
with you and your staff to discuss any issue or concern relating to 
this matter.

Sincerely,

Theodore Case Whitehouse

cc (w/encl.): Kerrie J. Freeborn, Esq.

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

United States of America, Plaintiff, v. Mittal Steel Company N.V., 
Defendant

[Civil Action No. 1: 06CV01360-ESH]

Comments of Silgan Containers Corporation on the Proposed Final 
Judgment and Competitive Impact Statement Regarding Competition in the 
Tin Mill Products Market

Willkie Farr and Gallagher LLP., 1875 K Street, NW., Washington, DC 
20006-1238, (202) 303-1000.

Thomas Prusa, Ph.D., Professor of Economics, Rutgers University, New 
Brunswick, New Jersey.

October 23, 2006

Table of Contents

Introduction and Summary of Comments

I. Divestiture of Dofasco is the Best Option
    A. Dofasco Has a Proven Track Record of Operating as a Highly 
Profitable, Independent Company
    B. Dofasco Is Far Better Suited To Operate as a Stand-Alone 
Facility Than Either Weirton or Sparrows Point
    C. Dofasco Is More Committee To Investing in the Future of the 
Tin Mill Steel Market
    D. The Decree Should Be Amended if Necessary To Require 
Divestiture of Dofasco on the Earliest Date on Which It May Legally 
Be Divested Free of the Stichting Arrangements, and the Hold-
Separate Order Should Continue in Effect Until That Divestiture Is 
Accomplished
II. A Stand-Alone Weirton Operation Will Fail in the Immediate 
Future and Undermine the Departments Objective of Preserving 
Competition in the Market
    A. Weirton's Ironmaking and Steelmaking Assets Are Not 
Competitive
    1. Weirton Has Small, Inefficient Blast Furnaces
    2. Weirton's Steelmaking Operations Are Also Antiquated and High 
Cost
    3. An Independent Weirton Operating Its Ironmaking Facilities 
Would Lack Any Captive Raw Material Supplies
    4. Weirton's Geographic Location Guarantees Higher Costs for 
Basic Inputs
    5. Weirton's Limitations as a Fully-Integrated Steel Maker 
Producing Tin Mill Steel Are Recognized by Mittal and Outside 
Observers
    B. Prospects for a Stand-Alone Weirton Enterprise Operating as a 
Rolling and Finishing Operation Are Limited
    1. Weirton's Rolling and Finishing Assets Require Substantial 
Investment To Be Competitive
    2. Weirton Would Be Committed To Producing Primarily Tin Mill 
Steel, Limiting Production Flexibility
    3. Weirton Would Have Difficulty Securing the Quality and Volume 
of Slab Necessary To Maintain Its Operations
    4. Even if a Stand-Alone Weirton Rolling and Finishing Operation 
Found a Consistent Source of Slab Supply, the Market Dynamics for 
Tin Mill Steel Would Limit Profitability
    5. A Stand-Alone Weirton Enterprise Running Only Its Tin Line 
Would Have Difficulty Securing Sufficient Volumes of Black Plate
    C. There Are No Legitimate Suitors for Weirton
    D. Divesting Weirton Will Have an Adverse Impact on Competition
III. A Divestiture of Sparrow's Point Would Also be a Far Less 
Effective Remedy Than Divesting Dofasco
    A. Divestiture of Sparrows Point Is Unlikely To Enhance 
Competition Over the Long Term
    1. Dofasco Is an Unlikely Replacement for Sparrows Point in 
Supplying Slabs to Weirton
    2. It Is Unlikely That Mittal Steel's Other North American Slab 
Producers Will Divert Scarce Feedstock to Weirton
    3. It Would Make no Economic Sense for Mittal's Brazilian 
Affiliate CST To Supply Slabs to Weirton
    B. Divesting Sparrows Point Will Have an Adverse Impact on 
Competition in the Medium to Long Term
Conclusion

Introduction and Summary of Comments

    Silgan Containers Corporation, the largest U.S. food can producer 
and single largest consumer of tin mill steel products in the United 
States, hereby provides comments on the proposed final judgment in 
United States v. Mittal Steel Company, the civil action concerning the 
effects of Mittal Steel's acquisition of Arcelor in the tin mill steel 
market in the Eastern United States. These comments are submitted in 
response to the invitation of the Antitrust Division of the United 
States Justice Department set forth in the August 24, 2006 edition of 
the Federal Register. Silgan appreciates the opportunity to submit 
comments.
    Silgan wholeheartedly agrees with the Department's conclusions that 
(1) Mittal Steel's acquisition of Arcelor ``further consolida[tes] an 
already highly concentrated market'' and (2) ``the likely effect of 
this acquisition would be to lessen competition substantially'' among 
suppliers of tin mill steel products in the Eastern United States, and 
(3) ``this loss of competition would likely result in higher prices, 
lower quality, less innovation and less favorable delivery terms to 
customers'' of tin mill steel.\1\ Silgan submits that such conclusions 
are amply supported by the evidence.
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    \1\See United States v. Mittal Steel Company, Proposed Final 
Judgment and Competitive Impact Statement, 71 Fed. Reg. 50084, 
50085, 50093 (August 24, 2006) (Attachment 1).
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    The proposed decree provides for two alternative divestiture 
scenarios. The first is to require divestiture by Mittal of Dofasco, a 
Canadian integrated steel producer. The alternative remedy, to be 
available only if Mittal is ``unable'' despite ``best efforts'' to 
accomplish the divestiture of Dofasco, would be divestiture of either 
the Sparrows Point integrated steel operation or the Weirton steel mill 
operation (which includes only a rolling mill capability at this time). 
Silgan wholeheartedly agrees with the Department that the preferred 
remedy to address this lessening of competition in the tin mill steel 
market is to require the divestiture of Dofasco. Indeed, Silgan submits 
that a proper understanding of both the market participants and the 
competitive dynamics affecting the market participants demonstrates the 
following:
     Weirton would not be able to survive as an independent 
operation.
    Given its location, its old, small, and currently inoperative blast 
furnaces, and the limited capabilities of Weirton's rolling facilities, 
Weirton cannot survive as an independent producer. Neither

[[Page 17639]]

running Weirton's ironmaking and steelmaking operations nor purchasing 
slab in the merchant market would be a viable strategy. Consequently, a 
remedy allowing the divestiture of Weirton would simply cause 
substantial tin mill steel capacity to exit the market, which would 
make the available tin mill steel supply even more concentrated.
     No existing integrated steel mill has a serious interest 
in acquiring Weirton, because it makes no economic sense.
    Weirton's only realistic hope of surviving is to operate as one 
facility within a large, diversified enterprise capable of supplying 
Weirton with key inputs and averaging costs across a larger production 
base. Weirton currently enjoys that status as part of Mittal. No viable 
alternative integrated steel mill is likely to come forward to replace 
Mittal.
     Although Sparrows Point Is a Superior Mill to Weirton, It 
Is Uncertain Whether Divesting Sparrows Point Would Preserve 
Competition Over the Mid- to Long-Term.
    Within the Mittal system, Sparrows Point is a key supplier of slab 
for Weirton. A Sparrows Point facility operating outside the Mittal 
system would eliminate a guaranteed supply of this key feedstock to 
Weirton and thereby threaten the ongoing viability of Weirton. Without 
Sparrows Point's slab capacity, the likelihood that Mittal will ration 
Weirton's slab supply is greatly increased because Weirton will not be 
the best use of Mittal's limited slab supply in the Midwest that can be 
used in more profitable operations. Such fact is evidenced by the 
statements of Mittal Steel officials that Weirton is the least 
desirable facility among Mittal Steel's North American operations. In 
short, divesting Sparrows Point would almost certainly lead to 
Weirton's demise even within the Mittal enterprise, thereby diminishing 
overall capacity to the detriment of consumers and frustrating the goal 
of the decree.
    In the pages below, Silgan discusses and documents these factual 
conclusions in considerable detail. Silgan submits that these factual 
conclusions require the Department to adopt the following approach in 
designing an appropriate remedy to address the reduced competition in 
the tin mill steel market. First, the Department should make every 
effort to accomplish the divestiture of Dofasco. Press reports 
immediately after publication of the consent decree suggest a lack of 
interest by Mittal-Arcelor of seriously pursuing divesting Dofasco. The 
Department needs to push Mittal-Arcelor to accomplish the divestiture 
of Dofasco.
    Second, if immediate divestiture is not possible, Silgan strongly 
recommends the consent decree be modified to wait the five years 
reportedly necessary to eliminate any existing legal impediments to the 
divestiture of Dofasco. An independent Dofasco in five years is better 
than any of the other alternatives for preserving competition. A long 
run solution to the issue is better than a short term fix.
    Silgan makes this recommendation because the other options under 
consideration--divesting Weirton or divesting Sparrows Point--will not 
accomplish the Department's objective of enhancing competition in the 
tin mill steel market. These other options will only protect 
competition if one believes that Weirton has better than a 64% chance 
of surviving over the next two or three years, either outside or within 
the Mittal enterprise. However, no knowledgeable industry observer 
would give Weirton better than a 10-20% chance of surviving if either 
Weirton or Sparrows Point is divested. Therefore, the only appropriate 
remedy is to divest Dofasco as soon as possible, even if this means 
waiting for the alleged legal impediments to such a divestiture to 
expire.
    To summarize:

     Divestiture of Dofasco is the most pro-competitive 
outcome.
     If divestiture of Dofasco is not possible now (because 
of the stichting arrangements reportedly engineered by Arcelor), the 
second best option is continued independent operation of Dofasco for 
the life of the trust, (reportedly 5 years) followed by divestiture 
to a firm not a U.S. tin-mill producer.
     A less desirable but feasible outcome would be 
divestiture of Sparrows Point to a firm not a U.S. tin-mill producer 
(with appropriate assurance that Sparrows Point's tin-mill activity 
will be continued).
     Divestiture of Weirton under any scenario would be 
counterproductive from a competition perspective and would hurt the 
market because Weirton would not survive and its capacity would be 
permanently lost.

I. Divestiture of Dofasco Is the Best Option

    A combined Mittal-Arcelor would have three tin mill steel 
production facilities supplying the Eastern United States market, 
resulting in an excessively concentrated supply situation. To remedy 
that undesirable outcome, the Department has determined that Dofasco 
should be divested.\2\ The Department is correct in that determination: 
Divesting Dofasco remains the preferred remedy to address the loss of 
competition in the tin mill steel market resulting from the Mittal-
Arcelor merger.
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    \2\ Id.
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    In assessing divestiture options the Department must consider 
whether the divested firm can operate independently and serve the 
changing needs of consumers. Any divested tin mill steel entity must be 
viable on its own, making Dofasco the most logical choice for 
divestiture.

A. Dofasco Has a Proven Track Record of Operating as a Highly 
Profitable, Independent Company

    In sharp contrast to Weirton or Sparrows Point (both of which are 
discussed below), Dofasco is recognized as one of the best steel mills 
in the world. A leading steel consultancy and benchmarking firm, World 
Steel Dynamics (``WSD''), ranked Dofasco in the Top 25 of all global 
steelmakers. The same assessment ranked Dofasco the highest of all 
North American producers.\3\ Dofasco scored a remarkable 9 out of 10 in 
the WSD analysis for profitability over the 2000-04 period.\4\
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    \3\ World Steel Dynamics (2005) (Attachment 2).
    \4\ Id.
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    The WSD analysis, which covers the period through June 2005, 
presents an independent, expert assessment of Dofasco prior to its 
acquisition by Arcelor, when the facility stood as a fully independent 
entity. Dofasco's performance during that period provides a strong 
indication of its likely performance if separated from Mittal.

B. Dofasco Is Far Better Suited To Operate as a Stand-Alone Facility 
Than Either Weirton or Sparrows Point

    Compared to either Weirton or Sparrows Point, Dofasco is far better 
suited to survive and thrive as a stand-alone facility. Four 
differences stand out: (1) Dofasco has a much deeper product line, (2) 
Dofasco has a larger scale operation, (3) Dofasco owns its own raw 
materials, and (4) Dofasco has much more cold-rolled capacity to feed 
its tin mill steel production. Silgan discusses these below.
    First, Dofasco has production capability that covers the full 
spectrum of flat-rolled products, from hot-rolled steel to cold-rolled 
and galvanized, as well as tin mill steel. Dofasco also produces 
tubular products in operations that consume the hot-rolled and cold-
rolled steel it produces. Indeed, Dofasco Tubular Products is the 
largest and most diversified producer of tubular products in North 
America.\5\ Finally, Dofasco is a significant player in the high margin 
auto sheet market, in which there are

[[Page 17640]]

few significant North American suppliers.\6\
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    \5\ See http://www.dofascotube.com/Default.htm (Attachment 3).
    \6\ The leading North American suppliers are Mittal (non-
Sparrows Point production), U.S. Steel, AK Steel and Dofasco. See 
Peter Marsh, Massive Bids on Table as Giants Fight for Dofasco, 
Financial Times (January 13, 2006) (Attachment 4). According to 
long-time steel analyst Charles Bradford, Sparrows Point ``doesn't 
have those (automotive) grades.'' Scott Robertson, Mittal Sparrows 
Point Mill May Be On Auction Block, American Metal Market (June 2, 
2006) (Attachment 5).
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    This breadth of production capability allows Dofasco to remain 
viable even if the tin mill steel market turns down. Neither Weirton 
nor Sparrows Point has the same breadth of production. Weirton's 
product line is quite limited. Indeed, Silgan's understanding is that 
the vast majority of Weirton's total steel production is just tin mill 
steel. Sparrows Point is not much better. Other than tin mill steel, 
Sparrows Point predominantly focuses on commodity grades of cold-rolled 
and galvanized flat-rolled steel.
    Second, Dofasco is also a larger scale operation, with just over 4 
million of tons of steelmaking capacity compared to 3.4 million tons at 
Sparrows Point and zero operating steelmaking capacity at Weirton. 
Dofasco also has larger rolling assets, with 4.9 million tons of hot 
strip capacity available compared to 3 million tons at Sparrows Point 
and 3.8 million tons at Weirton.\7\ This larger scale allows Dofasco to 
operate more efficiently and profitably than either Weirton or Sparrows 
Point.
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    \7\ See generally 2005 Directory of Iron and Steel Plants, 
Association for Iron and Steel Technology (2005) (Attachment 6).
---------------------------------------------------------------------------

    Third, Dofasco has access to captive supplies of both coke and iron 
ore, reducing its exposure to price volatility in raw material markets. 
Neither Weirton nor Sparrows Point has any such assets. Like the larger 
scale, these captive supplies of key feedstock allow Dofasco to operate 
more cost effectively and profitably than Weirton or Sparrows Point.
    Finally, as detailed in the chart below, Dofasco has a much more 
favorable ratio of tin mill steel capacity to cold-rolled capacity.

                          Figure 1.--Ratio of Tin Mill Capacity to Cold-Rolled Capacity
----------------------------------------------------------------------------------------------------------------
                                                                      Dofasco     Sparrows Point      Weirton
----------------------------------------------------------------------------------------------------------------
Cold-Rolled Capacity (000 tons).................................            3100            1580            1000
Tin steel production (000 tons).................................             418             828             800
Fraction of tin mill capacity to cold-rolled....................           13.5%           52.4%             80%
----------------------------------------------------------------------------------------------------------------

The ratio of tin mill capacity to cold-rolled capacity at Dofasco is 
just 13.5 percent. In contrast, the ratio of tin mill steel capacity to 
cold-rolled capacity at Sparrows Point is greater than 50%, and is 
roughly 80% at Weirton. Dofasco's more limited tin mill steel capacity 
relative to its cold-rolled capacity means a much larger portion of its 
cold-rolled capacity is immediately available for sale in often more 
profitable cold-rolled or galvanized markets. Weirton and Sparrows 
Point, on the other hand, have limited opportunity to serve cold-rolled 
and galvanized markets while at the same time keeping their more 
substantial tin mill steel lines operating at efficient capacity 
utilization rates.

C. Dofasco Is More Committed to Investing in the Future of the Tin Mill 
Steel Market

    A key factor for the Department's consideration should be which 
entity will support the tin mill steel market for the long term. It is 
Silgan's opinion that Mittal is not interested in this product and will 
not support the tin mill steel market, whereas Dofasco has demonstrated 
a concrete willingness to support the product.
    Prior to its acquisition of International Steel Group, Mittal had 
no significant involvement in the tinplate market from any of its 
worldwide operations. With ISG, Mittal acquired the former Bethlehem 
Steel tinplate operations at Sparrows Point, MD and the former Weirton 
Steel tinplate operations in Weirton, WV. Since the acquisition of ISG, 
these operations have been scaled back, not expanded, and Mittal has 
shown little or no interest in their long-term viability. As 
importantly, since its acquisition of ISG, Mittal has met is 
contractual volume commitment to Silgan, but has declined to ship 
additional volumes requested by Silgan. Efforts to engage Mittal in 
discussions toward extending the current supply commitment to Silgan 
have not been successful.
    The experience with Dofasco has been much different. Time and again 
Dofasco has demonstrated a willingness to commit to the long term 
production and supply of tin mill steel. For example, Dofasco 
understood the desire of can companies for wider and wider coils to 
enhance can making productivity. Dofasco, unlike other suppliers, 
decided to invest in additional wide coil capacity, and now is one of 
the few suppliers in the world to offer extra-wide coils. Another 
example is Dofasco's willingness to talk about and agree to longer-term 
supply arrangements. There is no question that producing tin mill steel 
is in Dofasco's long term plans.

D. The Decree Should Be Amended if Necessary To Require Divestiture of 
Dofasco on the Earliest Date on Which It May Legally Be Divested Free 
of the Stichting Arrangements, and the Hold-Separate Order Should 
Continue in Effect Until That Divestituture Is Accomplished

    Because of the obvious superiority, from the standpoint of 
competitive supply of tin mill steel products, of a divstiture of 
Dofasco over either alternative divestiture contemplated by the 
proposed decree, the Decree should be amended to ensure that Dofasco is 
divested and that any short-term impediment to that divestiture arising 
from the stichting arrangements erected by Arcelor to frustrate 
Mittal's efforts to acquire Arcelor does not wind up producing long-
term harm to the tin mill steel market in the Eastern United States. 
Dofasco's long history of successful operation as a stand-alone entity 
and its modern plant and facilities make it highly likely that Dofasco 
could exist and prosper under the hold-separate order now in place for 
at least five years and remain a viable and attractive divestiture 
candidate at the end of that period. Thus, there is no reason for the 
Department or the Court to accept the plainly less effective--and 
potentially counterproductive--alternatives of divesting either 
Sparrows Point or Weirton.

[[Page 17641]]

II. A Stand-Alone Weirton Operation Will Fail in the Immediate Future 
and Undermine the Department's Objective of Preserving Competition in 
the Market

    There is no viable business model for a stand-alone Weirton 
operation that ensures even the intermediate term survival of the 
company. As a fully-integrated steel producer making raw steel through 
to tin mill products (``tin mill steel''), Weirton is not competitive. 
The Weirton facility's ironmaking and steelmaking assets are antiquated 
and effectively unusable. Indeed, the ironmaking and steelingmaking 
assets are currently not operating for this very reason.\8\ The lack of 
any captive raw material assets and the costs associated with 
transporting bulk raw materials such as iron ore to the Weirton site 
only make the prospects for restarting the ironmaking and steelmaking 
assets in a stand-alone configuration that much more untenable.
---------------------------------------------------------------------------

    \8\ See Mark Reutter, The Strange Case of Weirton Steel, 
MakingSteel.Com (April 25, 2006) (emphasis aded) (Attachment 7).
---------------------------------------------------------------------------

    As a finishing operation consuming either slab or more advanced 
downstream inputs (i.e., hot-rolled band or black plate), it is also 
highly doubtful that Weirton would survive as a stand-alone entity. 
First, the proposition that a stand-alone Weirton operation would have 
access to the quality or volume of steel inputs at the cost necessary 
to run the facility efficiently is highly speculative. Second, 
limitations at Weirton's rolling operations would further hinder the 
facility's ability to operate a flexible production base or meet the 
ever-increasing quality demands of tin mill steel consumers.

A. Weirton's Ironmaking and Steelmaking Assets Are Not Competitive

1. Weirton Has Small, Inefficient Blast Furnaces
    It is generally agreed within the steel industry that blast 
furnaces with an annual production capacity of less than 1.5 million 
tons per year are not of efficient scale. Most, if not all, world-class 
blast furnaces exceed 3 million tons in annual capacity. While blast 
furnace size is not necessarily dispositive with respect to cost 
competitiveness, it is considered among the most important factors.\9\
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    \9\ Other competitiveness factors one might consider include the 
coking rate of the furnace and any alternative charging technologies 
utilized by the furnace to reduce that rate and increase 
productivity. For a discussion of these alternative techniques, see 
William T. Hogan and Frank T. Koelbe, Fewer Blast Furnaces, But 
Higher Productivity, New Steel (November 1996) (Attachment 8). Note, 
however, that reliance on alternative charging techniques has 
presented new cost problems for some blast furnace operations. In 
particular, for those blast furnaces relying on natural gas 
injection to reduce coking rates (including Weirton), they 
successfully lowered their coking rates and boosted productivity, 
but were later hit with heavy costs as natural gas prices rose 
dramatically.
---------------------------------------------------------------------------

    The U.S. Domestic steel industry's own trade association 
acknowledges the weaknesses and fate of small blast furnaces, as does 
the U.S. Department of Energy (``DOE''). According to an article posted 
on the American Iron and Steel Institute's web page, ``[b]last furnaces 
will survive into the next millennium because the larger, efficient 
furnaces can produce hot metal at costs competitive with other iron 
making technologies.'' \10\ Similarly, a study of alternative 
ironmaking technologies funded by DOE concluded that ``the primary 
problem (sic) the Blast Furnace approach is that many of these Blast 
furnaces are relatively small, as compared to newer larger furnaces; 
thus are relatively costly and inefficient to operate.'' \11\
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    \10\ See How a Blast Furnace Works, AISI (emphasis added) 
(Attachment 9).
    \11\ Ironmaking Process Alternative Screening Study--Volume I, 
Summary Report, Lockwood Greene study for the Department of Energy 
(Oct. 2000) at 1-1 (Attachment 10).
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    Weirton's blast furnaces--none of which is currently in operation--
are among the smallest blast furnaces in North America. Weirton's 
primary No. 1 furnace has a rated annual capacity of 1.46 million tons. 
The facility's No. 4 furnace, the only other furnace at the Weirton 
site in any condition to be restarted,\12\ has a rated capacity of just 
1 million tons.\13\ By contrast, the would-be competitors of a stand-
alone Weirton enterprise operate the largest blast furnaces in North 
America.\14\
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    \12\ Weirton's No. 4 furnace needs repairs before being 
restarted. Weirton's former owner ISG intended to make such repairs. 
See Jim Leonard, ISG To Repair, Restart Second Blast Furnace at 
Weirton Unit, American Metal Market (July 12, 2004) (Attachment 11). 
With Mittal's acquisition of Weirton, it was determined that Weirton 
would no longer produce raw steel and the repair work was never 
initiated. See Mark Reutter, The Strange Case of Weirton Steel, 
MaingSteel.Com (April 25, 2006) (Attachment 7).
    \13\ While age is less indicative of the efficiency of a 
furnace, Weirton's furnaces are very old. The No. 1 furnace was 
built in 1919; the No. 4 furnace was built in 1953. Through rebuilds 
and modifications, these furnaces have been made more efficient, but 
they remain high cost. Indeed, by Mittal's own admission, Silgan 
knows they are at least the highest cost furnaces in the Mittal USA 
system. See Mark Reutter, The Strange Case of Weirton Steel, 
MakingSteel.Com (April 25, 2006) (Attachment 7).
    \14\ Capacity data for the Weirton blast furnaces derived from 
2005 Directory of Iron and Steel Plants, Association for Iron and 
Steel Technology (2005) (Attachment 6). Capacity data for Mittal, 
Sparrows Point ``L'' furnace derived from Mittal Steel USA Works to 
Restore Furnace at Sparrows Point, PRNewswire (July 14, 2006) 
(Attachment 12). Capacity data on Mittal, Indiana Harbor No. 7 
furnace derived from Ispat Inland Accelerates Maintenance Outages, 
Ispat Inland Press Release (March 7, 2005) (Attachment 13).

                                   Figure 2.--Comparison of Blast Furnace Size
----------------------------------------------------------------------------------------------------------------
                                                                                                 Annual capacity
            Company/operation                        Blast furnace               Year built      (million tons)
----------------------------------------------------------------------------------------------------------------
Mittal, Indiana Harbor...................  No. 7............................              1980               4.0
U.S. Steel, Gary Works...................  No. 14...........................              1974               3.4
Mittal, Sparrows Point...................  ``L''............................              1977               3.2
    Weirton..............................  No. 1............................              1919               1.5
    Weirton..............................  No. 4............................              1953               1.0
----------------------------------------------------------------------------------------------------------------

Weirton's furnace limitations have long been known; in 1982, National 
Steel proposed shutting down Weirton's furnaces and operating Weirton 
as a rolling mill.\15\
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    \15\ Weirton Workers Buyout from Online NewsHour, September 23, 
1983; http://www.pbs.org/newshour/bb/business/july-dec83/steel_9-23-83.html. (Attachment 14).
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    In any case, assessing the competitiveness of the Weirton blast 
furnaces is strictly an academic exercise. Both the Weirton No. 1 and 
No. 4 furnaces are no longer hot banked, but now sit completely cold. 
The costs of restarting the furnaces from a cold state are uncertain, 
but could be significant depending on any damage resulting from the 
cool down. Such costs may in fact be prohibitive to any would-be 
investor.
2. Weirton's Steelmaking Operations Are Also Antiquated and High Cost
    Weighed down by the high cost of its ironmaking operations, the 
Weirton facility inherently is a high cost steel

[[Page 17642]]

producer. Leaving no doubt, Weirton's slab costs have been rated by a 
leading steel consultancy as the highest in the world.\16\ These 
results are consistent with Mittal's own top-down review of the Mittal 
USA system, which found the Weirton steelmaking assets to be the least 
economical among its many U.S. facilities.\17\
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    \16\ High Production Costs Hamper AK Steel's Middletown Works, 
Steel Business Briefing (Aug. 10, 2006) (Attachment 15).
    \17\ See Mark Reutter, The Strange Case of Weirton Steel, 
MakingSteel.Com (April 25, 2006) (Attachment 7).
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    Weirton's continuous caster is also an old, four-strand caster.\18\ 
A new, single strand caster is necessary to achieve better yield loss 
and quality control in important tin mill grades of steel.
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    \18\ 2005 Directory of Iron and Steel Plants, Association for 
Iron and Steel Technology (2005) at 130 (Attachment 6).
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3. An Independent Weirton Operating Its Ironmaking Facilities Would 
Lack Any Captive Raw Material Supplies
    A stand-alone Weirton enterprise utilizing its ironmaking assets 
does not fit the paradigm of successful integrated steel makers (i.e., 
those operating blast furnaces and basic oxygen furnaces to produce 
steel) operating in the U.S. market. That paradigm includes access to 
captive supplies of at least some raw material requirements (coal, 
coke, or iron ore).
    Integrated steel producers consume massive amounts of raw materials 
in the form of coal, coke, and iron ore to run their blast furnaces. To 
insulate themselves from volatility in raw material markets, integrated 
producers tend to maintain captive supplies of at least some of their 
raw material needs. Although all U.S. mills have largely divested 
themselves of their U.S. coal assets, maintaining captive coke supplies 
remains a common practice among integrated producers. This practice 
continues given the high costs associated with building new coke plants 
in today's regulatory environment and the fact that the coke market 
tends to be in very tight supply. The largest producers also maintain 
captive iron ore assets.

           Figure 3.--Integrated Mill Raw Material Assets \19\
------------------------------------------------------------------------
                                                         U.S. iron ore
            Company               U.S. coke  assets         assets
------------------------------------------------------------------------
U.S. Steel.....................  Yes................  Yes.
Mittal Steel...................  Yes................  Yes.
AK Steel.......................  Yes................  No.
Wheeling-Pittsburgh Steel......  Yes................  No.
WCI Steel......................  No.................  No.
Severstal-Rouge Steel..........  Yes................  No.
Sparrows Point.................  No.................  No.
Dofasco \20\...................  Yes................  Yes.
Weirton........................  No.................  No.
------------------------------------------------------------------------

    The Weirton facility does not operate coke ovens, nor does it own 
any iron ore assets. As a stand-alone enterprise operating its blast 
furnaces, Weirton's lack of raw materials assets would leave it 
dependent on outside supply, including supply from other U.S. tin mill 
steel producers.
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    \19\ See Various Annual Reports from producers listed in the 
above table below.
    \20\ Dofasco has iron ore assets in Canada. See Maria Guzzo, 
Dofasco seals $251m purchase of Canadian iron ore miner QCM, 
American Metal Market (July 26, 2005) (Attachment 16).
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    With respect to coke, the implication of Weirton's outside supply 
dependency is documented in Weirton's recent past. In 2004, Weirton 
experienced a coke supply disruption when U.S. Steel (a tin mill steel 
producer) declared force majeure on a supply contract with Weirton in a 
very tight market for coke, forcing Weirton to limit operations in that 
year.\21\
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    \21\ Scott Robertson, Force Majeure Clobbers Coke-Short 
Steelmakers: Weirton Eyes Options, Blast Furnace Closure, American 
Metal Market (Jan. 9, 2004) (Attachment 17).
---------------------------------------------------------------------------

    Although the first new coke ovens built in the United States in 
seven years were completed in 2005, shipments of metallurgical coal to 
U.S. coke plants show a decline over the last 5 years due to the tight 
specifications needed for coal to produce coke.\22\ Key sources of 
imported coke, such as China, now consume a larger portion of that 
supply in their own domestic markets.\23\ With a tight world market for 
metallurgical coal coupled with U.S. supply disruptions that occurred 
in 2005, the average delivered price of coal to U.S. coke plants 
increased by 36.2 percent to reach an average price of $83.79 per short 
ton in 2005. This, in turn, caused coke prices to skyrocket.\24\
---------------------------------------------------------------------------

    \22\ U.S. Coal Supply and Demand: 2005 Review, Department of 
Energy, Energy Information Administration.
    \23\ For a discussion of the tight market for coke during 2004 
and the factors that drive tight coke supplies, see Peter Krouse, 
Heat Back on Steel Makers, The Plain Dealer (February 26, 2004) 
(Attachment 18).
    \24\ U.S. Coal Supply and Demand: 2005 Review, Department of 
Energy, Energy Information Administration.

                    Figure 4.--U.S. Metallurgical Coal Supply and Prices to U.S. Coke Plants
                             [Million short tons and nominal dollars per short ton]
----------------------------------------------------------------------------------------------------------------
                                                2001          2002          2003          2004          2005
----------------------------------------------------------------------------------------------------------------
Consumption Average.......................         26.1          23.7          24.2          23.7          23.4
Delivered Price...........................        $46.42        $50.67        $50.63        $61.50        $83.79
----------------------------------------------------------------------------------------------------------------

Even Weirton's union representatives acknowledge the coke problem: 
``Union spokesman David Gosset said raw materials are the root of 
Weirton's problem. Weirton does not have a coke plant and must buy it 
at a high cost on the open market.'' \25\
---------------------------------------------------------------------------

    \25\ Vicki Smith, Furnace Will Stay Idle at Weirton Steel Mill, 
Associated Press (Dec. 2, 2005) (Attachment 19).

---------------------------------------------------------------------------

[[Page 17643]]

    The raw material paradigm bears out in the experience of other 
integrated steel producers. Operations with no captive supplies are 
vulnerable and tend to have poorer operating performance. WCI Steel, 
for example, also retains no raw material assets. Not surprisingly, 
like Weirton, it was also the victim of the coke supply disruption that 
occurred in 2004.\26\ WCI emerged from nearly three years of bankruptcy 
only this year.
---------------------------------------------------------------------------

    \26\ See Peter Krouse, Heat Back on Steel Makers, The Plain 
Dealer (February 26, 2004) (Attachment 18).
---------------------------------------------------------------------------

4. Weirton's Geographic Location Guarantees Higher Costs for Basic 
Inputs
    Unlike competitors along the Great Lakes and elsewhere, which have 
access to water transportation to bring in raw materials, Weirton must 
resort to more expensive truck and rail options to supply such basic 
bulk inputs as iron ore.\27\ As a stand-alone enterprise not affiliated 
with a larger integrated steel operation, Weirton would have no ability 
to average higher transportation costs over a broader asset base or 
leverage lower transportation prices with service providers serving 
more than the Weirton facility.
---------------------------------------------------------------------------

    \27\ According to the Minneapolis Federal Reserve ``water 
transport via inland ports is estimated to be at least five times 
more efficient than rail and trucks at delivering similar cargo on a 
fuel cost-per-gallon basis. U.S. inland waterways move about 15 
percent of interstate commerce for bulk commodities at only 2 
percent of the cost.'' Marcia Jedd, Minneapolis Federal Reserve 
fedgazette, January 2003, http://minneapolisfed.org/pubs/fedgaz/03-01/shipping.cfm (Attachment 20); See also Vicki Smith, Furnace Will 
Stay Idle at Weirton Steel Mill, Associated Press (Dec. 2, 2005) 
(Attachment 19) (``Weirton also must buy iron ore and have it 
shipped by rail. Mittal's mill in Cleveland can get iron ore shipped 
in cheaper on Lake Erie'').
---------------------------------------------------------------------------

5. Weirton's Limitations as a Fully-Integrated Steel Maker Producing 
Tin Mill Steel Are Recognized by Mittal and Outside Observers
    There is no dispute that Weirton suffers from severe limitations as 
a fully-integrated steel producer, even among those parties with an 
immediate interest in, or who are otherwise knowledgeable about, the 
facility. Consider the comments of Mittal USA CEO Leo Schorsch shortly 
after Mittal acquired Weirton and made the decision to shut down its 
steelmaking operations:

    This was a very difficult decision, since the Independent 
Steelworkers Union and all employees have worked so hard to beat the 
odds trying to maintain steelmaking at Weirton,'' said Louis L. 
Schorsch, chief executive of Mittal Steel USA. ``However, the 
structural disadvantages of Weirton for these processes entail costs 
that are too high to support competitive downstream facilities.\28\
---------------------------------------------------------------------------

    \28\ Mark Reutter, The Strange Case of Weirton Steel, 
MakingSteel.Com (April 25, 2006) (Attachment 7).

At the same time, noted industry analyst and expert on ironmaking/
---------------------------------------------------------------------------
steelmaking assets Michael Locker stated:

    The negative of the consolidation process is that you have a 
comparison going on of plants * * * within the Mittal family.
    If they come out on the short end of the stick, they can't 
justify standing alone--even with all the hopes of cost reduction 
and efforts by the union, which were mighty.\29\
---------------------------------------------------------------------------

    \29\ Vicki Smith, Furnace Will Stay Idle at Weirton Steel Mill, 
Associated Press (Dec. 2, 2005) (emphasis added) (Attachment 19).

Other commentary from the period is consistent with that above 
---------------------------------------------------------------------------
concerning Mittal's own internal assessment of the Weirton facility:

    Unknown to Weirton workers as well as to many ISU officers, 
Mittal Steel kept obsessive track of all financial aspects of its 
five integrated mills (Burns Harbor and Indiana Harbor in addition 
to Cleveland, Sparrows Point, and Weirton). The mills were compared 
and ranked according to their raw material inputs, manufacturing 
costs, and product profit margins. At the bottom of the list lay the 
``swing'' plant--the facility that, in times of low demand, didn't 
generate enough money to please the steelmasters in London.
    Weirton was the ``swing'' plant.
    It was hobbled by higher raw material costs, especially for 
coke, than the other mills.\30\

    \30\ Mark Reutter, The Strange Case of Weirton Steel, 
MakingSteel.Com (April 25, 2006) (Attachment 7).
---------------------------------------------------------------------------

    Based on this commentary, it is clear that Weirton, even as part of 
a vast integrated steel enterprise, is incapable of being competitive 
running its ironmaking and steelmaking assets. As an independent 
enterprise running those assets, prospects would only diminish from bad 
to worse.

B. Prospects for a Stand-Alone Weirton Enterprise Operating as a 
Rolling and Finishing Operation Are Limited

    Even if Weirton's ironmaking and steelmaking assets remain closed 
and the facility continues operating as a rolling and finishing 
operation, the viability of such an operation on a stand-alone basis is 
doubtful. The Weirton rolling operations--long neglected by its 
previous and current owners--require substantial investment to remain 
competitive. Moreover, the production emphasis on tin mill steel, as 
well as the configuration and limitations at the mill, mean that it 
would have limited production flexibility to maximize profitability by 
reacting to changes in up- and down-stream flat-rolled steel markets. 
Finally, the prospect of limited availability of merchant slab or black 
plate substrate could lead to supply disruptions and limit capacity 
utilization at the mill, such that it could not generate sustainable 
profits.
1. Weirton's Rolling and Finishing Assets Require Substantial 
Investment To Be Competitive
    The Weirton facility, both as an independent entity and as part of 
the International Steel Group and Mittal Steel, has been a consistent 
industry laggard. Years of losses have led to years of neglect at the 
mill.\31\ At the tin line, alone, Mittal has publicly identified the 
need for in-line edge-cutting and tension leveling equipment to keep 
the mill competitive.\32\ Mittal, however, has not committed to that 
investment, which it identified as important shortly after it acquired 
the Weirton assets from the International Steel Group.\33\
---------------------------------------------------------------------------

    \31\ Weirton filed for Chapter 11 Bankruptcy protection in May 
2003 after racking up more than $700 million in losses over the 
previous five years. Vicki Smith, Weirton Files for Ch. 11; 1,100 
Ohio Jobs Affected, Associated Press (May 20, 2003) (Attachment 21). 
Such financial performance is not conducive to investment in the 
capital-intensive steel industry.
    \32\ See Hearing Transcript, In the Matter Of: Tin and Chromium-
Coated Steel Sheet from Japan, Inv. No. 731-TA-860 (Review) (April 
27, 2006) (testimony of Bill Stephans, Division Manager for TMP at 
Mittal Steel USA's Weirton Facility) (Attachment 22).
    \33\ Mark Reutter, The Strange Case of Weirton Steel, 
MakingSteel.Com (April 25, 2006) (Attachment 7).
---------------------------------------------------------------------------

    Given Weirton's historically poor financial performance, it is 
likely that other major maintenance at the mill has been severely 
neglected. If Weirton has any chance at all of being a viable, stand-
alone operation, any new investor would have to be committed to 
substantial new capital spending to improve the competitive position of 
the mill. The rolling and finishing lines as they currently exist are 
not ``turn-key'' operations that would be immediately competitive in 
today's market.
2. Weirton Would Be Committed to Producing Primarily Tin Mill Steel, 
Limiting Production Flexibility
    In today's steel industry, few mills consistently make money 
producing only one product. This is particularly true for mills that 
maintain hot-rolled through galvanizing assets and have to cover the 
fixed costs associated with each stage of flat-rolled steel production. 
Large integrated operations such as these seek a balance, shifting 
production upstream and downstream to adjust to changing market 
conditions in each segment while also attempting

[[Page 17644]]

to preserve efficient capacity utilization rates at each stage of 
production. Weirton cannot make similar adjustments.
    At the front of the flat-rolled production chain, hot-rolled steel, 
Weirton would lack the ability to challenge more nimble and cost 
competitive minimill producers that have long dominated the commodity 
hot-rolled market. The economics of buying slab dictate that stand-
alone Weirton rolling and finishing operation move downstream to higher 
value-added products in order to capitalize on steel grades that 
minimills find more difficult to produce.
    At the end of the production chain, the Weirton facility is 
incapable of competing in the galvanized sheet market, whether using a 
hot-rolled or cold-rolled substrate. Weirton's galvanizing lines were 
determined to be the highest cost operations in the Mittal system and 
closed.\34\ It is difficult to conceive of a cost environment in which 
Weirton could reliably purchase slab and produce a sustainable profit 
running steel through such a high cost facility.
---------------------------------------------------------------------------

    \34\ Sam Kusic, ISU Irked by Mittal Steel's Plan To Shut Weirton 
Galvanizing Line, American Metal Market (Feb. 3, 2006) (Attachment 
23).
---------------------------------------------------------------------------

    Finally, Weirton's cold-rolling mill, while potentially capable of 
producing competitive cold-rolled, would have limited capacity to do so 
since it is dedicated to serving the tin operations, creating constant 
pressure to keep the tin mill operating at efficient rates to cover 
costs.
3. Weirton Would Have Difficulty Securing the Quality and Volume of 
Slab Necessary To Maintain Its Operations
    Tin mill steel is a high grade steel product that must meet strict 
metallurgical and physical tolerances in order to satisfy customer 
demands. The steelmaking and slab casting phases of production are 
every bit as critical to achieving these qualities as are the rolling 
and finishing phases. As a slab roller, it would be necessary for a 
stand-alone Weirton enterprise to secure tin mill steel-grade slab from 
as few committed sources as possible in order to control uniformity and 
quality. Failure to do so would lead to circumstances with which the 
Weirton facility is all too familiar: Unreliable, quality-deficient 
supply. This was the outcome in 1999, when Weirton experimented as an 
independent producer rolling slab acquired from other producers. 
Delivery and inventory management were poorly handled. Slab arrived 
late and in inconsistent quality and tolerances.\35\ It is unlikely 
that the Weirton facility could achieve better results in today's 
market.
---------------------------------------------------------------------------

    \35\ Weirton's resort to purchased slabs and the problems 
created by that strategy were cited in testimony during the 2000 
antidumping case on TMP imports from Japan (Attachment 24).
---------------------------------------------------------------------------

    A stand-alone Weirton Enterprise rolling purchased slab would find 
it difficult to secure, on an economic basis, the 800 thousand to 1 
million tons of tin mill steel-grade slab necessary for its operations 
from high quality suppliers. In this regard, Brazil is recognized as 
the low-cost, high quality producer of merchant slab (i.e., slab 
produced for sale) in the world and would be the logical supplier to 
the Weirton facility. However, current Brazilian merchant slab supply 
is largely allocated among an existing global customer base.\36\ 
Indeed, free supplies will be further limited with CSN's anticipated 
acquisition of U.S. steelmaker Wheeling-Pittsburgh, which currently 
maintains 600,000 tons in excess hot-rolling capacity that would be 
filled by CSN slab.\37\ That tonnage could increase substantially if a 
decision is made to shut Wheeling-Pittsburgh's aging blast furnace.\38\
---------------------------------------------------------------------------

    \36\ In 2006, Brazilian merchant slab supply became extremely 
tight, with prices rising to $555 a ton, as Brazilian producer CSN 
struggled to make up for production losses due to an accident at its 
No. 3 blast furnace. A looming increase in export taxes on Chinese 
slab put further pressure on the market as Chinese producers pulled 
back from export markets. See Diana Kinch, Brazil Slab hits $555/T 
In Tight Export Market, American Metal Market (June 5, 2006) 
(Attachment 25).
    \37\ Wheeling-Pittsburgh Makes Loss, Despite Rising Market, 
Steel Business Briefing (May 11, 2006) (Attachment 26).
    \38\ A competitor for the Wheeling-Pittsburgh assets, Esmark, 
envisions shutting down the last Wheeling-Pittsburgh blast furnace 
in an indication of the perceived or assessed costs of running that 
facility. See Esmark To Shut Wheeling-Pitt BF If Bid Succeeds, Steel 
Business Briefing (August 23, 2006) (Attachment 27).
---------------------------------------------------------------------------

    While the Brazilian slab industry has committed to a substantial 
expansion of its slab-making capacity, there is little prospect that an 
economically viable volume of this forthcoming slab capacity would be 
available to a stand-alone Weirton in the quality required to produce 
tin mill steel. As documented in the following table, virtually all of 
the new Brazilian slab would be unavailable to Weirton. Much of the 
planned slab capacity expansion among Brazilian producers targets 
either Brazilian domestic demand or other offshore demand (via existing 
business relationships). Timing considerations make it even more 
improbable that Brazil can source slab for a newly-divested and 
independent Weirton mill: A significant fraction of Brazil's new slab 
capacity will ramp up years from now, an unsuitably long period of 
time.

                                  Figure 5.--Brazilian Slab Capacity Expansions
----------------------------------------------------------------------------------------------------------------
                                 New slab capacity  (million
       Producer/project                     tons)                   Expected startup              Comments
----------------------------------------------------------------------------------------------------------------
CST (Arcelor Brazil) \39\.....  2.5.........................  End of 2006................  Expected to add 2.5
                                                                                            million tons of hot-
                                                                                            rolled coil capacity
                                                                                            by 2008, which will
                                                                                            capture much of this
                                                                                            expansion. Also
                                                                                            intends to ship
                                                                                            substantial
                                                                                            additional tonnage
                                                                                            to Arcelor-affiliate
                                                                                            Dofasco, which is
                                                                                            slab-deficient.
Gerdau Acominas SA \40\.......  3 (initially 1.5)...........  Mid-2008...................  Discussions are
                                                                                            already underway
                                                                                            with ``possible
                                                                                            clients abroad.''
CSA \41\ (Thyssen/CVRD).......  4.4.........................  2008.......................  Much of this capacity
                                                                                            is to be dedicated
                                                                                            to Thyssen Steel's
                                                                                            offshore operations,
                                                                                            including a proposed
                                                                                            U.S. greenfield mill
                                                                                            expected to produce
                                                                                            4.5 million tons of
                                                                                            finished steel.
Ceara Steel \42\ (CVRD/Donguk   1.5.........................  2009.......................  Donguk Steel is
 Steel/Danieli & C. SpA).                                                                   expected to consume
                                                                                            at least 50 percent
                                                                                            of the slab produced
                                                                                            at the facility.
CSN/Baosteel \43\.............  4.5.........................  2011.......................  Two projects are
                                                                                            envisioned, with
                                                                                            feasibility studies
                                                                                            to be finalized by
                                                                                            the end of 2006.
                                                                                            Baosteel is a
                                                                                            projected partner in
                                                                                            one project, with
                                                                                            the expectation that
                                                                                            a portion of the
                                                                                            production would be
                                                                                            directed at
                                                                                            Baosteel. Other
                                                                                            available capacity
                                                                                            would also serve
                                                                                            CSN's rolling
                                                                                            operations abroad,
                                                                                            with the remainder
                                                                                            available to third
                                                                                            parties.

[[Page 17645]]

 
Usiminas/CVRD \44\............  5...........................  2010-2012..................  Usiminas is seeking a
                                                                                            partner among
                                                                                            companies that
                                                                                            already have, or
                                                                                            plan to set up,
                                                                                            rolling capacity
                                                                                            abroad.
----------------------------------------------------------------------------------------------------------------

    The Russian producer Severstal is also a low-cost producer capable 
of meeting international quality standards and therefore might be an 
economical option for a stand-alone Weirton facility dedicated to 
rolling slab. This option, however, is limited. Severstal's acquisition 
of Rouge Steel limits its ability to supply high volumes of merchant 
slab while meeting its commitment to Rouge.\45\
---------------------------------------------------------------------------

    \39\ Diana Kinch, Arcelor Brasil Sets Sights on New Slab Plant, 
American Metal Market (May 1, 2006) (Attachment 28); Diana Kinch, 
CST to Hike Slab Sales to Dofasco, American Metal Market (March 22, 
2006) (Attachment 29).
    \40\ Diana Kinch, Gerdau Acominas Charging Into Slab Mart, 
American Metal Market (June 30, 2006) (Attachment 30).
    \41\ Diana Kinch, CSA Steel Project Receives License, American 
Metal Market (July 6, 2006) (Attachment 31); Scott Robertson, North 
American at Top of TK's Agenda, American Metal Market (August 11, 
2006) (Attachment 32).
    \42\ Diana Kinch, Groundwork Laid For Brazil's Ceara Slab 
Project, American Metal Market (December 16, 2005) (Attachment 33).
    \43\ Diana Kinch, CSN May Lift Slab Capacity of Two Projects, 
American Metal Market (September 1, 2006) (Attachment 34).
    \44\ Diana Kinch, Brazil's Usiminas Casts Sights Ahead for New 
Slab Project Partner, American Metal Market (August 29, 2006) 
(Attachment 35).
    \45\ At the time of acquisition, Severstal expressed its intent 
to revitalize the Rouge facility by shipping low-cost slab to Rouge 
from its Russian production base. See Russia's Severstal Wants to 
Ship More Steel to U.S., Reuters (February 2, 2004) (Attachment 36).
---------------------------------------------------------------------------

    In short, the market situation for merchant slab would likely force 
a stand-alone Weirton to source tin mill steel-quality slab piecemeal 
from multiple sources. As Weirton's 1999 experience showed, this is 
precisely the sourcing situation Weirton would want to avoid since it 
would raise the prospect of supply disruptions and production problems 
related to uneven slab consistency.
4. Even if a Stand-Alone Weirton Rolling and Finishing Operation Found 
a Consistent Source of Slab Supply, the Market Dynamics for Tin Mill 
Steel Would Limit Profitability
    Ultimately, even if Weirton could secure an adequate source of slab 
from third parties, the market dynamics for tin mill steel would create 
significant profitability problems as the market for flat rolled steel 
ebbs and flows. In the flat-rolled steel market, the relationship 
between slab prices and prices for mainstream flat-rolled steel--hot-
rolled, cold-rolled and galvanized products--tends to remain more 
stable. A more consistent pricing spread is maintained as prices for 
slab rise and fall. A very different pattern emerges for tin mill 
steel, given the very small and specialized market it serves. The 
pricing spread between slab and tin mill steel grows or shrinks 
substantially as the overall market for flat-rolled steel strengthens 
or weakens. For a tin mill steel producer relying on merchant slab, it 
is more difficult to preserve profit margins as markets for hot-rolled, 
cold-rolled, and galvanized steel expand and cause slab prices to rise. 
This is evidenced in the figure below tracking prices for imported 
slab, as well as the U.S. market prices for hot-rolled, cold-rolled, 
galvanized, and tin mill steel.\46\
---------------------------------------------------------------------------

    \46\ Slab prices reflect average unit values for carbon steel 
slab imported from Brazil, tracking U.S. harmonized tariff schedule 
items 7207.12.0050 and 7207.20.0045. U.S. market prices for hot-
rolled, cold-rolled and galvanized sheet were sourced from Steel 
Business Briefing and are FOB Midwest U.S. mill. U.S. market prices 
for TMP were sourced from Tin- and Chromium-Coated Steel Sheet from 
Japan, Inv. No. 731-TA-860 (Review), USITC Pub. 3860 (June 2006) at 
V-8 (Attachment 37).

---------------------------------------------------------------------------

[[Page 17646]]

[GRAPHIC] [TIFF OMITTED] TN09AP07.000

    Figure 1 captures both the significantly depressed steel market in 
2003 and the extremely strong steel market that followed in 2004 and 
2005. The substantial swing in pricing for hot-rolled, cold-rolled, and 
galvanized sheet is in sharp contrast to the much flatter pricing 
trajectory of tin mill steel. Indeed, during much of 2004, the market 
price for commodity grade cold-rolled steel (i.e., the product most 
similar to tin mill steel substrate) was actually higher than the tin 
mill steel price, despite the substantial additional value-added 
associated with tin mill steel production. While the visual depiction 
of pricing suggests tin mill steel also maintains a manageable pricing 
spread over time, the reality is very different. Consider that, over 
the 2000-2005 period, U.S. tin mill steel producers, as an industry, 
recorded their largest loss in 2003, when it appears from the figure 
above that their raw material costs would have been the most 
manageable.\47\
---------------------------------------------------------------------------

    \47\ Tin- and Chromium-Coated Steel Sheet from Japan, Inv. No. 
731-TA-860 (Review), USITC Pub. 3860 (June 2006) at Table III-8 
(Attachment 38).
---------------------------------------------------------------------------

    Just as important, the additional overhead and fixed costs 
associated with running rolling and finishing assets from the very 
first stage of flat rolled steel production through to tin mill steel 
production means that margins from tin mill steel production become 
extremely tight in a strong steel market. Yet, this is precisely when 
tin mill steel producers would logically seek to recoup losses from 
weak years. This phenomenon has two important implications. First, a 
tin mill steel producer reliant on merchant slab is unable to 
capitalize on a strong market through better margins on a higher volume 
of steel shipped. Second, a tin mill steel producer reliant on merchant 
slab is at a competitive disadvantage in the acquisition of slab on the 
open market against other slab rollers producing traditional flat-
rolled products. In particular, because of the pricing spread, these 
other slab rollers have greater bidding power to secure the volumes 
necessary for their operations. These two factors combine to produce a 
very difficult competitive environment for any tin mill steel producer 
wishing to rely exclusively on merchant slab. Weirton would not be an 
exception to this reality.
5. A Stand-Alone Weirton Enterprise Running Only Its Tin Line Would 
Have Difficulty Securing Sufficient Volumes of Black Plate
    Real world experience indicates that even if a stand-alone Weirton 
enterprise reduced its operations to only its tin lines and sourced 
only the substrate for tin mill steel, black plate, it would be unable 
to source enough substrate to run its operations on a profitable basis. 
In this regard, Silgan notes that the Weirton tin lines are 
substantial, capable of running 800,000 tons of tin mill steel. To 
achieve economies of scale, it needs to operate those lines at better 
than 70 percent, meaning it would have to secure as much as 560,000 
tons of black plate to run efficiently.
    Consider, however, the experience of Ohio Coatings, a tin mill 
steel producer configured to finish black plate. Despite being owned 
by, or in close affiliation with, integrated steel producers with the 
capacity to produce black plate,\48\ Ohio Coatings has been unable to 
secure more than 60 percent of its black plate requirement. This is 
true even though the mill is capable of producing only 300,000 tons of 
tin mill steel. The fact that an owner of the facility is unwilling to 
supply Ohio Coatings with its material requirements speaks volumes 
about whether a stand-alone Weirton

[[Page 17647]]

finishing black plate into tin mill steel, with far more substantial 
tin mill steel capacity, could source enough black plate as a stand-
alone producer looking to the open market.
---------------------------------------------------------------------------

    \48\ Ohio Coatings is a 50-50 joint venture between Wheeling-
Pittsburgh Steel and Donguk Steel of Korea. Wheeling-Pittsburgh is a 
producer of black plate and supplies Ohio Coatings that input. 
Nippon Steel is Ohio Coatings's exclusive distributor, and is also a 
major producer of black plate.
---------------------------------------------------------------------------

    Ohio Coatings' problem, which is the same problem a stand-alone 
Weirton enterprise would face if similarly operated, relates back to 
the flat-rolled pricing dynamics discussed in the previous section. 
Steelmakers must make choices regarding the products they choose to 
market. The decision begins at the raw steel phase, since steel 
chemistry will dictate what finished steel products can be made. In a 
strong market for hot-rolled, cold-rolled, or galvanized sheet, the 
incentive to produce black plate for tin mill steel production is 
diminished. A steelmaker will seek to maximize profitability and 
throughput by focusing on those products generating the strongest 
margins. The difference in profit margins between tin mill steel and 
the other traditional flat-rolled products can be so great that there 
is no economic justification for producing black plate. The result is 
Ohio Coating's dilemma--a 60 percent capacity utilization rate and no 
ready supply of black plate from either its parent company, companies 
with close ties to it, or other outside suppliers. There is no 
expectation that a stand-alone Weirton, similarly configured, would 
fare better. It would likely fare worse, given the lack of any 
affiliated supplier of black plate.

C. There Are No Legitimate Suitors for Weirton

    Weirton has long been perceived as one of the weakest and least 
competitive steel producers in the U.S. industry. To Silgan's 
knowledge, the only individual to surface expressing a desire to 
acquire the Weirton assets, Mitch Hecht, is not taken seriously by 
Mittal and has presented no viable business plan.
    Mr. Hecht's estimates on start-up costs to get the Weirton blast 
furnaces running are overly optimistic, including a proposed initial 
investment of just $10 million, including the purchase price. Hecht has 
been even more ambiguous about working capital needs and what he sees 
as necessary longer term investment in the ``several'' tens of millions 
of dollars.\49\ These ``estimates'' apparently do not even consider the 
necessary investment in the rolling assets, but focus only on the blast 
furnaces, although Mr. Hecht has expressed interest in acquiring the 
rolling assets as well.\50\
---------------------------------------------------------------------------

    \49\ Scott Robertson, Mittal Shows Little Interest in Weirton 
Furnace Sale, American Metal Market (May 5, 2006) (Attachment 39).
    \50\ Mittal Steel Plans to Sell Dofasco, Hecht Waits for 
Weirton, Steel Business Briefing (August 16, 2006) (Attachment 40).
---------------------------------------------------------------------------

D. Divesting Weirton Will Have an Adverse Impact on Competition

    Given that there is no existing steel entity interested in buying 
Weirton and since an independent Weirton would be entirely 
unprofitable, a decision to divest Weirton will result in an increase 
in the HHI. As detailed in the chart below, using the public data 
available to us, Silgan estimates that prior to the Mittal-Arcelor 
merger the HHI for the Eastern U.S. tin industry was 3058. With the 
Mittal-Arcelor merger, Silgan estimates that the HHI now stands at 
3446. Assuming that Weirton is divested and it survives as a standalone 
entity, the HHI would fall to 2761.\51\
---------------------------------------------------------------------------

    \51\ The full analysis is provided at Attachment 41 (``HHI 
Impact of Alternative Divestiture Scenarios'').

[[Page 17648]]



                          Figure 7.--HHI Anlaysis: Post-Merger and Weirton Market Exit
----------------------------------------------------------------------------------------------------------------
                                                                            HHI impact
----------------------------------------------------------------------------------------------------------------
Pre-merger......................................  3058
Post-merger (no divestiture)....................  3446
Remedy-Divest Weirton...........................  2761 (if Weirton survives).
                                                  3645 (if Weirton fails).
----------------------------------------------------------------------------------------------------------------

    Unfortunately, as the above discussion makes clear, the divestiture 
of Weirton will almost certainly result in failure and the exit of 
Weirton from the tin industry. Assuming that Weirton is divested and it 
does not survive as standalone entity, the HHI will rise to 3645.
    It is Silgan's belief that this latter scenario is quite likely; 
indeed, Silgan knows of no industry expert who would give a stand-alone 
Weirton more than a 20% chance of surviving. Consequently, this implies 
that the expected result of a Weirton divestiture is a higher, not 
lower, HHI. In fact, unless the DOJ believes that a stand-alone Weirton 
has a better than a two out of three chance of surviving (an unduly 
optimistic belief in Silgan's opinion), the expected result of a 
Weirton divestiture is a less competitive market.\52\ Given Weirton's 
poor prospects as a standalone producer, allowing Mittal to divest 
Weirton runs contrary to the goal of improving competition in tin 
market.
---------------------------------------------------------------------------

    \52\ The full analysis is provided at Attachment 42 
(``Probability that Divestiture Will Improve Competition'').
---------------------------------------------------------------------------

    The increase in HHI is only one probable consequence of a 
divestiture of Weirton. A failed Weirton would remove more than 800,000 
tons of tin-making capacity from the market. With Weirton in the market 
can-makers are often put on allocation and struggle to get delivery of 
product. The removal of about 20% of U.S. production capacity will make 
the current bad situation truly dire.

[[Page 17649]]

III. A Divestiture of Sparrow's Point Would Also Be a Far Less 
Effective Remedy Than Divesting DoFasco

A. Divestiture of Sparrows Point Is Unlikely To Enhance Competition 
Over the Long Term

    As discussed above, Weirton does not have the ability to survive on 
its own. And, without Sparrows Point, Weirton is unlikely to survive as 
part of the Mittal-Arcelor enterprise. The reason is straightforward: 
Without Sparrows Point, Weirton will not be able to secure sufficient 
volumes of feedstock to produce tin mill steel.
    Within the Mittal system, Sparrows Point is a key supplier of slab 
for Weirton. For example, Silgan's understanding is that all the tin 
free steel (``TFS'') originating at the Weirton facility is produced 
using Sparrows Point slab. A Sparrows Point facility operating outside 
the Mittal system would limit the supply of this key feedstock to 
Weirton and thereby threaten the ongoing viability of Weirton.
    And, as importantly, all indications are that other slab producers 
within Mittal Steel's collection of facilities either cannot or are 
unlikely to become reliable suppliers to Weirton's tin mill steel 
operations. Specifically, (1) Dofasco's current product mix and sales 
make Dofasco an unlikely replacement for Sparrows Point as a supplier 
of feedstock to Weirton, (2) given lower tin mill steel profitability 
compared to other flat-rolled products, it is unlikely that Mittal 
Steel's other U.S. slab producers will divert scarce feedstock to 
Weirton, and (3) it would make no economic sense for Mittal's Brazilian 
affiliate, CST, to supply slabs to Weirton.
    Silgan discusses these points below.
1. Dofasco Is an Unlikely Replacement for Sparrows Point in Supplying 
Slabs to Weirton
    As discussed above, if Sparrows Point is divested, it is unlikely 
that Dofasco would replace Sparrows Point as a key supplier of slab to 
Weirton. First, Dofasco is already a producer of tin mill steel and, 
while Sparrows Point may claim the same status, Dofasco is also a key 
supplier to the auto sheet market,\53\ where profit margins are among 
the strongest in the industry. Sparrows Point is not a significant 
player in that market.\54\ There would be virtually no economic 
incentive for Mittal to divert slabs from Dofasco and reduce production 
in the high margin auto sheet segment. Dofasco's slab production must 
also support other Dofasco downstream operations, including its hot-
rolled, cold-rolled and pipe facilities.\55\
---------------------------------------------------------------------------

    \53\ Dofasco is the fourth-largest producer of auto sheet in the 
North American market, at roughly 1 million tons, behind the multi-
site operations of Mittal Steel, U.S. Steel and AK Steel. See Peter 
Marsh, Massive Bids on Table as Giants Fight for Dofasco, Financial 
Times (January 13, 2006) (Attachment 4).
    \54\ According to long-time steel analyst Charles Bradford, 
Sparrows Point (``doesn't have those (automotive) grades.'' Scott 
Robertson, Mittal Sparrows Point Mill May Be On Action Block, 
American Metal Market (June 2, 2006) (Attachment 5).
    \55\ 2005 Directory of Iron and Steel Plants, Association for 
Iron and Steel Technology (2005) at 98-101 (listing flat-rolled 
assets) (Attachment 6). Dofasco Tubular Products is the largest and 
most diversified producer of tubular products in North America. See 
http://www.dofascotube.com/Default.htm (Attachment 3).
---------------------------------------------------------------------------

    More importantly, Dofasco is not self-sufficient in slabs, but 
itself requires as much as 750,000 tons in purchased slab to feed its 
rolling and finishing operations.\56\ Thus, to maintain efficient 
capacity utilization rates at all of its production lines, Dofasco 
needs every ton of slab it produces and acquires.
---------------------------------------------------------------------------

    \56\ Diana Kinch, CST to Hike Slab Sales to Dofasco, American 
Metal Market (March 22, 2006) (Attachment 29).
---------------------------------------------------------------------------

2. It Is Unlikely That Mittal Steel's Other North American Slab 
Producers Will Divert Scarce Feedstock to Weirton
    Divesting Sparrows Point will cause Mittal Steel to have one fewer 
steel-making facility. With one less blast furnace operating to support 
its operations, Weirton becomes more vulnerable to blast furnace 
outages--some planned, some unplanned--that aer a regular occurrence in 
the steel industry. Blast furnace relines as well as accidents can 
cause significant supply disruptions, particularly if slab supply is 
already tight. Any problem at Mittal's other steel-making facilities in 
Burns Harbor, Cleveland, or Indiana Harbor will result in a reduction 
of slab supplied to Weirton's tinning lines. Facing a supply shortage, 
Mittal USA would have a strong incentive to divert its limited supply 
of slabs away from the downsized tin mill steel market in order to 
maintain production volumes in the more robust galvanized and cold-
rolled markets. The result would be significant production delays at 
Weirton. Given the tight timing requirements for tin mill steel, where 
can-makers demand just-in-time delivery, such delays would be 
devastating to Weirton's customers.
    Without Sparrows Point's slab capacity, the likelihood that Mittal 
will ration Weirton's slab supply is greatly increased. As the chart 
below makes clear, the difference in profit margins between other flat-
rolled products and tin mill steel is just too great to justify sending 
scarce feedstock to Weirton.

  Figure 8.--Comparison of U.S. Industry Profitability for Flat-Rolled
                                Products
                           [Operating margin]
------------------------------------------------------------------------
                                        2004              2005
------------------------------------------------------------------------
Galvanized \57\....................      10.9%  5.4%
Plate \58\.........................      22.0%  25.4%
Hot-Rolled \59\....................      22.1%  Not available.
Tin Mill \60\......................      -0.9%  -0.7%
------------------------------------------------------------------------

Very simply,Weirton will not be the best use of Mittal's limited slab 
supply in the Midwest that services more profitable operations.
---------------------------------------------------------------------------

    \57\ ITC Prehearing Staff Report, Certain Carbon Steel Products 
from Australia, Belgium, Brazil, Canada, Finland, France, Germany, 
Japan, Korea, Mexico, Poland, Romania, Spain, Sweden, Taiwan, and 
the United Kingdom, Inv. Nos. AA1921-197 (Second Review); 701-TA-
319, 320, 325-328, 348, and 350 (Second Review); and 731-TA-573, 
574, 576, 578, 582-587, 612, and 614-618 (Second Review) (September 
25, 2006) at Table CORE-III-8 (Attachment 43).
    \58\ Id. at Table CTL-III-9.
    \59\ Certain Hot-Rolled Flat-Rolled Carbon-Quality Steel 
Products From Brazil, Japan, and Russia, Inv. Nos. 701-TA-384 and 
731-TA-806-808 (Review), USITC Pub. 3767 (April 2005) at Table III-
11 (Attachment 44).
    \60\ Tin and Chromium Coated Steel Sheet from Japan, Inv. No. 
731-TA-860, USITC Pub. 3860 (June 2006) at Table III-8 (Attachment 
38).
---------------------------------------------------------------------------

3. It Would Make No Economic Sense for Mittal's Brazilian Affiliate CST 
To Supply Slabs to Weirton
    Within Mittal's global steel operations, its Brazilian affiliate 
CST (Arcelor/Brazil) is a significant producer of slab for sale in 
export markets. CST also has plans to expand its slab capacity in the 
very near term, with the introduction of some 2.5 million tons of new 
slab capacity at the close of this year. CST, however, is an unlikely 
candidate to ship a significant tonnage of slab to Weirton.
    CST is already a major supplier of slab to Dofasco, shipping some 
400,000 tons with plans to increase that amount, perhaps to meet all of 
Dofasco's merchant slab requirements (750,000 tons).\61\ It would make 
more economic sense to ship this slab to Dofasco, a high profit margin 
producer that needs the slab to fill capacity in high demand, than to 
Weirton.
---------------------------------------------------------------------------

    \61\ Id.
---------------------------------------------------------------------------

    The window in which CST might ship to Weirton is also limited since 
it has plans to increase its own hot-rolled sheet capacity by 2.5 
million tons by 2008, the same amount as its slab

[[Page 17650]]

capacity expansion.\62\ Between servicing this new hot-rolled capacity 
and other profitable global accounts, CST would be very reluctant to 
allocate slab for supply to Weirton. Under the circumstances, as a 
rational economic actor seeking to maximize profits, there is no 
justification for Mittal to ship slabs from CST to Weirton.
---------------------------------------------------------------------------

    \62\ Diana Kinch, Arcelor Brasil Sets Sights On New Slab Plant, 
American Metal Market (May 1, 2006) (Attachment 28)
---------------------------------------------------------------------------

B. Divesting Sparrows Point Will Have an Adverse Impact on Competition 
in the Medium to Long Term

    From the standpoint of consumer impact, the divestiture of Sparrows 
Point is, at best, a highly risky policy option. As detailed in the 
chart below, Silgan estimates that, prior to the Mittal-Arcelor merger, 
the HHI for the Eastern U.S. tin industry was 3058; following the 
merger, Silgan estimates that the HHI will be 3446. Assuming that 
Sparrows Point is divested and that such divestiture neither adversely 
impacts Weirton's viability nor alters Sparrow Point's commitment to 
tin, the HHI would fall to 2836.\63\
---------------------------------------------------------------------------

    \63\ The full analysis is provided at Attachment 41 (``HHI 
Impact of Alternative Divestiture Scenarios'').

           Figure 9.--Weirton and Sparrows Point HHI Analysis
------------------------------------------------------------------------
                                                    HHI impact
------------------------------------------------------------------------
Pre-merger.............................  3058.
Post-merger (no divestiture)...........  3446.
Remedy-Divest Sparrows Point...........  2836 (if both W & SP survive).
                                         3421 (if Weirton fails).
                                         3495 (if SP does not maintain
                                          its tin operations).
------------------------------------------------------------------------

    Regrettably, the necessary conditions for an improvement in the 
concentration metric (both Weirton and Sparrows Point surviving upon 
divestiture) are unrealistic and not likely to materialize. As 
explained above, the divestiture of Sparrows Point will significantly 
threaten the reliable supply of quality slab to the Weirton facility 
and hence will jeopardize Weirton's viability. While Weirton would not 
likely fail immediately, the lack of reliable captive slab supply will 
result in the exit of Weirton from the tin industry. Such exit from the 
industry would cause the HHI to rise to 3421. Said differently, if the 
divestiture of Sparrows Point results in Weirton failing, the Sparrows 
Point divestiture would be totally ineffectual in restoring competitive 
balance to the tin industry.
    Further weakening the benefits of a Sparrows Point divestiture is 
the question of Sparrows Point's commitment to the tin market. As 
discussed, Sparrows Point has never operated as a stand-alone facility 
and is not only likely to invest insufficiently in making its tin lines 
world class. If a stand-alone Sparrows Point is not committed to its 
tin facility, the HHI would be 3495. Again, this implies that the 
Sparrows Point divestiture would be totally ineffectual in restoring 
competitive balance to the tin industry.
    In sum, the divestiture of Sparrows Point is a risky gambit. The 
Department of Justice's competition policy should not be based on hope 
and a prayer. If the DOJ believes that either of the above two 
scenarios has more than a one in two chance of occurring, the expected 
result of a Sparrows Point divestiture is a less competitive market.

Conclusion

    For all the foregoing reasons, we ask that the Department adopt the 
following approach in designing an appropriate remedy to address the 
reduced competition in the tin mill steel market.
     First, the Department should make every effort to 
accomplish the divestiture of Dofasco.
     Second, if immediate divestiture is not possible, Silgan 
strongly recommends the consent decree be modified to wait the five 
years reportedly necessary to eliminate any existing legal impediments 
to the divestiture of Dofasco. An independent Dofasco in five years is 
better than any of the other alternatives for preserving competition.

    Respectfully submitted,

Theodore C. Whitehouse
James P. Durling
Daniel L. Porter
Matthew McCullough
Willkie Farr & Gallagher LLP, 1875 K Street, NW., Washington, DC 
20006, (202) 303-1000.

 List of Attachments

    1. United States v. Mittal Steel Company, Proposed Final Judgment 
and Competitive Impact Statement, 71 Fed. Reg. 50084, 50085, 50093 
(August 24, 2006).
    2. World Steel Dynamics (2005).
    3. http://www.dofascotube.com/Default.htm.
    4. Massive Bids on Table as Giants Fight for Dofasco, Financial 
Times (January 13, 2006).
    5. Mittal Sparrows Point Mill May Be On Auction Block, American 
Metal Market (June 2, 2006).
    6. Excerpts from 2005 Directory of Iron and Steel Plants, 
Association for Iron and Steel Technology (2005).
    7. The Strange Case of Weirton Steel, MakingSteel.com (April 25, 
2006).
    8. Fewer Blast Furnaces, But Higher Productivity, New Steel 
(November 1996).
    9. See How a Blast Furnace Works, AISI.
    10. Ironmaking Process Alternative Screening Study--Volume I, 
Summary Report, Lockwood Greene study for the Department of Energy 
(Oct. 2000).
    11. ISG To Repair, Restart Second Blast Furnace at Weirton Unit, 
American Metal Market (July 14, 2004).
    12. Mittal Steel USA Works to Restore Furnace at Sparrows Point, 
PRNewswire (July 14, 2006).
    13. Ispat Inland Accelerates Maintenance Outages, Ispat Inland 
Press Release (March 7, 2005).
    14. Weirton Workers Buyout from Online NewsHour, September 23, 
1983; http://www.pbs.org/newshour/bb/business/july-dec83/steel_9-23-83.html.
    15. High Production Costs Hamper AK Steel's Middletown Works, Steel 
Business Briefing (Aug. 10, 2006).
    16. Dofasco Seals $251m Purchase of Canadian Iron Ore Miner QCM, 
American Metal Market (July 26, 2005).
    17. Force Majeure Clobbers Coke-Short Steelmaking: Weirton Eyes 
Option, Blast Furnace Closure, American Metal Market (Jan. 9, 2004).
    18. Heat Back on Steel Makers, The Plain Dealer (February 26, 
2004).
    19. Furnace Will Stay Idle at Weirton Steel Mill, Associated Press 
(Dec. 2, 2005).
    20. The shipping news & forecast: District ports face many 
competitive challenges, but whether they sink or

[[Page 17651]]

swim over the long term will likely depend on infrastructure 
improvements, Minneapolis Federal Reserve fedgazette (January 2003).
    21. Weirton Files for Ch. 11; 1,000 Ohio Jobs Affected, Associated 
Press (May 20, 2003).
    22. Testimony of Bill Stephans, Division Manager for TMP at Mittal 
Steel USA's-Weirton Facility from Hearing Transcript, In the Matter Of: 
Tin and Chromium Coated Steel Sheet from Japan, Inv. No. 731-TA-860 
(Review) (April 27, 2006).
    23. ISU Irked by Mittal Steel's Plan To Shut Weirton Galvanizing 
Line, American Metal Market (Feb. 3, 2006).
    24. Excerpts of Testimony from Hearing Transcript, In the Matter 
Of: Tin and Chromium Coated Steel Sheet from Japan, Inv. No. 731-TA-860 
(F) (June 29, 2000).
    25. Brazil Slab Hits $555/T In Tight Export Market, American Metal 
Market (June 5, 2006).
    26. Wheeling-Pittsburg Makes Loss, Despite Rising Market, Steel 
Business Briefing (May 11, 2006).
    27. Esmark To Shut Wheeling-Pitt BF If Bid Succeeds, Steel Business 
Briefing (Aug. 23, 2006).
    28. Arcelor Brasil Sets Sights On New Slab Plant, American Metal 
Market (March 22, 2006).
    29. CST to Hike Slab Sales to Dofasco, American Metal Market (March 
22, 2006).
    30. Gerdau Acominas Charging Into Slab Mart, American Metal Market 
(June 30, 2006).
    31. CSA Steel Project Receives License, American Metal Market (July 
6, 2006).
    32. North America at Top of TK's Agenda, American Metal Market 
(August 11, 2006).
    33. Groundwork Laid For Brazil's Ceara Slab Project, American Metal 
Market (September 1, 2006).
    34. CSN May Lift Slab Capacity Of Two Projects, American Metal 
Market (September 1, 2006).
    35. Brasil's Usiminas Casts Sights Abroad For New Slab Project 
Partner, American Metal Market (August 29, 2006).
    36. Russia's Severstal Wants to Ship More Steel to U.S., Reuters 
(February 2, 2004).
    37. Tin and Chromium Coated Steel Sheet from Japan, No. 731-TA-860 
(Review), USITC Pub. 3860 (June 2006) at V-8.
    38. Tin and Chromium Coated Steel Sheet from Japan, Inv. No. 731-
TA-860 (Review), USITC Pub. 3860 (June 2006) at Table III-8.
    39. Mittal Shows Little Interest in Weirton Furnace Sale, American 
Metal Market (May 5, 2006).
    40. Mittal Plans to Sell Dofasco, Hecht Waits for Weirton, Steel 
Business Briefing (August 16, 2006).
    41. ``HHI Impact of Alternative Divestiture Scenarios''.
    42. ``Probability that Divestiture Will Improve Competition''.
    43. ITC Prehearing Staff Report, Certain Carbon Steel Products from 
Australia, Belgium, Brazil, Canada, Finland, France, Germany, Japan, 
Korea, Mexico, Poland, Romania, Spain, Sweden, Taiwan, and the United 
Kingdom, Inv. Nos. AA1921-197 (Second Review); 701-TA-319, 320, 325-
328, 348, and 350 (Second Review); and 731-TA-573, 574, 576, 578, 582-
587, 612, and 614-618 (Second Review) (September 25, 2006) at Tables 
CORE-III-8 and CTL III-9.
    44. Certain Hot-Rolled Flat-Rolled Carbon-Quality Steel Products 
From Brazil, Japan, and Russia, Inv. Nos. 701-TA-384 and 731-TA-806-808 
(Review), USITC Pub. 3767 (April 2005) at Table III-11.

Attachment 1--United States v. Mittal Steel Company, Proposed Final 
Judgment and Competitive Impact Statement 71 FR 50084, 50085, 50093 
(August 24, 2006)

    The attachment is available in the Federal Register, 71 FR 50084.

Attachment 2--World Steel Dynamics (2005)

                                                Positioning of 23 World-Class Steelmakers as of June 2005
                                                              [Version A--by Factor Weight]
                                                       1=least favorable \1\ 10=most favorable \1\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                      Anshan     Bao-      Blue-      China
                                            Arcelor    Steel     Steel     Scope      Steel     Corus      CSN       CST     Dofasco   Gerdau      JFE
                                              E.U      China     China   Australia   Taiwan      UK      Brazil    Brazil    Canada    Brazil     Japan
--------------------------------------------------------------------------------------------------------------------------------------------------------
Annual Steel Shipments        ...........        53        10        19          8        12        23         5         5         5        15        30
 (million tons).............
           Factor                Weight
                                (percent)
1 Cash operating costs......           10         6         8         8          8         7         5        10        10         6         7         6
2 Harnessing technological             10         6         7         8          7         5         4         4         6         6         5         7
 revolution.................
3 Profitability in 2000-2004            6         4         8        10          9         8         4        10         8         9        10         6
4 Balance sheet.............            6         7         4         8          8        10         8         7         5         7         9         7
5 Dominance country/region..            6         4        10        10          4         3         2         8         8         3         7         2
6 Domestic market growth....            5         6         7         8          7         5         4         4         6         6         5         7
7 Expanding capacity........            5         3        10         9          6         3         2         6        10         3         8         3
8 Access to outside funds...            4         7         6        10          9         9         5         6         9         9         8         8
9 Cost-cutting efforts......            4        10         9         7          7         6        10         6         6         6         6        10
10 Downstream businesses....            4         5         3         4          9         3         7         5         3         4         6        10
11 Environment and safety...            4         9         9         9          9         9         9         9         9         9         9         9
12 Iron ore and coking coal             4         3         7         4          4         3         3         7         3         5         4         3
 mines......................
13 Liabilities for retired              4         6         6         8          6         6        10         7        10         7         8         6
 workers....................
14 Location to procure raw              4         6         7         8          8         8         8         7         8         6         5         8
 materials..................
15 Alliances, mergers,                  4        10         9         9          7         6         4         7         7         7        10         9
 acquisitions and JVs.......
16 ``Pricing Power'' with               4         8         4         8          8        10         8         7         5         7         7         8
 large buyers...............
17 Threat from nearby                   4         5         4         5          8         8         5         7         6         6         7         7
 competitors................

[[Page 17652]]

 
18 Product quality..........            4         9         5         9          8         8         8         7         8         9         6        10
19 Skilled and productive               4         8         5         7          8         8         8         7         9        10         8        10
 workforce..................
20 Stock market performance             4         9         9         9          9         9         9         9         9         9         9         9
 (3-year)...................
    Average Score...........  ...........      6.55      6.85      7.90       7.45      6.70      6.15      7.00      7.25      6.70      7.20      7.25
    Ranking \1\.............  ...........        18        14         4          7        15        23        13         9        15        11         9
    Weighted-Average Score..  ...........      6.07      6.75      7.61       7.05      6.22      5.60      6.80      6.98      6.19      6.81      6.66
    Ranking \1\.............  ...........        20        12         4          7        18        23        10         8        19         9        13
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Many of these rankings are subjective and some are duplicative.
\2\ Plants in many countries, includes lspat International.
Source: WSD estimates.


                                                Positioning of 23 World-Class Steelmakers as of June 2005
                                                              [Version A--by Factor Weight]
                                                       1=least favorable \1\ 10=most favorable \1\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                 Mittal             Nippon                                                    Tata   Thyssen/    U.S.
                                  \1\    Maanshan   Steel    Nucor    POPSO   SDI USA  Severstal   Shagang   Steel     Krupp    Steel    Wuhan     Avg.
                                 Steel     China    Japan     USA      S.K.              Russia     China    India    Germany    USA     China
--------------------------------------------------------------------------------------------------------------------------------------------------------
Annual Steel Shipments               62         8       30       20       34        4         13         5        5        19       21       10       18
 (million tons)...............
Factor:
    1 Cash operating costs....        7         7        6        8        8        8         10         6       10         5        6        7      7.4
    2 Harnessing technological        7         6        7       10        9        9          6         7        7         6        5        6      6.5
     revolution...............
    3 Profitability in 2000-          7         7        6        7       10        9          9         8       10         4        4        8      7.6
     2004.....................
    4 Balance sheet...........        8         6        7        6       10        4          8         4        8         6        6        6      7.0
    5 Dominance country/region        6        10        2        2        6        2          8        10       10         2        2       10      5.5
    6 Domestic market growth..        7         6        7       10        9        9          6         7        7         6        5        6      6.5
    7 Expanding capacity......        8        10        3       10        4       10          9        10       10         5        3        9      6.6
    8 Access to outside funds.       10         6        8       10       10        9          9         5       10         7        7        6      8.0
    9 Cost-cutting efforts....       10         9        9        6        6        6          6         6        8         8        8        8      7.5
    10 Downstream businesses..        5         7       10       10        7        6          7         2        5        10        3        2      6.0
    11 Environment and safety.        9         9        9        9        9        9          9         9        9         9        9        9      9.0
    12 Iron ore and coking            7         5        3  .......        4  .......         10         3       10         3        7        3      4.9
     coal mines...............
    13 Liabilities for retired        7         6        6       10        8       10          8        10        6         6        5        6      7.4
     workers..................
    14 Location to procure raw        8         6        8        6        8        6          7         8       10         5        8        6      7.2
     materials................
    15 Alliances, mergers,           10         7        7       10        8       10          8         8        9         9       10        8      8.2
     acquisitions and JVs.....
    16 ``Pricing Power'' with         8         4        8        4       10        3          9         3        8         7        5        4      6.8
     large buyers.............
    17 Threat from nearby             6         4        7        4       10        4          8         4        7         5        5        4      6.0
     competitors..............
    18 Product quality........        7         5       10        7       10        7          6         5        8         9        9        6      7.7
    19 Skilled and productive         8         5       10       10       10       10          7         7        8         9        9        5      8.2
     workforce................
    20 Stock market                  10         9        9        9        9        9         10         5        9         9        9        9      8.9
     performance (3-year).....
    Average Score.............     7.75      6.70     7.10     7.79     8.25     7.37       8.00      6.35     8.45      6.50     6.25     6.40     7.16
    Ranking \1\...............        6        15       12        5        2        8          3        21        1        19       22       20  .......
    Weighted-Average Score....     7.21      6.52     6.54     7.10     7.87     6.75       7.65      6.27     8.11      5.93     5.70     6.29     6.76
    Ranking \1\...............        5        15       14        6        2       11          3        17        1        21       22       16  .......
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Many of these rankings are subjective and some are duplicative.
\2\ Plants in many countries, includes Ispat International.
 Source: WSD estimates.


[[Page 17653]]

Attachment 3--http://www.dofascotube.com/Default.htm

    The attachment is available at the following Web site, http://www.dofascomarion.com/Default.htm

Attachment 4--Massive Bids on Table as Giants Fight for Dofasco, 
Financial Times (January 13, 2006)

Massive Bids on Table as Giants Fight for Dofasco

    Scarcity and an iron ore mine drive the battle between Arcelor and 
ThyssenKrupp for the Canadian steelmaker, says Peter Marsh.

By Peter Marsh
13 January 2006
Financial Times
(c) 2006 The Financial Times Limited. All rights reserved
    The global steel industry has been through a transformation as 
spectacular as any to have affected the business world in the past few 
years.
    That is confirmed in the bidding battle between Arcelor and 
ThyssenKrupp, two giants of the European steel industry, for Dofasco, a 
mid-sized Canadian steelmaker that both companies are valuing at more 
than USDollars 4bn.
    Luxembourg-based Arcelor is considering whether to make a fresh bid 
for the Ontario company higher than that tabled by its German rival--
and other companies could still enter the fray. Just before Christmas, 
Lakshmi Mittal, chairman and majority owner of Mittal Steel, the 
world's biggest steelmaker, indicated he had not ruled out making an 
offer for Dofasco, even though such a move is considered unlikely. Mr. 
Mittal has been a prime initiator of steel industry mergers since 2000 
that have increased the size of the main players in the sector and put 
them in a much stronger position to dictate terms to customers. At the 
same time, steel prices have rocketed due to rapacious demand from 
China as its economy has expanded to suck in about 30 percent of world 
steel output.
    As a consequence, share prices of quoted steel companies in recent 
years have been among the best performers on global stock markets, 
despite a downturn in recent months. Thyssen's most recent January 3 
offer of CDollars 63 a share values Dofasco at CDollars 4.9bn 
(USDollars 4.2bn). It was pitched at the same level as a rival bid by 
Arcelor--which started the effort to acquire Dofasco through a CDollars 
56-a-share bid in November. But the Canadians regard Arcelor as a 
predator and the Dofasco board is backing the Germans, at least in part 
because if it sells to another suitor, Dofasco would have to hand 
Thyssen a CDollars 100m break-up fee.
    Mike Locker, of Locker Associates, a US steel consultancy, says the 
magnitude of both bids is ``eye-popping'', given that Dofasco is a 
relatively small player with production last year estimated at about 5m 
tonnes. In the first nine months of 2005, Dofasco turned in net income 
of CDollars 142.6 m on sales of CDollars 2.69bn, with the earnings 
figure well down on the CDollars 280.1m net income recorded in the 
first nine months of 2004, a result of tougher conditions generally in 
the steel industry in the early part of last year.
    But in spite of the earnings drop, Mr. Locker still thinks the high 
price of the offers can be justified, given Dofasco's strong position 
in higher-value segments of the steel industry--particularly in flat 
galvanized sheet used for car bodies. About 75m tonnes of this 
material--which has to be made using special processes so it is 
especially shiny and resistant to corrosion--is made each year, with 
Arcelor being the world leader with about 10m tonnes.
    While Thyssen is well behind with 5m tonnes, both are keen to 
expand in this field in North America--where Dofasco is the fourth 
biggest producer with output estimated at about 1m tonnes a year. 
Mittal Steel and US Steel are the two largest producers of automotive 
sheet steel in the region--with global output of 6m tonnes and 5m 
tonnes respectively, most of this coming from their US plants.
    The third player in North America, with 2m tonnes, is AK Steel--
which has been in financial difficulties and is burdened by healthcare 
and pensions liabilities estimated at Dollars 3.5bn. ``Since neither 
Mittal nor US Steel is available, and AK is probably ruled out, there 
is a scarcity value about Dofasco (in automotive steel) which 
inevitably increases its price,'' says Mr. Locker.
    Another attraction of the Canadian company is its ownership of QCM, 
an iron ore mine in Quebec. This raw material has been in short supply 
in the past two years, with a consequent big increase in price.
    Michelle Applebaum, of Michelle Applebaum Research, an Illinois-
based consultancy, says ``roughly a third'' of the money Arcelor and 
Thyssen are prepared to pay for Dofasco could be linked to ownership of 
the mine--which produces about 16m tonnes of ore a year, most for sale 
to other steelmakers.

Attachment 5--Mittal Sparrows Point Mill May Be On Auction Block, 
American Metal Market (June 2, 2006)

Mittal Sparrows Point Mill May Be on Auction Block

By Scott Robertson

    PITTSBURGH--Mittal Steel Co. NV reportedly is shopping its 
integrated steel mill in Sparrows Point, Md., as part of what appears 
to be a contingency plan if its proposed acquisition of Arcelor SA, 
Luxembourg, falls through.
    Executives from ThyssenKrupp AG, which is in line to buy Dofasco 
Inc. if Mittal acquires Arcelor, toured the Sparrows Point plant last 
week and have expressed interest in it, according to Mittal sources.
    Mittal reportedly is entertaining a sale of the Sparrows Point 
plant, formerly owned by Bethlehem Steel Corp. and later by 
International Steel Group Inc., in an antitrust maneuver.
    Mittal is interested in acquiring Arcelor and has reached an 
agreement to sell Dofasco--currently held in a trust created by 
Arcelor--to ThyssenKrupp if it succeeds in getting Arcelor.
    Arcelor, however, has reached an agreement to acquire Russian steel 
producer OAO Severstal that could take Mittal out of the picture. The 
possible sale of the Sparrows Point plant to ThyssenKrupp might be a 
contingency plan should Mittal be unable to complete the promised sale 
of Dofasco as part of an Arcelor takeover.
    A spokesman for Mittal Steel USA Inc., Chicago, said Thursday that 
its Rotterdam-based parent expects to complete the Arcelor purchase and 
to move forward with its sale of the Dofasco mill in Hamilton, Ontario, 
to ThyssenKrupp. In that case, he said, ``no other moves would be 
necessary.''
    The U.S. Department of Justice already has granted conditional 
approval to the Mittal merger with Arcelor. The conditions stipulate 
that it dispose of certain operations--interpreted to be Dofasco.
    Calls to managers at the Sparrows Point plant, to Mittal Steel 
offices in London and to ThyssenKrupp in Dusseldorf, Germany, were not 
returned by late Thursday.
    It is not unusual for representatives of steel producers to tour 
each other's plants, so in some respects a ThyssenKrupp tour of 
Sparrows Point could be viewed as something done in the normal course 
of business. The appearance of ThyssenKrupp representatives at the 
plant, however, sparked widespread industry chatter that the plant was 
on the block and

[[Page 17654]]

could be part of a Mittal-ThyssenKrupp contingency plan.
    When it announced last month it was improving its bid for Arcelor, 
Mittal Steel said it would consider selling other North American assets 
if it could not complete the sale of Dofasco to ThyssenKrupp.
    Several sources said that while the contingency plan idea might be 
true, a ThyssenKrupp acquisition of Sparrows Point would not mesh with 
its goals for the North American market. ThyssenKrupp, which lost out 
in a bidding war with Arcelor for Dofasco earlier this year, in the 
past has been rumored to be interested in acquiring AK Steel Corp., 
Middletown, Ohio, or U.S. Steel Corp., Pittsburgh, in an effort to gain 
entry to the North American automotive market.
    ``Sparrows Point doesn't have those (automotive) grades,'' longtime 
steel industry analyst Charles Bradford said. ``If (Mittal) were going 
to get rid of something in North America, I don't think it would be 
Sparrows Point. I think if they had their druthers, they'd sell 
Weirton, but that does not meet what ThyssenKrupp needs, either.
    ``I think it would be more likely that they would get rid of 
Inland,'' he said, referring to the former Ispat Inland plant in East 
Chicago, Ind. that is now part of Mittal's Indiana Harbor division. 
``It used to be said that Inland and Dofasco were like brother and 
sister in terms of the things they did, so that would make more sense 
to me. Getting rid of Sparrows Point does not make sense from an 
antitrust perspective because it is not related to automotive like 
Inland and Dofasco are.''
    Bradford added that ThyssenKrupp's presence in the global stainless 
steel market and its ownership of ThyssenKrupp Budd Co., an automotive 
parts manufacturer in Troy, Mich. also make an acquisition of Sparrows 
Point unlikely.
    ``They (Budd) are a parts-maker and chassis maker,'' Bradford said. 
``Again, that does not fit with what Sparrows Point does. But you 
always go and take a look whenever a competitor gives you that 
opportunity, you take advantage of it.''
    Another market source close to the Sparrows Point plant said the 
visit could be nothing more than a smokescreen. ``ThyssenKrupp 
announced a few days ago it will downsize its steel business,'' he 
said. ``So while an outpost in North American could be good for 
ThyssenKrupp, since they won't get Canada's Dofasco (in the case of a 
Severstal-Arcelor merger), there might be less to this than meets the 
eye.
    ``Maybe this was done on behest of Mittal to raise interest among 
other (potential) investors,'' he said. ``I know ThyssenKrupp and 
Mittal are pretty tight at the moment.''

Attachment 6--Excerpts from 2005 Directory of Iron and Steel Plants, 
Association for Iron and Steel Technology (2005)

                                         Iron and Steel Plant Facilities
                                                [CSN USA--Cont'd]
----------------------------------------------------------------------------------------------------------------
                                       Capacity,
          Identification               tons/year            Bases             Furnaces           Atmosphere
----------------------------------------------------------------------------------------------------------------
                                                 Batch Annealing
----------------------------------------------------------------------------------------------------------------
                                           308,000  12 4-high stack......               6  100% H2
----------------------------------------------------------------------------------------------------------------


 
                                                                                      Product size, thickness x width, in.
           Identification                Nominal width, in.    Capacity, tons/---------------------------------------------------      Configuration
                                                                    year                 Low C                  Motor Lam.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                  Temper/Skinpass Mill
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                      Max width: 73                   600,000  0.012 min...............  0.025 min..............  Single stand 4-h.
                                       untrimmed, 72 trimmed.
                                      Min. width: 34.........  ..............  0.100 max...............  0.040 max..............  Dynamic Shape Roll.
                                                                                                                                  85 in. max OD.
                                                                                                                                  38 in. min OD.
                                                                                                                                  85,000 max. wt.
--------------------------------------------------------------------------------------------------------------------------------------------------------


 
                                                                              Product thickness x width, in.
              Type                  Capacity tons/year   ------------------------------------------------------------------------  Differential coating
                                                                 Cold roll               Hot roll                  Width
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       Galvanizing
--------------------------------------------------------------------------------------------------------------------------------------------------------
Hot dip........................  350,000................  min. 0.012............  min. 0.050............  min. 34...............  Yes.
                                                          max. 0.080............  max. 0.130............  max. 73...............
--------------------------------------------------------------------------------------------------------------------------------------------------------


 
                                    Unit capacity,
          Identification               tons/year     No. of units     Product size range       Configuration
----------------------------------------------------------------------------------------------------------------
                                                    Slitting
----------------------------------------------------------------------------------------------------------------
Pro-Eco...........................  ..............               1  0.010-0.175 x 72.....  Driven slit and
                                                                    85,000 max wt........   slitter assist
                                                                                            tension unit Kor-
                                                                                            flex leveler.
----------------------------------------------------------------------------------------------------------------


[[Page 17655]]


                                                                      DOFASCO INC.
                                                                 Hamilton, Ont., Canada
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                  Oven dimensions, ft-in.
                                                                    Battery     Ovens per --------------------------------------
        Battery identification                   Type           capacity, tons/   battery               Width,                     Byproducts recovered
                                                                     year                    Height      avg.        Length
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       Cokemaking
--------------------------------------------------------------------------------------------------------------------------------------------------------
1....................................  Gun....................         148,607         25       13-0         17      39-11\1/8\  Tar, ammonium sulfate,
                                                                                                                                  light oil, sulfur.
2....................................  Gun....................         208,050         35       13-0         17      39-11\1/8\
3....................................  Gun....................         267,493         45       13-0         17      39-11\1/8\
4....................................  Gun....................         322,478         53       13-0         17      39-61\1/8\  Tar, anhydrous ammonia,
                                                                                                                                  light oil, hydrogen.
5....................................  Gun....................         322,478         53       13-0         17       39-6\1/8\
6....................................  Compound/underjet......         402,412         35    20-5/32         17       48-1\1/2\
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                             Iron and Steel Plant Facilities
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                    Capacity                                   Hearth
           Identification           ----------------------------------------  Total height,   dia. ft-   Working vol.         Injectants         No. of
                                        tons/day            tons/year            ft-in.         in.         cu. ft                               stoves
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      Blast Furnace
--------------------------------------------------------------------------------------------------------------------------------------------------------
No. 2..............................           2650*  758,300...............         108-9**       20-9          32,600  Oil, oxygen..........          3
No. 3..............................           2750*  846,600...............  108-10\1/2\ **       21-6          31,900  Oil, oxygen..........          2
No. 4..............................           4850*  1.4 million...........    118-9\3/4\**       28-0          56,320  Oil, oxygen..........          3
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Instantaneous smelting rate.
** lip ring to foundation pad.


----------------------------------------------------------------------------------------------------------------
                                                                                       Heat
      Shop Identification              Process         Capacity, tons/     No. of     size,       Gas cleaning
                                                            year          vessels      tons
----------------------------------------------------------------------------------------------------------------
                                               Steelmaking--Oxygen
----------------------------------------------------------------------------------------------------------------
                                 K-OBM.............  2.75 million......          1        330  Scrubber and
                                                                                                screen.
----------------------------------------------------------------------------------------------------------------


 
                                  Capacity, tons/     No. of     Heat size,                         Transformer
            Process                     year         vessels        tons          Gas cleaning      rating, MVA
----------------------------------------------------------------------------------------------------------------
                                        Steelmaking--Electric Arc Furnace
----------------------------------------------------------------------------------------------------------------
Twin-shell, AC.................  1.35 million.....          1             180  Baghouse.........             120
----------------------------------------------------------------------------------------------------------------


 
                                       Total capacity, tons/     No. of     Heat size,
                Type                            year             units         tons             Injectants
----------------------------------------------------------------------------------------------------------------
                                                Vacuum Degassing
----------------------------------------------------------------------------------------------------------------
Tank................................  1.5 million............          1             290  Aluminum for
                                                                                           deoxidation after
                                                                                           vacuum.
----------------------------------------------------------------------------------------------------------------


 
                                                                        Heat size,                  Transformer
        Total capacity, tons/year                No. of units              tons       Injectants    rating, kVA
----------------------------------------------------------------------------------------------------------------
                                                Ladle Metallurgy
----------------------------------------------------------------------------------------------------------------
2.37 million (aim)......................  1 reheat furnace, 2 high-       330 (avg.)         Nil          40,000
                                           flow stirring stations, 2
                                           deslag stations.
1.35 million............................  1 reheat furnace to handle             180           1          20,000
                                           two ladle cars (twin-
                                           shell).
----------------------------------------------------------------------------------------------------------------


 
                                                Ladle
      Capacity, tons/year        Strands   capacity, tons        Product size range, in.             Shroud
----------------------------------------------------------------------------------------------------------------
                                               Continuous Casting
----------------------------------------------------------------------------------------------------------------
2.75 million (aim)............          2             300             8.5 x 30.5-63 x 177-374  Argon
1.35 million..................          1             180             8.5 x 30.5-63 x 177-374  Argon.
----------------------------------------------------------------------------------------------------------------


[[Page 17656]]


 
                                                                No. of   Capacity, tons/
             Mill served                       Type            furnaces    hr/furnace       Hearth dimensions
----------------------------------------------------------------------------------------------------------------
                                               Reheating Furnaces
----------------------------------------------------------------------------------------------------------------
No. 2 hot strip mill................  Walking beam..........          2             400            47.4 x 12.0 m
----------------------------------------------------------------------------------------------------------------


                                         Iron and Steel Plant Facilities
                                             [DOFASCO INC.--Cont'd]
----------------------------------------------------------------------------------------------------------------
                                                                                    No. and configuration
      Nominal width, in.         Capacity, tons/        Finished size,     -------------------------------------
                                       year         thickness x width, in.   Roughing stands    Finishing stands
----------------------------------------------------------------------------------------------------------------
                                                 Hot Strip Mill
----------------------------------------------------------------------------------------------------------------
68............................  3.2 million......      0.060-0.500 x 30-62  2-hi reversing     7-stand, 4-hi, 30
                                                                             with attached      and 60 x 68.
                                                                             edgers.
                                                                            Horizontal 54\1/
                                                                             2\ x 72,
                                                                             vertical 42 x
                                                                             43\1/2\.
----------------------------------------------------------------------------------------------------------------


 
                                           Capacity, tons/    Strip thickness x
              Identification                    year              width, in.                  Acid used
----------------------------------------------------------------------------------------------------------------
                                                    Pickling
----------------------------------------------------------------------------------------------------------------
No. 2....................................         660,000      0.075-0.110 x 24-56  HCl.
No. 3....................................       1,100,000      0.075-0.200 x 24-66  HCl.
No. 4....................................         750,000      0.055-0.275 x 24-62  HCl.
CPCM.....................................       1,000,000    0.075-0.215 x 24-62.5  HCl.
----------------------------------------------------------------------------------------------------------------


 
                                   Nominal width,  Capacity, tons/      Finished size,
          Identification                 in.            year        thickness x width, in.      Configuration
----------------------------------------------------------------------------------------------------------------
                                               Cold Reduction Mill
----------------------------------------------------------------------------------------------------------------
66 in............................              66         260,000    0.0195-0.1650 x 24-61  4-hi, single-stand
                                                                                             reversing.
No. 1 tandem.....................              56         450,000    0.0072-0.0456 x 24-49  4-hi, 5-stand
                                                                                             tandem.
No. 2 tandem.....................              72       1,400,000   0.011-0.0125 x 24-61.5  4-hi, 5-stand
                                                                                             tandem.
CPCM.............................              68       1,000,000    0.008-0.100 x 23.5-62  4-hi, 5-stand
                                                                                             continuous.
----------------------------------------------------------------------------------------------------------------


 
                                           Capacity, tons/    Strip thickness x
              Identification                    year              width, in.                  Fuel type
----------------------------------------------------------------------------------------------------------------
                                              Continuous Annealing
----------------------------------------------------------------------------------------------------------------
No. 2 tower anneal.......................         280,000   0.0077-0.036 x 40 max.  Electric.
No. 1....................................          80,000      0.007-0.025 x 18-48
No. 2....................................         110,000      0.007-0.040 x 18-48
----------------------------------------------------------------------------------------------------------------


 
                                 Capacity, tons/
         Identification               year                Bases
------------------------------------------------------------------------
                             Batch Annealing
------------------------------------------------------------------------
Sheet mill batch...............         575,000  10 x 60-in. radiant
                                                  tube, HNX, single
                                                  stack.
                                                 112 x 72-in. radiant
                                                  tube, HNX, single
                                                  stack.
                                                 48 x 72-in. direct-
                                                  fire, HNX, single
                                                  stack.
                                                 4 x 86-in. direct-fire,
                                                  100% H2, single stack.
Open coil anneal...............          52,200  3 x 108-in. radiant
                                                  tube, HNX, single
                                                  stack.
                                                 11 x 114-in. radiant
                                                  tube, HNX, single
                                                  stack.
                                                 2 x 114-in. direct-
                                                  fire, HNX, single
                                                  stack.
                                                 16 x 114-in. radiant
                                                  tube, HNX, single
                                                  stack.
------------------------------------------------------------------------


 
                                    Nominal
          Identification             width,      Capacity,      Product size, thickness x       Configuration
                                      in.        tons/year             width, in.
----------------------------------------------------------------------------------------------------------------
                                              Temper/Skinpass Mill
----------------------------------------------------------------------------------------------------------------
42 in............................         42         317,200       0.0061-0.0350 x 20-39.5  4-hi, 2-stand.
56 in............................         56         341,000         0.0051-0.0480 x 20-52  4-hi, 2-stand.
No. 1............................         66         372,800           0.018-0.135 x 20-61  4-hi, single-stand.
No. 2............................         66         475,900           0.018-0.135 x 20-61  4-hi, single-stand.
No. 5-56.........................         56         300,000           0.012-0.040 x 24-50  4-hi, single-stand.
----------------------------------------------------------------------------------------------------------------


[[Page 17657]]


 
                                                                  Product thickness x
                 Type                    Capacity,  tons/year          width, in.          Differential coating
----------------------------------------------------------------------------------------------------------------
                                                   Galvanizing
----------------------------------------------------------------------------------------------------------------
No. 1 hot dip........................  170,000................      0.012-0.080 x 24-48  Galvalume/galvanize.
No. 2 hot dip........................  320,000................     0.024-0.0168 x 24-60  Galvanneal/galvanize.
No. 3 hot dip........................  254,000................      0.010-0.080 x 24-52  Galvanneal/galvanize.
No. 4 hot dip........................  305,000................      0.012-0.080 x 24-60  Galvanize.
DJG hot dip..........................  400,000 (Dofasco 50%       0.0157-0.0787 x 24-72  Galvanneal/galvanize.
                                        ownership).
DSG hot dip..........................  450,000 (Dofasco 80%       0.0196-0.0787 x 36-72  Galvanneal/galvanize.
                                        ownership).
Sorevco hot dip......................  125,000 (Dofasco 50%        0.012-0.0787 x 24-50  Wipe coat/galvanize.
                                        ownership).
----------------------------------------------------------------------------------------------------------------


 
                                                                    Capacity, tons/  Product thickness x width,
                               Type                                      year                    in.
----------------------------------------------------------------------------------------------------------------
                                                    Tinplate
----------------------------------------------------------------------------------------------------------------
No. 2 E line......................................................         144,600         0.0055-0.0230 x 18-40
No. 3 E line, tin/chrome..........................................         273,200         0.0055-0.0230 x 58-43
----------------------------------------------------------------------------------------------------------------


 
                                     Unit capacity,    No. of
           Identification               tons/year      units      Product size range          Configuration
----------------------------------------------------------------------------------------------------------------
                                                    Slitting
----------------------------------------------------------------------------------------------------------------
48 in..............................          64,000          1  19-48.................
60 in..............................         350,000          1  0.059-0.100 x 9-64
                                                                 entry to 2 min. out.
62 in..............................         300,000          1  0.100-0.375 x 17-64
                                                                 entry to 2\1/4\ min.
                                                                 out.
----------------------------------------------------------------------------------------------------------------


 
                                                         Capacity, tons/   No. of
                          Unit                                year         units         Product size range
----------------------------------------------------------------------------------------------------------------
                                                  Miscellaneous
----------------------------------------------------------------------------------------------------------------
Prep Line..............................................         320,000          1                   0.005-0.023
No. 1 Cleaning Line....................................         220,000          1                   0.006-0.026
No. 2 Cleaning Line....................................         360,000          1           0.077-0.140 x 18-68
Rewind Line............................................         200,000          1           0.010-0.100 x 25-62
No. 3 Shear Line.......................................          50.000          1        0.0081-0.048 x 12.5-40
No. 5 Shear Line.......................................         150,000          1         0.014-0.135 x 12.5-67
----------------------------------------------------------------------------------------------------------------


                                         Iron and Steel Plant Facilities
                                      [International Steel Group--Cont'd.]
----------------------------------------------------------------------------------------------------------------
                                                                No. of      Heat size,
                Type                   Capacity, tons/year      units          tons             Injectants
----------------------------------------------------------------------------------------------------------------
                                                Vacuum Degassing
----------------------------------------------------------------------------------------------------------------
RH 5-stage steam ejection unit.....  1 million.............            2             340  Argon, aluminum
----------------------------------------------------------------------------------------------------------------


 
                                                                 No. of     Heat size,
                Type                    Capacity, tons/year      units         tons             Injectants
----------------------------------------------------------------------------------------------------------------
                                                Ladle Metallurgy
----------------------------------------------------------------------------------------------------------------
Ladle stirring and Trim Station.....                3,000,000          1             340  Argon, carbon,
                                                                                           aluminum, manganese
                                                                                           and scrap.
CAS-OB..............................                3,000,000          1             340  Argon, oxygen,
                                                                                           nitrogen, carbon
                                                                                           aluminum, manganese,
                                                                                           titanium.
----------------------------------------------------------------------------------------------------------------


 
                                                      Ladle
         Capacity, tons/year           Strands   capacity, tons  Product size range, in.          Shroud
----------------------------------------------------------------------------------------------------------------
                                               Continuous Casting
----------------------------------------------------------------------------------------------------------------
3,000,000...........................          4             340     32-48 x 9 x 400 max.  Argon gas submerged
                                                                                           ladle shroud; Fused
                                                                                           silica and alumina
                                                                                           graphite.
----------------------------------------------------------------------------------------------------------------


 
                                                                No. of   Capacity, tons/
             Mill served                       Type            furnaces    hr/furnace     Hearth dimensions, ft
----------------------------------------------------------------------------------------------------------------
                                               Reheating Furnaces
----------------------------------------------------------------------------------------------------------------
54-in. hot mill.....................  Walking beam..........          2             350                 35 x 155
----------------------------------------------------------------------------------------------------------------


[[Page 17658]]


 
                                                                                  Number and configuration
      Nominal width, in.         Capacity, tons/        Finished size,     -------------------------------------
                                       year         thickness x width, in.   Roughing stands    Finishing stands
----------------------------------------------------------------------------------------------------------------
                                                 Hot Strip Mill
----------------------------------------------------------------------------------------------------------------
54............................  3.8 million......       0.056-0.50 x 23-49  1 4-hi reversing,  7-stand, 4-hi.
                                                                             1 4-hi
                                                                             continuous.
----------------------------------------------------------------------------------------------------------------


 
                                 Nominal width,     Capacity,     Finished size, thickness x
         Identification                in.          tons/year             width, in.             Configuration
----------------------------------------------------------------------------------------------------------------
                                               Cold Reduction Mill
----------------------------------------------------------------------------------------------------------------
No. 7 tandem...................              52         725,000    0.0065-0.0359 x 22\1/2\-48  5-stand, 4-hi
No. 8 tandem...................              52         699,000     0.0193-0.138 x 22\1/2\-48  4-stand, 4-hi
No. 9 continuous tandem........              52         991,000     0.0065-0.060 x 24\1/2\-48  5-stand, 4-hi
----------------------------------------------------------------------------------------------------------------

Attachment 7--The Strange Case of Weirton Steel, MakingSteel.com (April 
25, 2006)

    The attachment is available at the following Web site, http://www.makingsteel.com/weirton.html

Fewer Blast Furnaces, But Higher Productivity

The number of U.S. blast furnaces has dropped from 83 to 43 in the past 
decade, but PCI and natural gas have helped raise output from the 
survivors by 25 percent

By William T. Hogan, S.J., and Frank T. Koelble

    Father William Hogan and Frank Koelble of Fordham University's 
Industrial Economics Research Institute recently conducted an extensive 
study of the current capacity, condition, and outlook of coke ovens and 
blast furnaces in the U.S. In this two-part study, New Steel looks this 
month at blast furnaces and next month at coke ovens and at how 
steelmakers are boosting productivities and responding to new 
environmental regulations.
    A quiet recasting of how the U.S. iron and steel industry makes its 
iron has been yielding major gains in productivity and major benefits 
to the environment. Driving this progress has been not some new, 
``direct'' technology but the tried-and-true blast furnace, the 
dominant ironmaker for more than a century. Today's surviving blast 
furnaces still support some 60 percent of all U.S. steelmaking activity 
by producing much more iron and consuming much less coke than they did 
even a few years ago. And yet, because of impending environmental 
standards on cokemaking, the future of the blast furnaces is anything 
but assured.
    On Jan. 1, 1998, 90 percent of all U.S. cokemaking capacity will 
have to meet much stricter standards under the Clean Air Act. Five 
years later, on Jan. 1, 2003, an initial group of coke batteries will 
have to meet a new public-health standard, which has not yet been 
promulgated.
    As the two deadlines force more coke plants to close, the current 
deficit in domestic coke supply is likely to widen appreciably. This 
could constrain blast-furnace output and offset the recent improvements 
in productivity, which have allowed for fewer furnaces to sustain and 
even increase the supply of steelmaking iron.
    The U.S. blast-furnace population has declined as the U.S. steel 
industry has undergone one of the most drastic restructurings in the 
history of industrial enterprise. At one point, nearly one-third of the 
industry's raw-steel capacity was downsized out of existence.
    The blast-furnace-based integrated steelmakers were hit the 
hardest. Since 1975, the number of integrated mills with blast furnaces 
has fallen from 48 to 21. The number of blast furnaces in the U.S. has 
plummeted from 197 to 43. The most recent shutdown was a year ago, when 
Bethlehem Steel shut down its blast furnace, basic oxygen furnaces 
(BOFs), and electric furnace in Bethlehem, Pa., in Nov. 1995 (Steel 
Forum, Jan. 1995).
    Electric furnaces accounted for 40 percent of U.S. steel production 
last year, up from 28 percent in 1980 and 34 percent in 1985. The 
growth of scrap-using EAFs has meant that ferrous scrap now accounts 
for more of U.S. steelmakers' metallics supply than blast-furnace iron.
    BOFs accounted for 60 percent of steel production last year--
virtually the same as in 1980. BOFs use on average 77-percent blast-
furnace iron and 23-percent scrap. Much of the growth of the electric 
furnaces occurred at the expense of the open hearth, the now extinct 
process once used by integrated plants and phased out completely in 
1991.

The Future Metallics Supply

    The growth in blast-furnace productivity and in the output of 
scrap-based EAFs has helped U.S. steelmakers to have a viable metallics 
supply in recent years. But several trends do not bode well for the 
future supply of metallics feedstocks for American mills:
    (1) Secular trends in U.S. steel demand and production have shifted 
from decline to renewed growth. Increasing quantities of both iron and 
scrap will be needed to support steelmaking over the long term.
    (2) Recent levels of U.S. coke and iron demand already have been 
taxing the limits of coke-oven and blast-furnace capacity.
    (3) U.S. coke ovens are of advancing age. Although steelmakers have 
invested considerably in extending their useful lives, the stricter 
environmental regulations will make the coke ovens' future operation 
increasingly difficult and higher in cost.
    (4) U.S. steelmakers are depending more on imports of coke and 
semifinished steel. This ultimately raises the costs of finished-steel 
output and undermines the U.S. iron and steel industry's long-term 
competitiveness. In the past, U.S. mills have imported coke and slabs 
mainly to alleviate temporary shortfalls in domestic coke, iron, and 
steel production.
    (5) Despite advances in scrap-based steelmaking and in the 
substitution of scrap for iron, electric-furnace melting alone is 
incapable of meeting U.S. steel demand. Minimills are limited by the 
availability and cost of high-quality, low-residual scrap and purchased 
electricity as well as by restrictions on the types and qualities of 
steel it can produce without access to virgin iron units at an 
economical cost.
    For these reasons steelmakers are investigating new, direct methods 
of producing iron, both in solid form as a high-quality complement to 
scrap and in molten form as an alternative to iron

[[Page 17659]]

from the blast furnace. However, at least for the next ten years, U.S. 
mills will implement such ironmaking alternatives on a relatively small 
scale in comparison to U.S. blast-furnace capacity.

Saving 350 Pounds of Coke per Ton of Iron

    U.S. steelmakers currently are operating 40 blast furnaces with a 
combined annual ironmaking capacity of 61.2 million tons. In addition, 
three furnaces are designated as ``standby'' but are unlikely to 
operate again; these have a combined capacity rating of 2.7 million 
tons. This brings the total blast-furnace population to 43 units. (All 
tons in this article are net.)
    U.S. steelmakers have eliminated 27 blast furnaces since mid-1990. 
In June 1990, there were 70 U.S. blast furnaces with a combined 
capacity of 75.3 million tons.
    Most of the blast furnaces shut down in recent years were idled 
before shutdown. The number of idle furnaces has fallen from 35 in 1986 
to three now. The active furnace population declined from 48 in 1986 to 
40 in 1996; the total blast-furnace population declined from 83 to 43 
during this period (see Table 2).
    Despite the shutdown of 27 furnaces since June 1990, the ironmaking 
capacity of U.S. blast furnaces dropped during that period by just 11.4 
million tons--half the capacity represented by the 27 abandoned 
furnaces. The difference was made up by major productivity gains at the 
blast furnaces that continue to operate.
    While closing the least efficient furnaces, steelmakers now are 
concentrating ironmaking output at the fewer, more productive blast 
furnaces. The overall productivity of today's active furnaces is more 
than one-fourth higher than it was a decade ago. Daily output over the 
past decade has risen, on average, from 5.5 to nearly 7.0 tons per 100 
cubic feet of working volume.
    From 1975 to 1995, ironmaking coke needs were cut by more than one-
fourth, saving some 350 pounds of coke per ton of iron. The quantity of 
coke required to smelt one ton of iron fell during this period from 
1,222 pounds (0.611 ton) to 874 pounds (0.437 ton) (Table 3). Although 
the active blast-furnace population declined from 135 to 40 from 1975 
to 1995, average yearly output per furnace increased from 590,000 to 
1.4 million tons.
    Much of the boost in productivity took place recently. It took some 
150 pounds less coke to make a ton of iron in 1995 than it did in 1991.
    One big reason for the higher productivity is that blast-furnace 
operators are injecting more supplemental fuels, primarily natural gas 
and pulverized coal. This not only has reduced coke consumption but 
also has increased iron output by making additional space available in 
the furnace to hold iron ore and other iron-bearing materials instead 
of the coke displaced. Steelmakers also are boosting iron output by:
     Charging scrap metal, direct-reduced iron (DRI), and self-
fluxing iron-ore pellets into the blast furnaces;
     Optimizing such hot-blast conditions as temperature and 
contained oxygen; and
     Using new repair and maintenance techniques, including 
refractory gunning and grouting, to reduce maintenance downtime and 
significantly extend furnace campaigns between major relines, obviating 
the need for standby capacity.
    The combined result of these advances has been not only to sharply 
reduce the coke rate since 1991 but also to boost the aggregate 
capacity of today's 40 still-active furnaces by some 10 million annual 
tons.

Leading Blast Furnaces

    Acme, AK, National, and U.S. Steel are among the leaders in 
boosting blast-furnace productivities. Acme's A blast furnace at South 
Chicago has raised its ironmaking capacity by one-third to a current 
level of 3,200 tons/day. Acme did this by injecting natural gas at a 
rate of 250 pounds/ton of iron, by using self-fluxing pellets, and by 
raising the hot-blast temperature some 100 degrees F to 1,910 degrees 
F. Acme uses the stoves and hot-blast system of the B furnace to 
enhance the hot blast on A; this is a primary reason Acme maintains B 
as standby capacity.
    Acme operators eventually plan to raise throughput on the A furnace 
to more than 4,000 tons/day by injecting additional natural gas and 
adding scrap to the furnace charge. The increased iron output realized 
to date has been accompanied by a decline in the coke rate from just 
above 0.500 to a low of 0.365 ton of coke input ton of iron output.
    AK Steel's two remaining blast furnaces, Amanda at Ashland, Ky., 
and No. 3 at Middletown, Ohio, also have made major productivity gains 
in the past few years. Employees at Amanda have increased the blast-
furnace capacity by 49 percent by using pulverized-coal injection (PCI) 
at a rate of 200 pounds/ton of iron and by adding BOF slag and scrap to 
the iron-ore pellets charged.
    Operators at the No. 3 furnace in Middletown have boosted capacity 
by 54 percent to a current level of 6,000 tons/day partly by injecting 
natural gas at a rate of 215 pounds/ton and using an enhanced burden 
that contains some 350 pounds/ton of hot-briquetted iron (HBI). The 
coke input rates have declined from 0.425 ton per ton of iron output at 
both blast furnaces a few years ago to 0.388 at Amanda in Ashland and 
0.353 at No. 3 in Middletown.
    A recent reline and upgrading of National's B furnace at Granite 
City, Ill., boosted its ironmaking capacity by 50 percent from 2,800 to 
4,200 tons/day. Improvements included a new furnace top, a newly 
designed hearth, increased cooling and advanced process controls at the 
furnace, and a revamp of the stoves to raise the wind rate and hot-
blast temperature.
    U.S. Steel's four remaining blast furnaces at Gary, Ind., have 
raised their ironmaking throughput by an average of 30 percent while 
their combined input coke rate has fallen to 0.340 ton per ton of iron 
output. The productivity gains largely are due to the use of PCI in all 
four furnaces at injection rates that, averaged, currently lead the 
industry.

PCI vs. Natural Gas

    Although they have used supplemental fuel injection for decades, 
U.S. ironmakers in recent years have aggressively increased their 
injection rates of natural gas and, more recently, pulverized coal. All 
40 active blast furnaces today inject either one or a combination of 
fuels, including natural gas, pulverized coal, oil, tar, and coke-oven 
gas. Twenty-five furnaces inject natural gas at rates of up to 250 
pounds per ton of iron produced; 12 furnaces use PCI at rates of up to 
375 pounds/ton.
    The volume of natural gas consumed by U.S. blast furnaces has 
increased nearly 90 percent since 1990, from 56.7 million to 106.5 
million cubic feet annually. The acceptance of natural gas stems from 
its ready availability, its relatively low price in recent years, and 
its adaptability to injection without major capital or startup costs. 
Assuming a starting coke input rate of 0.500 ton per ton of iron output 
(or 1,000 pounds/ton), natural-gas injection has been proven by some 
mills to be capable of displacing about 25 percent of coke 
requirements--and maybe more, depending on the outcome of current tests 
sponsored by the Gas Research Institute.
    Although 250 pounds/ton is the highest natural-gas injection rate 
currently employed, the average rate is a much lower 125 pounds/ton. At 
most blast furnaces, injection is limited to

[[Page 17660]]

between 100 and 200 pounds, because higher volumes unfavorably lower 
flame temperatures and furnace productivity.
    Higher gas-injection rates require increased oxygen enrichment and 
higher hot-blast temperatures; this is not attainable at some blast 
furnaces because of limitations in oxygen processing and the 
capabilities of their hot-blast systems. In such cases, injecting more 
natural gas would require significant investments to upgrade stoves and 
other hot-blast components and to make more oxygen available.
    Compared to natural gas, PCI has a much less significant impact on 
process temperatures and affords a greater opportunity for lowering the 
coke rate. Steel mills have proven that PCI can replace 40 percent of a 
1,000-pound coke requirement and can use lower-cost, lower-grade coals 
in place of the high-grade metallurgical coal needed for cokemaking.
    The disadvantage of PCI is that, unlike natural-gas injection, it 
requires an initial investment of $40-50 million, approximately two-
thirds of which can be required for coal preparation. Some blast-
furnace operators already injecting 150 pounds or more of natural gas 
consider this too high a price to pay for increasing injection rates an 
additional 200 pounds or so by switching to PCI. However, most 
operators recognize that a commitment to natural gas leaves them 
vulnerable to a repeat of past run-ups in gas prices.
    A number of steel companies with PCI projects have benefited from 
creative arrangements to reduce or avoid the financial costs of coal 
preparation. PCI at Inland, for example, is supported by a coal-
preparation facility jointly funded by Inland and Northern Indiana 
Public Service Company. National will obtain pulverized coal for its 
Ecorse, Mich., blast furnaces from Detroit Edison Company.
    Likewise, U.S. Steel reduced its PCI investment at Fairfield, Ala., 
by obtaining injectable coal from a company-owned mine some five miles 
away; the coal is transported in specially designed hopper cars to 
ensure it remains dry. USS/Kobe's PCI unit uses coal pulverizers 
provided by Ohio Edison.
    PCI was developed in the early 1960s by AK Steel's forerunner, 
Armco. The company first used the new technology commercially at the 
Ashland plant's now abandoned Bellefonte blast furnace in 1963--the 
same year Armco completed construction of the Amanda furnace there. Ten 
years later, Armco installed PCI at Amanda and used it intermittently 
at varying injection rates until establishing in recent years an 
average rate of 200 pounds/ton.
    Twelve blast funaces in the U.S. now are equipped for PCI (Table 
4). Their injection rates range from 120 to 375 pounds/ton and average 
254 pounds; blast furnaces can inject as much as 400 pounds/ton, 
industry managers say. Raising PCI rates will help blast furnaces face 
future constraints on cokemaking capacity.
    Next year Gulf States and National Steel at Ecorse plan to install 
PCI. LTV is considering using PCI at its Cleveland and Indiana Harbor, 
Ind., plants, although it has not yet made a final decision.

Startups From 1909 to 1980

    In the past few years, steelmakers have made some of their largest 
productivity gains at some of the oldest blast furnaces. U.S. Steel's 
Gary No. 8 furnace was built in 1909; rebuilt in 1943; disabled in 
April 1995 by an explosion near the top of its stack; and returned to 
service in Aug. 1995 after repairs and an unscheduled reline. No. 8 now 
produces 40 percent more iron than it did a few years ago. Equipped to 
use PCI at a rate of some 235 pounds/ton, the No. 8 blast furnace has 
seen its coke rate decline to the 0.390 level, which makes it more 
efficient at using coke than some of its counterparts built 60-70 years 
later.
    Roughly 75 percent of the active furnace population is under 30 
years of age, and 25 percent over (see Table 1). Startup dates of 
current U.S. blast furnaces range from the first decade of the century 
to 1980.
    Clearly, blast furnaces that have been rebuilt and retrofitted to 
take advantage of technological improvements over the years have proven 
capable of operating indefinitely, and doing so very effectively. As 
the furnace population has been rationalized and the least efficient 
units removed from service, age has become a less relevant indicator of 
useful furnace life. Rather, the most significant influence on future 
decisions to maintain or discontinue blast-furnace ironmaking will 
derive from environmental regulations that result in additional cuts in 
U.S. cokemaking capacity.
    Father William Hogan of the Society of Jesus has been a leading 
authority on the steel industry for the past 45 years. His numerous 
books include Productivity in the Blast Furnace, The Development of 
Heavy Industry in the Twentieth Century, Economic History of the Iron 
and Steel Industry in the United States (a five-volume work), and, most 
recently, Steel in the 21st Century: Competition Forges a New World 
Order (1994). The International Iron and Steel Institute has named only 
two honorary members since its founding in 1967: Fr. Hogan and Herbert 
Gienow.
    Frank Koelble has worked as a steel economist and consultant for 
the past 30 years. His books include Purchased Ferrous Scrap, An 
Analysis of the U.S. Metallurgical Coke Industry, and Direct Reduction 
as an Ironmaking Alternative in the United States. Hogan is director 
and Koelble associate director of the Industrial Economics Research 
Institute of Fordham University (Bronx, N.Y.).

                                                    The 43 Blast Furnaces in the U.S. Today (Table 1)
--------------------------------------------------------------------------------------------------------------------------------------------------------
 Co. & capacity coke capacity  (mil.
            net tpy) \1\                       Plant                    Furnace            Dia. \2\     Rate \3\     Year \4\         (net tpd) \5\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Acme (1.17).........................  S. Chicago, Ill........  A.......................       25'0''        0.365        1964R  3,200
                                      .......................  B.......................       19'8''  ...........        1970R  (1,200)(S)
AK Steel (4.12).....................  Ashland, Ky............  Amanda..................       33'5''        0.388        1963B  5,300
                                      Middletown, Ohio.......  3.......................       29'4''        0.353        1984R  6,000
Bethlehem (8.53)....................  Burns Harbor, Ind......  C.......................       38'3''        0.359        1972B  7,030
                                      .......................  D.......................       35'9''        0.397        1969B  6,590
                                      Sparrows Pt., Md.......  L.......................       44'3''        0.430        1977B  9,750
Geneva (2.45).......................  Geneva, Utah...........  1.......................       26'6''        0.448        1963R  2,275
                                      .......................  2.......................       26'6''        0.450        1963R  2,250
                                      .......................  3.......................       26'6''        0.455        1963R  2,180
Gulf States (1.08)..................  Gadsden, Ala...........  2.......................       26'0''        0.490        1966R  2,965
Inland (5.24).......................  E. Chicago, Ind........  5.......................       26'6''        0.393        1974R  2,500
                                      .......................  6.......................       26'6''        0.448        1976R  2,450
                                      .......................  7.......................       45'0''        0.330        1980B  9,400

[[Page 17661]]

 
LTV (7.68)..........................  Cleveland, Ohio........  C1......................       27'6''        0.413        1972R  3,440
                                      .......................  C5......................       29'6''        0.407        1990R  4,150
                                      .......................  C6......................       29'6''        0.412        1989R  4,350
                                      Ind. Harbor, Ind.......  H3......................       29'6''        0.400        1988R  3,950
                                      .......................  H4......................       32'9''        0.421        1987R  5,150
McLouth \6\ (1.24)..................  Trenton, Mich..........  1.......................       28'6''  ...........        1956B  (3,000)(S)
                                      .......................  2.......................       28'6''        0.475        1958B  3,400
National (6.46).....................  Ecorse, Mich...........  A.......................       30'6''        0.470        1954B  3,450
                                      .......................  B.......................       29'0''        0.463        1951B  3,350
                                      .......................  D.......................      28'10''        0.440        1952B  2,800
                                      Granite City, Ill......  A.......................       27'3''        0.378        1956B  3,900
                                      .......................  B.......................       27'3''        0.380        1961B  4,200
Rouge (2.62)........................  Dearborn, Mich.........  B.......................       20'0''        0.375        1958R  2,275
                                      .......................  C.......................       29'0''        0.385        1959R  4,900
U.S. Steel (12.00)..................  Fairfield, Ala.........  8.......................       32'0''        0.420        1978B  6,000
                                      Gary, Ind..............  4.......................      28'10''        0.368        1950R  3,700
                                      .......................  6.......................       28'0''        0.388        1947R  3,750
                                      .......................  8.......................       28'0''        0.390        1943R  3,800
                                      .......................  13......................       36'6''        0.290        1974B  9,425
                                      Mon Valley, Pa.........  1.......................      28'10''        0.448        1943R  3,230
                                      .......................  3.......................       25'3''        0.443        1930R  2,975
USS/Kobe (2.30).....................  Lorain, Ohio...........  3.......................       28'6''        0.355        1959R  3,600
                                      .......................  4.......................       29'0''        0.453        1962R  2,700
WCI (1.50)..........................  Warren, Ohio...........  1.......................       28'0''        0.470        1980R  4,100
Weirton (2.54)......................  Weirton, WV............  1.......................       27'0''        0.403        1984R  3,770
                                      .......................  3.......................       26'3''        0.418        1983R  3,200
                                      .......................  4.......................       27'0''  ...........        1977R  (3,100)(S)
Wheel-Pitt (2.30)...................  Steubenville, Ohio.....  1N......................       25'0''        0.405        1991R  2,900
                                      .......................  5S......................      23'10''        0.430        1995R  3,400
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Capacity of active blast furnaces, representing potential maximum productive capability.
\2\ Hearth diameter of furnace.
\3\ Coke rate at full ironmaking capacity is expressed as the net tons of coke input per net ton of iron output.
\4\ Years are designated B for the year built and R for the year in which a major rebuild was last completed. Relinings are not considered rebuilds.
\5\ ( ) indicates idle capacity; (S) indicates standby furnaces.
\6\ Plant temporarily idled in March 1996; company has been sold to Hamlin Holdings Inc., with operations scheduled to restart in early 1997.


                              Reducing the Number of U.S. Blast Furnaces (Table 2)
----------------------------------------------------------------------------------------------------------------
                                 Date \1\                                     Active        Idle        Total
----------------------------------------------------------------------------------------------------------------
2/86.....................................................................           48           35           83
5/87.....................................................................           45           32           77
9/88.....................................................................           47           25           72
10/89....................................................................           45           25           70
6/90.....................................................................           46           24           70
8/91.....................................................................           38           19           57
8/92.....................................................................           40           11           51
8/93.....................................................................           40           10           50
8/94.....................................................................           40            9           49
9/95.....................................................................           41            4           45
7/96.....................................................................           40            3           43
----------------------------------------------------------------------------------------------------------------
\1\ Dates of surveys conducted by Industrial Economics Research Institute, Fordham University.


                    Lowering the Coke Rate (Table 3)
                          [Million of net tons]
------------------------------------------------------------------------
                                   U.S. blast-
               Year                   furnace       Coke      Coke rate
                                    production    consumed       \1\
------------------------------------------------------------------------
1975.............................         79.9         48.8        0.611
1976.............................         86.9         51.6        0.594
1977.............................         81.3         48.5        0.597
1978.............................         87.7         51.3        0.585
1979.............................         87.0         50.0        0.574
1980.............................         68.7         39.1        0.569
1981.............................         73.6         40.5         0.55
1982.............................         43.3         23.3        0.538
1983.............................         48.7         26.3        0.540

[[Page 17662]]

 
1984.............................         51.9         27.4        0.528
1985.............................         50.4         26.6        0.508
1986.............................         44.0         22.3        0.507
1987.............................         48.4         25.5        0.527
1988.............................         55.7         29.4        0.528
1989.............................         55.9         29.2        0.522
1990.............................         54.8         27.5        0.502
1991.............................         48.6         24.8        0.510
1992.............................         52.2         25.0        0.479
1993.............................         53.1         23.7        0.446
1994.............................         54.4         24.2        0.445
1995.............................         56.1         24.5        0.437
------------------------------------------------------------------------
\1\ Data are from American Iron and Steel Institute; coke rate indicates
  the tons of coke consumed per ton of blast-furnace iron produced.


                                       Pulverized-Coal Injection (Table 4)
----------------------------------------------------------------------------------------------------------------
                                                                              Year  started    Rate  (lbs./ton)
             Company                     Plant                Furnace              up                \1\
----------------------------------------------------------------------------------------------------------------
AK Steel........................  Ashland............  Amanda..............            1973  200
Bethlehem.......................  Burns Harbor \2\...  C...................            1994  180
                                  ...................  D...................            1994  260
Gulf States Inland..............  Gadsden............  2...................            1997  ...................
                                  E. Chicago.........  5...................            1993  245
                                  ...................  6...................            1993  120
                                  ...................  7...................            1993  320
National........................  Ecorse.............  A...................            1997  350P
                                  ...................  B...................            1997  250P
                                  ...................  D...................            1997  250P
U.S. Steel......................  Fairfield \2\......  8...................            1995  270
                                  Gary...............  4...................            1993  295
                                  ...................  6...................            1993  235
                                  ...................  8...................            1993  235
                                  ...................  13..................            1993  375
USS/Kobe........................  Lorain.............  3...................            1994  315
----------------------------------------------------------------------------------------------------------------
\1\ Injection rate; P is projected; all others are average rates during 1995.
\2\ Plant based on granular-coal injection.

Attachment 9--See How a Blast Furnace Works, AISI

    The attachment is available at the following Web site, http://www.steel.org/AM/Template.cfm?Section=Home&template=/CM/HTMLDisplay.cfm&ContentID=12305

Attachment 10--Ironmaking Process Alternative Screening Study--Volume 
I, Summary Report, Lockwood Greene study for the Department of Energy 
(Oct. 2000)

    The attachment is available at the following Web site, http://
www.ornl.gov/~webworks/cppr/y2001/rpt/122325.pdf

Attachment 11--ISG to Repair, Restart Second Blast Furnace at Weirton 
Unit, American Metal Market (July 12, 2004)

    The attachment is available at the following Web site, http://www.findarticles.com/p/articles/mi_m3MKT/is_28-1_112/ai_n6106694.

Attachment 12--Mittal Steel USA Works to Restore Furnace at Sparrows 
Point, PRNewswire (July 14, 2006)

    The attachment is available at the following Web site, http://www.mittalsteel.com/NR/rdonlyres/20253936-859A-42A8-8DEC-DBC284FDFB6A/1161/LFurnacerecoveryNR071406.pdf.

Attachment 13--Ispat Inland Accelerates Maintenance Outages, Ispat 
Inland Press Release (March 7, 2005)

    The attachment is available at the following Web site, http://metalsplace.com/metalsnews/?a=942

Attachment 14--Weirton Workers Buyout from Online NewsHour, September 
23, 1983

    The attachment is available at the following Web site, http://www.pbs.org/newshour/bb/business/july-dec83/steel_9-23-83.html.

Attachment 15--High Production Costs Hamper AK Steel's Middletown 
Works, Steel Business Briefing (Aug. 10, 2006)

High Production Costs Hamper AK Steel's Middletown Works

Thursday, 10 August 2006
    AK Steel, trying to lower its labour costs, is pointing to a year-
old analyst's report that says slab-making costs at its flagship 
Middletown, Ohio works are nearly the highest on the globe, Steel 
Business Briefing has learned.
    In a communiqu[eacute] sent out earlier this week, AK says a report 
authored by World Steel Dynamics' Peter Marcus, rates Middletown 147th 
out of 151 slab mills in terms of cost per ton of slab. The steelmaker 
is attempting to illustrate that its labour costs have to come down in 
order for the plant to be competitive, not only in North America but 
throughout the globe.
    An AK spokesman tells SBB, however, ``We're not saying all of that

[[Page 17663]]

is employment'' costs. He declined to discuss what the works' per-ton 
slab production costs are.
    Steel industry analyst Charles Bradford says AK likely has a cost 
disadvantage on iron ore alone of about $30/short ton. He says the 
steelmaker also probably has a cost penalty on coal, too. ``Even if 
they could get competitive raw materials, they would have a freight 
penalty,'' he adds. But Bradford notes that care has to be taken in 
such an analysis because there is a cost difference to produce 
commodity hot-rolled coil versus an interstitial-free HR coil.
    In addition to AK, other North American steelmakers at the bottom 
of the Marcus list include Mittal Steel USA's Weirton, West Virginia 
works, which has since shut its hot end, as the world's most costly 
slab producer. Severstal North America's River Rouge works was found to 
be the next highest cost producer in the June 2005 report.

Attachment 16--Dofasco Seals $251m Purchase of Canadian Iron Ore Miner 
QCM, American Metal Market (July 26, 2005)

    The attachment is available at the following Web site, http://www.findarticles.com/p/articles/mi_m3MKT/is_29-2_113/ai_n14842699.

Attachment 17--Force Majeure Clobbers Coke-Short Steelmakers: Weirton 
Eyes Option, Blast Furnace Closure, American Metal Market (Jan. 9, 
2004)

    The attachment is available at the following Web site, http://www.findarticles.com/p/articles/mi_m3MKT/is_1-5_112/ai_112104367.

Attachment 18--Heat Back on Steel Makers, The Plain Dealer (February 
26, 2004)

    The attachment is available at the following Web site, http://cleve.live.advance.net/indepth/steel/index.ssf?/indepth/steel/more/1077791716314950.html.

Attachment 19--Furnace Will Stay Idle at Weirton Steel Mill, Associated 
Press (Dec. 2, 2005)

Friday, December 2, 2005

Furnace Will Stay Idle at Weirton Steel Mill

Bad Site, High Costs and Age Are Cited
By Vicki Smith, Associated Press
    Historically high production costs, an inconvenient location and 
old, inefficient facilities have apparently doomed hopes of 
revitalizing a West Virginia steel mill that once employed 13,000 
people and now has just 1,300 union workers.
    Mittal Steel, the world's largest steelmaker, idled the blast 
furnace at its Weirton division this summer, laying off some 750 
workers for what the Independent Steelworkers Union hoped would be a 
temporary wait for business to pick up. But late Tuesday, Mittal told 
the union that the furnace will remain cold, and as many as 800 jobs 
will be permanently lost.
    ``This was a very difficult decision, since the Independent 
Steelworkers Union and all employees have worked so hard to beat the 
odds trying to maintain steelmaking at Weirton,'' said Louis Schorsch, 
chief executive of Mittal Steel USA. ``However, the structural 
disadvantages of Weirton for these processes entail costs that are too 
high to support competitive downstream facilities.''
    Analyst Michael Locker, president of Locker Associates in New York, 
said the small blast furnace and the steelmaking Mittal has elsewhere 
combined to seal Weirton's fate.
    He said, ``The negative of the consolidation process is that you 
have a comparison going on of plants * * * within the Mittal family. If 
they come out on the short end of the stick, they can't justify 
standing alone--even with all the hopes of cost reduction and efforts 
by the union, which were mighty.
    ``You have good finishing facilities at Weirton that are going to 
survive, but the source of the steel is going to be elsewhere.''
    Analyst Charles Bradford of Bradford Research-Soleil Securities in 
New York, sees Mittal's flexibility as a benefit of the industry's 
global consolidation.
    ``When there is softness in the market, you close the high-cost 
ones first. Mittal, just within North America, has more than a dozen 
blast furnaces, so they have the ability to cut one or two and moderate 
their business.''
    Mittal, a Netherlands company, took control of Weirton in April 
through a $4.5 billion purchase of former owner International Steel 
Group of Richfield, Ohio. ISG had won a bidding war for Weirton, the 
nation's No. 2 tin producer, in bankruptcy court in 2004.
    Weirton's steel-production costs have been among the highest at 
Mittal, which has other mills capable of producing enough steel to meet 
demand through 2006.
    Union spokesman David Gossett said raw materials are at the root of 
Weirton's problem. Weirton does not have a coke plant and must buy it 
at a high cost on the open market.
    Weirton also must buy iron ore and have it shipped by rail. 
Mittal's Cleveland mill can get it shipped in cheaper on Lake Erie.
    Weirton is also struggling with high gas prices in a mill that 
Gossett said doesn't use fuel as efficiently as it could.
    Bradford predicts Weirton's blast furnace will only be restarted if 
and when every other Mittal furnace is at capacity.
    But ISU President Mark Glyptis said he believes Mittal is committed 
to maintaining an operation in Weirton, and that the mill is a key part 
of its strategy to sell tin.
    Schorsch acknowledged in a statement that Mittal wants to 
reconfigure the Weirton plant around tinplate.

Attachment 20--The shipping news & forecast: District ports face many 
competitive challenges, but whether they sink or swim over the long 
term will likely depend on infrastructure improvements, Minneapolis 
Federal Reserve fedgazette (January 2003)

    The attachment is available at the following Web site, http://www.minneapolisfed.org/pubs/fedgaz/03-01/shipping.cfm.

Attachment 21--Weirton Files for Ch. 11; 1,000 Ohio Jobs Affected, 
Associated Press (May 20, 2003)

Tuesday, May 20, 2003

Weirton Steel Files for Ch. 11

1,100 Ohio Jobs Affected

By Vicki Smith
The Associated Press
    Weirton, W.Va.--Weirton Steel Corp., the nation's sixth-largest 
integrated steel maker and No. 2 producer of tin, filed for Chaper 11 
bankruptcy protection Monday.
    The employee-owned company located across the Ohio River from 
Steubenville, Ohio, held on while an import crisis took down dozens of 
competitors, but racked up more than $700 million in losses over five 
years.
    Weirton Steel employs 1,100 Ohioans.
    President and CEO John Walker said the company has obtained a $225 
million financing package that will allow it to keep operating while it 
reorganizes.
    Walker had been in the middle of a plan to cut costs by $120 
million when Weirton Steel's board of directors voted Monday to file 
for bankruptcy.
    ``In the past year, we did everything we could do outside the 
bankruptcy venue before taking this necessary

[[Page 17664]]

step,'' Walker said. ``Our previous initiatives strengthened the 
company, but it became increasingly evident in the current industry 
climate that Chapter 11 reorganization is the only remaining solution 
to address our liability issues.''
    In its bankruptcy filing, Weirton Steel said it had about $654.5 
million in assets and about $1.41 billion in debts as of March 31. The 
company expects to file a reorganization plan within about six months.
    Walker said the recent U.S. Steel-National Steel and International 
Steel Group-Bethlehem Steel mergers, along with a federal $250 million 
loan package awarded to Wheeling-Pittsburgh Steel, left his company 
with no options for expansion.
    Weirton's survival strategy had centered on having the nation's 
largest tin mill. Only U.S. Steel produces more tin-plated steel than 
Weirton, where tin accounts for 38 percent of production and 50 percent 
of revenues.
    Monday's filing surprised a steel analyst who said Weirton Steel 
had seemed to ``be bumping along.''
    But the company was squeezed by rising energy and material costs 
and declining prices for tin products, said Michael Locker, president 
of Locker Associates Inc. and author of the Steel Industry Update 
Newsletter.
    The Independent Steelworkers Union had helped Walker trim $38 
million, approving a one-year contract that cut pay 5 percent, canceled 
a planned raise and froze accrued pension benefits. The company planned 
to cut an additional $34 million by asking the 3,600 active employees 
and 4,600 retirees and dependents for health-care givebacks.
    Retirees, however, had been slow to embrace the request, which 
asked that they help cover the cost of health insurance with a $200 
monthly deduction from their pension checks. They also faced higher co-
payments for prescription drugs and doctor visits. Weirton Steel is 
seeking court approval to create a committee of retirees to address the 
pension issues.
    ISU president Mark Glyptis, who sits on the board of directors, 
opposed the bankruptcy filing.
    ``Today, our senior management effectively gave up and conceded 
defeat,'' he said. ``But the working people of Weirton Steel will never 
surrender. We will not give up.''

Attachment 22--Testimony of Bill Stephans, Division Manager for TMP at 
Mittal Steel USA's Weirton Facility from Hearing Transcript, In the 
Matter Of: Tin and Chromium Coated Steel Sheet from Japan, Inv. No. 
731-TA-860 (Review) (April 27, 2006)

    The attachment is available at the following Web site, http://www.usitc.gov/trade_remedy/731_ad_701_cvd/investigations/2005/tin_chromium_steel/PDF/Tin%20and%20chromium%20steel%2004-27-06.pdf.

Attachment 23--ISU Irked by Mittal Steel's Plan To Shut Weirton 
Galvanizing Line, American Metal Market (Feb. 3, 2006)

ISU Irked by Mittal Steel's Plan To Shut Weirton Galvanizing Line

By Sam Kusic
    PITTSBURGH--Mittal SteeL USA Inc. plans to shut down the 
galvanizing line at its Weirton, W.Va., plant, eliminating 25 to 40 
jobs, and refocus the facility entirely on tinplate products.
    The move comes two months after the company sent official notices 
to workers that the plant's blast furnace, idle for much of last year, 
would be closed permanently.
    ``The (galvanizing) line does not fit into the plans,'' a Mittal 
Steel USA spokesman said, adding that the Wierton line costs more to 
operate than other comparable facilities it owns.
    But Mark Glyptis, president of the Independent Steelworkers Union 
(ISU) at Weirton, said the union had been working toward lowering the 
line's operating costs. `` Its a good line and one that ought to be 
running in this organization,'' he said. ``We did a great deal of work 
to keep that line in operation.''
    The closure, set to take place in two to three months, follows the 
layoff of about 450 people when the Chicago-based company decided to 
indefinitely close its iron and steelmaking operations there in 
November. The hot end previously had been temporarily idled since May, 
when steel prices were falling due to bloated inventories nationwide.
    The closure ends nearly 100 years of steelmaking at the plant, 
which was a founding piece of Weirton Steel Corp. in 1909. In 1984, its 
employees bought the plant, at the time making it the world's largest 
wholly employee-owned company. In 2003, International Steel Group Inc. 
(ISG) purchased the business, and Mittal bought ISG in a multibillion-
dollar deal in April 2005.
    With the closures, only the plant's hot- and cold-rolled mills and 
its tinplating operations remain intact. If there is good news, Glyptis 
said, it's that the union was able to work with the company to keep the 
hot-roll mill open, saving about 200 jobs.
    Mittal had been reviewing whether to shutter the hot-roll mill, but 
ultimately decided against it. ``It's one of the better hot mills in 
operation,'' Glyptis said, adding that as the plant increases its 
tinplating operations, jobs are being added. ``It's kind of a roller 
coaster of good news and not-so-good news.''

Attachment 24--Excerpts of Testimony from Hearing Transcript, In the 
Matter Of: Tin and Chromium Coated Steel Sheet from Japan, Inv. No. 
731-TA-860 (F) (June 29, 2000)

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Attachment 25--Brazil Slab Hits $555/T In Tight Export Market, American 
Metal Market (June 5, 2006)

Brazil Slab Hits $555/T in Tight Export Market

By Diana Kinch

    Vitoria, Brazil--Export prices for steel slab have risen to $555 a 
tonne f.o.b. Brazil and could continue to rise due to tight world 
supplies, Cia. Sider [Atilde][ordm]rgica de Tubar[Atilde][pound]o (CST) 
said late Thursday.
    The slab producer, majority owned by Luxembourg-based steelmaker 
Arcelor SA, said it had just closed a deal to sell slab to a U.S. buyer 
at $555 a tonne, although the tonnage was not disclosed.
    ``Pressure continues on prices following the Chinese pulling out of 
the slab export market due to China's charging of export taxes,'' a CST 
source said.
    (In fact, China apparently has delayed implementation of higher 
export taxes on steel products until at least July 1. But Chinese 
exporters reduced slab and billet offers in May in anticipation of the 
anticipated 5- to 10-percent tax, and as yet there is no sign of any 
rebound in slab exports, according to reports out of China.)
    The other major factor influencing Brazilian export prices is the 
loss of the No. 3 blast furnace at Cia. Sider [Atilde][ordm]rgica 
Nacional (CSN) in January in what was described at the time as a minor 
accident involving a dust collection system. The furnace, responsible 
for 60 percent of CSN's raw steel output of 6 million tonnes per year, 
was expected to return to service in June, but now sources said they 
don't expect it to restart until next month at the earliest.
    CSN reportedly has ordered 1 million tonnes of slab to replace the 
lost production but so far has received only 300,000 tonnes because of 
the market tightness, sources said.
    CST did not confirm whether it sees the delay in bringing on-stream 
its new No. 3 blast furnace as a market factor. The new 2.5-million-
tonne-per-year furnace, which is now more than 90 percent complete, 
will probably be inaugurated in early 2007 because of the impact on a 
recent construction workers' strike at the site, a source close to the 
furnace project said (see story, page 6).

Attachment 26--Wheeling-Pittsburg Makes Loss, Despite Rising Market, 
Steel Business Briefing (May 11, 2006)

Wheeling-Pittsburgh Makes Loss, Despite Rising Market

Thursday, 11 May 2006

    Wheeling-Pittsburgh Corp, the holding company of Wheeling-
Pittsburgh Steel, is reporting a $2.1m net loss for the first quarter, 
compared with $8m in earnings in the first quarter of 2005. The sheet 
steel producer had a $49m cost increase, Steel Business Briefing 
understands.
    Wheeling-Pittsburgh, in talks with Brazil's CSN to form a slab 
rolling alliance, shipped 681,000 short tons in Q1, up substantially 
from 523,000 s.t shipped in Q1 2005 when the company suffered an 
equipment failure. However, sales were made at an average of $739/s.t a 
year ago, declining to $680/s.t in the most recently completed quarter.
    CSN is interested in having its slabs rolled by Wheeling-
Pittsburgh, which has about 600,000 s.t/year of excess hot-rolling 
capacity. CSN is also discussing taking a minority stake in the West 
Virginia steelmaker.
    ``While our first quarter loss represented an improvement from the 
fourth quarter of 2005, it was a disappointment given current demand 
for our products,'' says company CEO James Bradley.

Attachment 27--Esmark To Shut Wheeling-Pitt BF If Bid Succeeds, Steel 
Business Briefing (Aug. 23, 2006)

Esmark To Shut Wheeling-Pitt BF If Bid Succeeds

Wednesday, 23 August 2006

    Esmark, the U.S. service centre consolidator in a proxy fight for 
control of Wheeling-Pittsburgh Steel, plans to shutter the sheet 
producer's Mingo Junction, Ohio blast furnace and rely solely on its 
new electric furnace, in addition to purchased slabs, Steel Business 
Briefing understands.
    In a television interview with a Wheeling, West Virginia television 
station, brothers James and Craig Bouchard of Esmark say they plan to 
shut the BF because it is not cost-effective. SBB could not reach the 
Bouchards for further comment. Esmark has not filed documents with 
regulators detailing its plans.
    The interview preceded Wheeling-Pittsburgh's response to a United 
Steelworkers assertion that the steelmaker violated its labour contract 
by not giving the union the same amount of time to make a competing bid 
for the company that Brazilian suitor CSN was given.
    In a 21 August letter to USW officials, Wheeling-Pittsburgh CEO 
James Bradley notes the union has known about the potential hook-up 
with CSN since early July and that the USW ``has no compelling basis'' 
to request more time given its support of the Esmark proposal. He also 
again criticises the Esmark bid as inferior to CSN's proposal.

Attachment 28--Arcelor Brasil Sets Sights on New Slab Plant, American 
Metal Market (March 22, 2006)

Arcelor Brasil Sets Sights on New Slab Plant

By Diana Kinch

    Vitoria, Brazil--Arcelor Brasil SA is studying the possibility of 
building a 3.5-million-tonne-a-year steel slab-for-export plant, 
probably in conjunction with Cia. Vale do Rio Doce (CVRD), at Anchieta 
in Espirito Santo state.
    The plant would be about 60 kilometers (37 miles) from the existing 
Cia. Sider[Atilde][ordm]rgica de Tubar[Atilde][pound]o (CST)-Arcelor 
Brasil slabmaking and hot-rolled coil plant, company executives said 
during a press conference.
    CVRD announced a month ago that it was seeking partners for a new 
slabmaking venture at Anchieta, in which it would like to hold a 
minority participation. According to the CVRD announcement, the final 
capacity of such a plant would be around 5 million tonnes a year.
    ``We would probably start off with 3 million to 3.5 million tonnes 
per year,'' a spokesman said.
    Usinas Sider[Atilde][ordm]rgicas de Minas Gerais SA (Usiminas), 
based in Belo Horizonte, which also is considering building new 
slabmaking capacity in Brazil, reportedly isn't involved in the 
Anchieta project talks.
    CST-Arcelor Brasil is expected to expand its own steelmaking 
capacity to 9 million tonnes a year by 2012, after which its current 
site at Tubar[Atilde][pound]o will be saturated, the spokesman said.
    CST-Arcelor Brasil later this year will bring on-stream its third 
blast furnace, boosting its annual steelmaking capacity from 5 million 
tonnes currently to 7.5 million tonnes, of which some 5 million tonnes 
will be used for merchant slab production.
    The steelmaker currently produces some 2.5 million tonnes of hot-
rolled coil a year and is expected to double its hot-rolled coil mill 
capacity by 2008 in what should be a relatively economic investment.

Attachment 29--CST to Hike Slab Sales to Dofasco, American Metal Market 
(March 22, 2006)

    The attachment is available at the following Web site, http://www.findarticles.com/p/articles/mi_m3MKT/is_11-3_114/ai_n16119523.

[[Page 17671]]

Attachment 30--Gerdau Acominas Charging Into Slab Mart, American Metal 
Market (June 30, 2006)

Gerdau A[ccedil]ominas Charging Into Slab Mart

By Diana Kinch

    Ouro Branco, Brazil--Gerdau AASec. ominas SA will step up 
production of merchant slab, particularly of special grades, by 
installing its first continuous slab caster.
    The 3-million-tonne-per-year slab caster will operate initially at 
a rate of 1.5 million tonnes annually when it starts up in two years, 
with output directed at the export market, Jorge Gerdau Johannpeter, 
Gerdau SA chairman and president, announced Wednesday.
    Currently, Gerdau AASec. ominas, located at Ouro Branco, Minas 
Gerais state, produces less than 200,000 tonnes of merchant slab per 
year. Most of its current 3 million tonnes of annual raw steel output 
is sold as billet, bloom, wire rod and sections.
    ``The move into slab is in response to market demand,'' Gerdau 
AASec. ominas sales director Alberto Huallem said, adding that talks 
have already taken place with possible clients abroad.
    The move into large-scale slab export will bring Gerdau 
AASec. ominas into direct competition with both Cia. SiderA[ordm]rgica 
de Tubarao and Cia. SiderA[ordm]rgica Nacional, Huallem said. ``But the 
market is big enough for everyone,'' he added.
    The plant is working to boost its raw steel output to 4.5 million 
tonnes per year beginning in the second half of 2007, when its No. 2 
blast furnace using Chinese technology, currently under construction, 
is due on-stream as part of a $1.5-billion investment.
    The extra capacity will be used initially to produce more billet, 
and later slab for export once the slab caster comes on-stream in 2008, 
Gerdau AASec. ominas industrial director Manoel Vitor de MendonASec. a 
said.
    ``The slab caster is a new development, recently approved by the 
board, and will cost $275 million,'' Gerdau Johannpeter said. Proposals 
from potential suppliers are still being considered and the supplier 
should be confirmed by the end of this year.
    Luiz AndrA[eacute] Rico Vicente, Gerdau AASec. ominas president, 
said that the caster will make only high-value grades. ``Our company 
trend is to steer away from commodity grades. We want to produce API 
and interstitial-free grades because the market is hungry for these 
products,'' he said.
    Currently, Gerdau AASec. ominas sells 70 percent of its products 
for export, billet being its principal product. But its relatively new 
sections rolling mill is aimed principally at the domestic construction 
industry.
    Gerdau Johannpeter indicated that the installation of a 3-million-
tonne slab caster is to prepare for possible future expansions of the 
Gerdau AASec. ominas works, which was envisioned as a 10-million-tonne-
per-year steelmaker when it was originally set up 20 years ago by the 
Brazilian state.
    ``We are already studying the possibility of a further expansion to 
6 million or 6.5 million tonnes of crude steel capacity,'' Rico Vicente 
said. ``We are being advised by (Japan's JFE Steel Corp.) on these 
studies, which should be completed by the end of this year.''

 Attachment 31--CSA Steel Project Receives License, American Metal 
Market (July 6, 2006)

CSA Steel Project Receives License

By Diana Kinch

    Rio de Janeiro--Cia. Sider[Atilde][ordm]rgica do 
Atl[Atilde][cent]ntico (CSA), the 4.4-million-tonne-per-year slab-for-
export joint venture to be built in Sepetiba, Rio de Janeiro state, by 
Germany's ThyssenKrupp Stahl AG and Brazil's Cia. Vale do Rio Doce, has 
been granted a preliminary environmental license despite protests by 
local fishermen.
    Notice that Rio de Janeiro state environmental authority 
Funda[Atilde]Sec. [Atilde][pound]o Estadual de Engenharia do Meio 
Ambiente granted the license to CSA was published in the state's 
official gazette Monday.
    The preliminary environmental license basically determines the site 
of the new works and will enable the steelmaking project to proceed 
with equipment purchases. The $2.4-billion CSA is slated for start-up 
in 2008, with all output aimed for export.

Attachment 32--North America at Top of TK's Agenda, American Metal 
Market (August 11, 2006)

North America at Top of TK's Agenda

By Scott Robertson

    Pittsburgh--ThyssenKrupp AG, D[uuml]sseldorf, Germany, is 
sharpening its focus on North America, with plans to take a significant 
share of the U.S. carbon and stainless steel markets.
    The company said Friday it had approved a project development 
budget of $50 million, in effect a feasibility study into building a 
$2.9-billion carbon and stainless steel mill in the southern United 
States.
    ThyssenKrupp executives termed the proposal to build a mill a 
``backup plan'' in case the company's deal to acquire Dofasco Inc., 
Hamilton, Ontario, from Arcelor SA-Mittal Steel Co. NV falls through. 
But it seems likely the project will move forward, given the protective 
measures Arcelor took to secure Dofasco as it attempted to fight off a 
Mittal takeover in early negotiations.
    ``Our first priority is the acquisition of Dofasco,'' Ekkehard D. 
Schulz, executive board chairman of ThyssenKrupp, said. ``But in case 
that is not possible, we have to look for opportunities to develop our 
(North American) strategy.''
    That would appear to make building a mill the likely option, 
especially given that ThyssenKrupp's announcement comes less than a 
week after Gonzalo Urquijo, senior executive vice president and chief 
financial officer of Arcelor, said it appears ``impossible'' for 
Dofasco to be sold given its control by a ``Dutch trust.''
    ThyssenKrupp has been looking to increase its position in North 
America for years and reportedly had eyed the purchase of AK Steel 
Corp., Middletown, Ohio, or some form of tie-up with U.S. Steel Corp., 
Pittsburgh. The company also reportedly looked at acquiring the 
Sparrows Point, Md., plant of Mittal Steel USA Inc. if the Dofasco deal 
fell through.
    Now it has turned its focus to a greenfield project that would 
comprise carbon and stainless steel manufacturing. The plan 
contemplates the construction of a hot strip mill by ThyssenKrupp Steel 
AG that would be used to process slab from ThyssenKrupp's new Cia. 
Siderurgica do Atlantico (CSA) steel mill in Brazil. The new U.S. plant 
also would feature cold-rolling and hot-dip galvanizing capacity for 
carbon flat products. The 1.8-billion-euros ($2.3-billion) carbon plant 
would produce about 4.5 million tonnes of steel per year.
    At the same time, ThyssenKrupp Stainless AG would spend around 500 
million euros ($636 million) to build a melt shop with an annual 
capacity of up to 1 million tonnes of slab, which would be processed on 
the hot strip mill. A cold-rolling facility also would be included, 
which in its initial phase would be designed to produce 325,000 tons of 
cold strip and 100,000 tons of pickled hot strip. In addition, 
ThyssenKrupp Mexinox would be supplied with hot strip from the United 
States as starting material.
    ThyssenKrupp said sites in Alabama, Arkansas and Louisiana are 
under consideration for the project, but gave no timetable as to when 
construction might begin. Locating in that region would place the 
company in a geographic position to supply steel to

[[Page 17672]]

automotive transplant companies throughout the Southeast. It also would 
place the proposed mill in direct competition with SeverCorr LLC, a 
carbon steel mini-mill now under construction in Columbus, Miss., that 
plans to supply the automotive transplants. SeverCorr is on track to 
begin production in late 2007.
    ThyssenKrupp executives stressed that negotiations aimed at 
acquiring Dofasco would continue over the next few days and that the 
mill project would be undertaken only if those negotiations fail.
    ``Dofasco is our top priority,'' said A. Stefan Kirsten, chief 
financial officer and a member of the executive board of ThyssenKrupp. 
``The greenfield strategy is a backup strategy. We need a Nafta 
strategy. If there is any chance that we do not get Dofasco, we do not 
want to be unprepared. We do not want to put our steel strategy into 
the hands of a third party. What we have done is fund a feasibility 
study. We have not agreed to build a steel plant in the U.S. This is a 
prudent company.''
    ThyssenKrupp has been prudent enough, Kirsten said, to review what 
adding such capacity would mean to the U.S. market. He said the U.S. 
steel industry does not produce all the steel the country needs and 
relies on imports to provide anywhere from 8 million to 12 million tons 
per year to make up the difference. ThyssenKrupp's plan, he said, is to 
displace those imports.
    The entire plan could be scrapped, Kirsten said, if ThyssenKrupp 
gets Dofasco. ``If we get Dofasco, we will revisit our strategy,'' he 
said. ``We already have achieved a strong position in stainless (in the 
Nafta region) with our Mexican plant. This strategy (to build a new 
mill) is something we would be sure to revisit when the moment comes.''

Attachment 33--Groundwork Laid For Brazil's Ceara Slab Project, 
American Metal Market (September 1, 2006)

    The attachment is available at the following Web site, http://www.findarticles.com/p/articles/mi_m3MKT/is_49-5_113/ai_n15981124.

Attachment 34--CSN May Lift Slab Capacity Of Two Projects, American 
Metal Market (September 1, 2006)

    The attachment is available at the following Web site, http://www.findarticles.com/p/articles/mi_m3MKT/is_35-1_114/ai_n16726710.

Attachment 35--Brasil's Usiminas Casts Sights Abroad For New Slab 
Project Partner, American Metal Market (August 29, 2006)

    The attachment is available at the following Web site, http://www.findarticles.com/p/articles/mi_m3MKT/is_34-3_114/ai_n16715616.

Attachment 36--Russia's Severstal Wants to Ship More Steel to U.S., 
Reuters (February 2, 2004)

Russia's Severstal Wants To Ship More Steel to U.S.

Reuters, 02.02.04, 7:56 AM ET

    Moscow, Feb 2 (Reuters)--Russian steel giant Severstal  
, fresh from its first acquisition in the United States, said 
on Monday it would ask the U.S. Commerce Department to allow it to ship 
more steel to the United States.
    Last Friday, Severstal completed the acquisition of bankrupt U.S. 
firm Rouge Industries Inc, one of the largest suppliers of steel to car 
giants such as Ford Motor (nyse: F--news--people) Co.
    The purchase, likely to increase Severstal's presence in the global 
car market, was the second move by a major Russian metals company into 
the U.S. market after Norilsk Nickel   took over 
U.S.-based platinum firm Stillwater Mining (nyse: SWC--news--people) 
Co.
    ``We would like to present Rouge Industries (nyse: ROU--news--
people) with a plan for its financial revitalisation by this spring,'' 
said Severstal spokeswoman Olga Yezhova.
    ``As part of this plan we intend to ask the U.S. Commerce 
Department to allow us to supply more steel slab there.''
    Severstal, one of Russia's biggest exporters of steel, had 
previously said foreign firms with U.S. assets tended to obtain such 
permission. The company shipped a mere 2,000 tonnes of steel and 
products to the United States last year.
    But Washington's recent decision to abolish three-year steel import 
duties that the United States slapped on countries including Russia, is 
likely to trigger major export growth from Russia.
    Dmitry Goroshkov, Severstal's sales director, said in a recent 
media interview that Severstal could sell ``hundreds of thousands of 
tonnes of steel'' to the United States this year as a result.
    Yezhova said Severstal had never supplied slab to Rouge before. 
Severstal plans to invest up to $45 million a year in its U.S. partner.
    A U.S. bankruptcy court has allowed the sale of Rouge to Severstal 
for about $285.5 million. Through its U.S. vehicle, Severstal has also 
bought Rouge's 50 percent stake in Double Eagle Steel Coating Company--
the world's largest electro-galvanising line that produces galvanised 
sheet steel for cars. Severstal North America has also acquired Rouge's 
48 percent stake in Spartan Steel Coating, a hot dip galvanizing firm.

Attachment 37--Tin and Chromium Coated Steel Sheet from Japan, Inv. No. 
731-TA-860 (Review), USITC Pub. 3860 (June 2006) at V-8

    The attachment is available at the following Web site, http://hotdocs.usitc.gov/docs/pubs/701_731/pub3860.pdf.

Attachment 38--Tin and Chromium Coated Steel Sheet from Japan, Inv. No. 
731-TA-860 (Review), USITC Pub. 3860 (June 2006) at Table III-8

    The attachment is available at the following Web site, http://hotdocs.usitc.gov/docs/pubs/701_731/pub3860.pdf.

Attachment 39--Mittal Shows Little Interest in Weirton Furnace Sale, 
American Metal Market (May 5, 2006)

Mittal Shows Little Interest in Weirton Furnace Sale

By Scott Robertson

    Pittsburgh--Mitchell A. Hecht, former chief financial officer at 
International Steel Group Inc., wants to buy and restart two idle blast 
furnaces in Weirton, W.Va. Standing in his way, he says, is the 
inattention of the furnaces' current owner, Mittal Steel Co NV., the 
world's largest steelmaker.
    ``I know right now they have bigger fish to fry,'' Hecht said about 
Mittal Steel's efforts to acquire Arcelor SA, the world's second-
largest steel producer. ``But I think once they can focus on this, 
they'll find it's a win-win-win situation'' for Mittal, for Hecht's 
recently formed Hamsphire Steel Investments and for as many as 200 
unemployed steelworkers in West Virginia.
    Hecht confirmed Thursday that he has made an offer to buy the 
former Weirton Steel Corp. blast furnaces from Mittal Steel USA Inc. 
Those furnaces were idled a year ago when Mittal decided to reduce 
steel production to better align it with demand at the time. The 
company never brought back the furnaces--among the highest cost in 
Mittal's arsenal--in-stead redirecting efforts on the Weirton plant's 
tinplate business.
    Hecht envisions starting a new company around the furnaces with an 
initial investment of about $10 million,

[[Page 17673]]

including the purchase price. Additional working capital would be 
needed as well.
    Employees of the new company would receive an unspecified ownership 
interest. Hecht said employee involvement would not be on the order of 
an employee stock ownership plan (ESOP), the likes of which once 
operated at Weirton Steel. ``It's not going to be an ESOP. But I want 
the employees to be involved,'' he said.
    ``The furnaces are in good shape,'' Hecht said. ``They would 
require some prep work to bring them back. We're not talking about 
major dollars initially. Long-term, I think we are looking at 
investment on the level of several tens of millions of dollars.''
    His plan is to sell pig iron produced on-site and invest further in 
alternative methods of ironmaking.
    ``We think it is a win for all parties,'' he said. ``It's a win for 
the (Independent Steelworkers Union) in that it would bring people back 
to work. It's a win for Mittal because it would allow them to enhance 
their good standing with the union, in the community and in the region. 
And it would be a win for us because we think we can make money selling 
pig and trying to invest in alternate methods of ironmaking. I have 
become intrigued over the past year with advances in alternative 
ironmaking that are being made in other countries. I think there are 
some positive things that can be done in that area.''
    The ISU, which represents hourly workers at what is now known as 
Mittal Steel-Weirton, expects 80 jobs would be created by restarting 
one furnace and as many as 200 jobs if both furnaces are operating, 
according to Mark Glyptis, president of the ISU. About 1,000 union jobs 
have been eliminated at Mittal Steel-Weirton since the furnaces were 
idled.
    Glyptis indicated that Mittal Steel appeared unwilling to part with 
the assets.
    Hecht expressed a more positive view. ``I have made an offer to 
them and they have responded to that offer with some questions,'' he 
said. ``I have responded to their questions and we are moving the 
process forward. Frankly, they are thinly staffed at this point and 
their attention is diverted to what they are doing with Arcelor. I 
think once they get through (dealing with Arcelor) and have a chance to 
focus on this offer, they'll see it as something positive.''
    Hecht said he has not heard anything negative from Mittal with 
regard to his offer. ``We are going through the process. Mittal Steel 
USA is a relatively small part, about 10 percent, of the global 
company. Right now (the parent company) has their attention elsewhere. 
I am confident that once they turn their attention and get focused on 
this offer, we'll be able to get something done.''
    Hecht's Hampshire Steel Investments is a private hedge fund that 
aims to invest in steel equities. Before becoming involved with 
International Steel Group, which was acquired by steel mogul Lakshmi N. 
Mittal last year and merged with his other U.S. holdings to form Mittal 
Steel USA, Hecht spent time with Bankers Investment, PaineWebber Inc. 
and as an independent consultant.

Attachment 40--Mittal Plans to Sell Dofasco, Hecht Waits for Weirton, 
Steel Business Briefing (August 16, 2006)

Mittal Still Plans To Sell Dofasco, Hecht Waits for Weirton

Wednesday, 16 August 2006

    Whilst the Arcelor side of the Arcelor Mittal merger maintains that 
Dofasco cannot be sold to ThyssenKrupp, there still appears to be a 
differing opinion coming from the Mittal camp. In fact, that opinion 
seems strong enough that Mittal Steel USA declines to say if one of its 
other tinplate plants will be sold to satisfy regulators' concerns.
    A Mittal Steel USA spokesman tells Steel Business Briefing that no 
decision is forthcoming shortly on whether the Sparrows Point, Maryland 
works or the Weirton, West Virginia works will be sold to comply with 
U.S. Justice Department concerns over a controlling interest in the 
U.S. tin mill products market place.
    He says that's because European management--at least those from the 
Mittal side of the equation--still believe Dofasco can be sold to TK 
under an agreement the two sides forged in January.
    Meanwhile, Mitch Hecht, the former ISG executive who has expressed 
an interest in Weirton's now-shuttered hot end, tells SBB he's still 
interested in the slab making operation and that he is also willing to 
partner with the works' independent union to purchase the rolling 
operations as well if Mittal is keen to sell them.
    Saying the Weirton hot strip mill ``is a very attractive asset,'' 
Hecht says he will bring in financial partners to again combine the 
rolling and finishing operations with the hot end to make the works 
profitable.
    He adds, however, ``We're sitting here waiting to see which way 
Mittal will go'' with the sale of one of the properties.

Attachment 41--``HHI Impact of Alternative Divestiture Scenarios''

Arcelor-Mittal Merger--Competitive Impact for U.S. Tin Consumers

HHI Impact of Alternative Divestiture Scenarios

    We calculate the HHI for the U.S. tin market using market shares 
reported in the DOJ Competitive Impact Statement. Market shares for the 
two foreign suppliers (Rasselstein and Corus) was estimated using U.S. 
import statistics.
    Prior to the Mittal-Arcelor merger we estimate the market shares as 
follows:

------------------------------------------------------------------------
                                                                 Market
                                                                 share
                                                               (percent)
------------------------------------------------------------------------
USS..........................................................         44
Mittal.......................................................         31
Ohio Coatings................................................          8
Dofasco-Arcelor-EU...........................................          6
Rasselstein..................................................          5
Corus........................................................          6
------------------------------------------------------------------------

    Mittal's market share (31%) can be divided into Weirton (18.6%) and 
Sparrows Point (12.4%). Arcelor's market share can be divided into 
Dofasco (4.0%) and Arcelor-EU (2.0%).
    In the following pages we present a separate HHI calculation for 
each potential divestiture. Given that certain options involve the high 
likelihood that a U.S. firm will fail, we are forced to make an 
assumption about how the surviving firms' market share will be 
reallocated. For simplicity we assume that the surviving firms' market 
share will grow in proportion to their current share.
    For instance, if Weirton is divested by Mittal-Arcelor but 
subsequently fails, 18.6% of the tin market will disappear and 81.4% 
survives. We assume that the surviving firms' market share will remain 
in proportion to their current shares. That is, USS's current market 
share is 44%; our assumption implies that USS's market share following 
the failure of Weirton would be 44%/(81.4%) = 54.05%
    We stress that our assumption is very optimistic (i.e., pro-
competitive) as it implies the foreign suppliers' market share also 
increases. Given the U.S. tin industry's protectionist history, such 
market share increases could easily result in an antidumping petition 
against foreign suppliers. As exemplified by the 2000 tin case against 
Japan antidumping actions often result in the foreign country exiting 
the U.S. market. This prospect makes it even more imperative that the 
DOJ pursue a divestiture that maximizes that chance that all U.S. 
production will remain viable.

[[Page 17674]]



                   HHI Tin Market--Summary Tabulation
                     [Eastern U.S. Regional Market]
------------------------------------------------------------------------
                                                             Loss of Mkt
                                                    HHI        size (%)
------------------------------------------------------------------------
Market Condition (Pre-merger).................        3,058  ...........
Market Condition (Post-merger)--No Divestiture        3,446  ...........
                                               -------------
    Change in HHI.............................          388  ...........
Market Condition (Post-merger)--Weirton
 Divested (independent):
    Weirton Survives (highly unlikely)........        2,761  ...........
    Weirton Fails (very likely)...............        3,645         18.6
Market Condition (Post-merger)--Sparrows Point
 Divested (independent):
    Weirton Survives (unlikely beyond the very        2,836  ...........
     short term)..............................
    Weirton Fails (likely within a few years).        3,421         18.6
Market Condition (Post-merger)--Sparrows Point
 Divested (independent):
    S-Point TMP Operations Survive............        2,836  ...........
    S-Point TMP Operations Shuttered..........        3,495         12.4
Market Condition (Post-merger)--Sparrows Point
 Divested (to USS):
    S-Point TMP Operations Survive............        3,927  ...........
    S-Point TMP Operations Shuttered..........        3,495         12.4
Market Condition (Post-merger)--Dofasco               3,182  ...........
 Divested (independent)
Market Condition (Post-merger)--Dofasco               3,222  ...........
 Divested to TK
------------------------------------------------------------------------

Prepared by WFG
Competitive Impact Analysis: Alternative Remedies

HHI Tin Market

Eastern U.S. Regional Market

                      Market Condition (Pre-Merger)
------------------------------------------------------------------------
                                             Mkt share       MShr-Sqr
------------------------------------------------------------------------
USS.....................................             44%         0.19360
Mittal..................................             31%         0.09610
Ohio Coatings...........................              8%         0.00640
Dofasco-Arcelor-EU......................              6%         0.00360
Rasselstein.............................              5%         0.00245
Corus...................................              6%         0.00366
HHI.....................................           3,058  ..............
------------------------------------------------------------------------


             Market Condition (Post-Merger)--No Divestiture
------------------------------------------------------------------------
                                             Mkt share       MShr-Sqr
------------------------------------------------------------------------
USS.....................................             44%         0.19360
Mittal-Arcelor..........................             37%         0.13690
Ohio Coatings...........................              8%         0.00640
Rasselstein.............................              5%         0.00245
Corus...................................              6%         0.00366
                                                    100%  ..............
HHI.....................................           3,430  ..............
------------------------------------------------------------------------


                            Key Market Shares
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Weirton.................................................           18.6%
Sparrows Point..........................................           12.4%
Dofasco.................................................            4.0%
Arcelor-EU..............................................            2.0%
------------------------------------------------------------------------


                         Market Condition (Post-Merger)--Weirton Divested (Independent)
----------------------------------------------------------------------------------------------------------------
                                                         Weirton survives                  Weirton fails
                                                 ---------------------------------------------------------------
                                                     Mkt share       MShr-Sqr        Mkt share       MShr-Sqr
----------------------------------------------------------------------------------------------------------------
USS.............................................           44.0%         0.19360             54%         0.29218
Mittal-Arcelor..................................           18.4%         0.03386             23%         0.05110
Ohio Coatings...................................            8.0%         0.00640             10%         0.00966
Weirton.........................................           18.6%         0.03460  ..............  ..............
Rasselstein.....................................              5%         0.00245              6%         0.00370

[[Page 17675]]

 
Corus...........................................              6%         0.00366              7%         0.00552
HHI.............................................           2,746  ..............           3,622  ..............
----------------------------------------------------------------------------------------------------------------

Eastern U.S. Regional Market

                      Market Condition (Post-Merger)--Sparrows Point Divested (Independent)
----------------------------------------------------------------------------------------------------------------
                                                         Weirton Survives                  Weirton fails
                                                 ---------------------------------------------------------------
                                                     Mkt share       MShr-Sqr        Mkt share       MShr-Sqr
----------------------------------------------------------------------------------------------------------------
USS.............................................           44.0%         0.19360             54%         0.29218
Mittal-Arcelor..................................           24.6%         0.06052            7.4%         0.00543
Ohio Coatings...................................            8.0%         0.00640             10%         0.00966
Sparrows Point..................................           12.4%         0.01538             15%         0.02321
Rasselstein.....................................              5%         0.00245              6%         0.00370
Corus...........................................              6%         0.00366              7%         0.00552
HHI.............................................           2,820  ..............           3,397  ..............
----------------------------------------------------------------------------------------------------------------


                      Market Condition (Post-Merger)--Sparrows Point Divested (Independent)
----------------------------------------------------------------------------------------------------------------
                                                   S-Point TMP operations remain      S-Point TMP operations
                                                           in operation                      shuttered
                                                 ---------------------------------------------------------------
                                                     Mkt share       MShr-Sqr        Mkt share       MShr-Sqr
----------------------------------------------------------------------------------------------------------------
USS.............................................           44.0%         0.19360             50%         0.25229
Mittal-Arcelor..................................           24.6%         0.06052             28%         0.07886
Ohio Coatings...................................            8.0%         0.00640              9%         0.00834
Sparrows Point..................................           12.4%         0.01538  ..............         0.00000
Rasselstein.....................................              5%         0.00245              6%         0.00319
Corus...........................................              6%         0.00366              7%         0.00477
HHI.............................................           2,820  ..............           3,475  ..............
----------------------------------------------------------------------------------------------------------------


                        Market Condition (Post-Merger)--Sparrows Point Divested (to USS)
----------------------------------------------------------------------------------------------------------------
                                                   S-Point TMP operations remain      S-Point TMP operations
                                                           in operation                      shuttered
                                                 ---------------------------------------------------------------
                                                     Mkt share       MShr-Sqr        Mkt share       MShr-Sqr
----------------------------------------------------------------------------------------------------------------
USS.............................................           56.4%         0.31810             50%         0.25229
Mittal-Arcelor..................................           24.6%         0.06052             28%         0.07886
Ohio Coatings...................................            8.0%         0.00640              9%         0.00834
                                                  ..............  ..............              0%         0.00000
Rasselstein.....................................              5%         0.00245              6%         0.00319
Corus...........................................              6%         0.00366              7%         0.00477
HHI.............................................           3,911  ..............           3,475  ..............
----------------------------------------------------------------------------------------------------------------


     Market Condition (Post-Merger)--Dofasco Divested (Independent)
------------------------------------------------------------------------
                                             Mkt share        MSr-Sqr
------------------------------------------------------------------------
USS.....................................            44%0         0.19360
Mittal-Arcelor..........................             33%         0.10890
Ohio Coatings...........................              8%         0.00640
Rasselstein.............................              5%         0.00245
Corus...................................              6%         0.00366
Dofasco.................................              4%         0.00160
HHI.....................................           3,166  ..............
------------------------------------------------------------------------


    Market Condition (Post-Merger)--Dofasco Divested to ThyssenKrupp
------------------------------------------------------------------------
                                             Mkt share        MSr-Sqr
------------------------------------------------------------------------
USS.....................................             44%         0.19360

[[Page 17676]]

 
Mittal-Arcelor..........................             33%         0.10890
Ohio Coatings...........................              8%         0.00640
Rasselstein-Dofasco (TK)................              9%         0.00801
Corus...................................              6%         0.00366
HHI.....................................           3,206  ..............
------------------------------------------------------------------------

Prepared by WFG
Competitve Impact Analysis: Alternative Remedies

HHI Tin Market

Eastern U.S. Regional Market

                      Market Condition (Pre-Merger)
------------------------------------------------------------------------
                                          Mkt share CHED
                                          H='1'>MShr-Sqr
---------------------------------------------------------
USS.....................................             44%         0.19360
Mittal..................................             31%         0.09610
Ohio Coatings...........................              8%         0.00640
Dofasco-Arcelor-EU......................              6%         0.00360
Rasselstein.............................              5%         0.00245
Corus...................................              6%         0.00366
HHI.....................................           3,058  ..............
------------------------------------------------------------------------


             Market Condition (Post-Merger)--No Divestiture
------------------------------------------------------------------------
                                             Mkt share       MShr-Sqr
------------------------------------------------------------------------
USS.....................................             44%         0.19360
Mittal-Arcelor..........................             37%         0.13690
Ohio Coatings...........................              8%         0.00640
Rasselstein.............................              5%         0.00245
Corus...................................              6%         0.00366
                                                    100%  ..............
HHI.....................................           3,430  ..............
------------------------------------------------------------------------


                            Key Market Shares
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Weirton.................................................           18.6%
Sparrows Point..........................................           12.4%
Dofasco.................................................            4.0%
Arcelor-EU..............................................            2.0%
------------------------------------------------------------------------


                         Market Condition (Post-Merger)--Weirton Divested (Independent)
----------------------------------------------------------------------------------------------------------------
                                                         Weirton survives                  Weirton fails
                                                 ---------------------------------------------------------------
                                                     Mkt share       MShr-Sqr        Mkt share       MShr-Sqr
----------------------------------------------------------------------------------------------------------------
USS.............................................           44.0%         0.19360             54%         0.29218
Mittal-Arcelor..................................           18.4%         0.03386             23%         0.05110
Ohio Coatings...................................            8.0%         0.00640             10%         0.00966
Weirton.........................................           18.6%         0.03460  ..............  ..............
Rasselstein.....................................              5%         0.00245              6%         0.00370
Corus...........................................              6%         0.00366              7%         0.00552
HHI.............................................           2,746  ..............           3,622  ..............
----------------------------------------------------------------------------------------------------------------


                      Market Condition (Post-Merger)--Sparrows Point Divested (Independent)
----------------------------------------------------------------------------------------------------------------
                                                         Weirton survives                  Weirton fails
                                                 ---------------------------------------------------------------
                                                     Mkt share       MShr-Sqr        Mkt share       MShr-Sqr
----------------------------------------------------------------------------------------------------------------
USS.............................................           44.0%         0.19360             54%         0.29218
Mittal-Arcelor..................................           24.0%         0.06052            7.4%         0.00543
Ohio Coatings...................................            8.0%         0.00640             10%         0.00966

[[Page 17677]]

 
Sparrows Point..................................           12.4%         0.01538             15%         0.02321
Rasselstein.....................................              5%         0.00245              6%         0.00370
Corus...........................................              6%         0.00366              7%         0.00552
HHI.............................................           2,820  ..............           3,397  ..............
----------------------------------------------------------------------------------------------------------------


                      Market Condition (Post-Merger)--Sparrows Point Divested (Independent)
----------------------------------------------------------------------------------------------------------------
                                                   S-Point TMP operations remain      S-Point TMP operations
                                                           in operation                      shuttered
                                                 ---------------------------------------------------------------
                                                     Mkt share       MShr-Sqr        Mkt share       MShr-Sqr
----------------------------------------------------------------------------------------------------------------
USS.............................................           44.0%         0.19360             50%         0.25229
Mittal-Arcelor..................................           26.6%         0.06052             28%         0.07886
Ohio Coatings...................................            8.0%         0.00640              9%         0.00834
Sparrows Point..................................           12.4%         0.01538  ..............         0.00000
Rasselstein.....................................              5%         0.00245              6%         0.00319
Corus...........................................             60%         0.00366               7         0.00477
HHI.............................................           2,820  ..............           3,475  ..............
----------------------------------------------------------------------------------------------------------------


                        Market Condition (Post-Merger)--Sparrows Point Divested (to USS)
----------------------------------------------------------------------------------------------------------------
                                                   S-Point TMP operations remain      S-Point TMP operations
                                                           in operation                      shuttered
                                                 ---------------------------------------------------------------
                                                     Mkt share       MShr-Sqr        Mkt share       MShr-Sqr
----------------------------------------------------------------------------------------------------------------
USS.............................................           56.4%         0.31810             50%         0.25229
Mittal-Arcelor..................................           24.6%         0.06052             28%         0.07886
Ohio Coatings...................................            8.0%         0.00640              9%         0.00834
                                                  ..............  ..............              0%         0.00000
Rasselstein.....................................              5%         0.00245              6%         0.00319
Corus...........................................              6%         0.00366              7%         0.00477
HHI.............................................           3,911  ..............           3,475  ..............
----------------------------------------------------------------------------------------------------------------


     Market Condition (Post-Merger)--Dofasco Divested (Independent)
------------------------------------------------------------------------
                                             Mkt share       MShr-Sqr
------------------------------------------------------------------------
USS.....................................             44%         0.19360
Mittal-Arcelor..........................             33%         0.10890
Ohio Coatings...........................              8%         0.00640
Rasselstein.............................              5%         0.00245
Corus...................................              6%         0.00366
Dofasco.................................              4%         0.00160
HHI.....................................           3,166  ..............
------------------------------------------------------------------------


    Market Condition (Post-Merger)--Dofasco Divested to ThyssenKrupp
------------------------------------------------------------------------
                                             Mkt share       MShr-Sqr
------------------------------------------------------------------------
USS.....................................             44%         0.19360
Mittal-Arcelor..........................             33%         0.10890
Ohio Coatings...........................              8%         0.00640
Rasselstein-Dofasco (TK)................              9%         0.00801
Corus...................................              6%         0.00366
HHI.....................................           3,206  ..............
------------------------------------------------------------------------

Attachment 42--``Probability That Divestiture Will Improve 
Competition''

[[Page 17678]]

[GRAPHIC] [TIFF OMITTED] TN09AP07.006


[[Page 17679]]


[GRAPHIC] [TIFF OMITTED] TN09AP07.007


[[Page 17680]]



Attachment 43--ITC Prehearing Staff Report, Certain Carbon Steel 
Products From Australia, Belgium, Brazil, Canada, Finland, France, 
Germany, Japan, Korea, Mexico, Poland, Romania, Spain, Sweden, Taiwan, 
and the United Kingdom, Inv. Nos. AA1921-197 (Second Review); 701-TA-
319, 320, 325-328, 348, and 350 (Second Review); 701-TA-319, 320, 325-
328, 348, and 350 (Second Review); and 731-TA-573, 574, 576, 578, 582-
587, 612, and 614-618 (Second Review) (September 25, 2006) at Tables 
CORE-III-8 and CTL III-9

Public Version

UNITED STATES INTERNATIONAL TRADE COMMISSION

Washington, DC

Certain Carbon Steel Products From Australia, Belgium, Brazil, Canada, 
Finland, France, Germany, Japan, Korea, Mexico, Poland, Romania, Spain, 
Sweden, Taiwan, and the United Kingdom

    Prehearing Report to the Commission on Investigation Nos. AA1921-
197 (Second Review); 701-TA-319, 320, 325-328, 348, and 350 (Second 
Review); and 731-TA-573, 574, 576, 578, 582-587, 612, and 614-618 
(Second Review).

    Staff assigned:

 Elizabeth Haines, Investigator (205-3200),
 Michael Szustakowski, Investigator (205-3188),
 Gerald Houck, Industry Analyst (205-3392),
 Heather Sykes, Industry Analyst (205-3436),
 Kelly Clark, Economist (205-3166),
 Mary Klir, Accountant (205-3247),
 June Brown, Attorney (205-3042),
 David Fishberg, Attorney (708-2614),
 Douglas Corkran, Supervisory Investigator (205-3057).
    Staff gratefully acknowledge the contributions of the following 
individuals:
    Mara Alexander; Gabriel Ellenberger; Lita David-Harris; Carolyn 
Holmes; Steven Hudgens; Susan Louie; Mark Rees; Fred Ruggles; Lemuel 
Shields; and Darlene Smith in January-June 2006 than in January-June 
2005. Ten of the 18 producers operating continuously from 2000 to 2003 
reported better operating profits while the other eight producers 
reported a decline in operating profits. As discussed in table CORE-
III-9, data for 2003 are impacted by limitations in information 
available to * * * regarding the operations of * * *.

         Table CORE-III-8--Corrosion-Resistant Steel: Results of Operations of U.S. Producers, 2000-05, January-June 2005, and January-June 2006
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                              Fiscal year                                            January-June
                  Item                   ---------------------------------------------------------------------------------------------------------------
                                              2000          2001          2002          2003          2004          2005          2005          2006
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                  Quantity (short tons)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total net sales.........................   20,077,026    19,561,875    20,890,841    19,290,267    21,916,288    20,389,803    10,108,023    11,349,571
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                     Value ($1,000)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total net sales.........................   11,060,117     9,766,640    10,955,956    10,324,538    14,847,617    14,495,023     7,428,201     8,258,842
COGS....................................   10,487,543     9,843,595    10,699,028     9,711,362    12,768,311    13,267,367     6,587,267     7,606,927
Gross profit (loss).....................      572,574       (76,955)      256,928       613,176     2,079,306     1,277,656       840,934       651,915
SG&A expenses...........................      424,888       412,539       435,110       459,562       456,432       448,921       215,626       224,073
Operating income (loss).................      147,686      (489,494)     (178,182)      153,614     1,622,874       778,735       625,308       427,842
Interest expense........................      270,797       281,813       219,501       184,218       190,862       147,755        71,222        79,063
CDSOA income............................            0         8,240         5,125        14,416        17,235         6,593             0             0
Other income (expense)..................       50,357         6,953        29,850       (58,033)      (95,415)     (101,884)      (54,609)      (45,711)
Net income (loss).......................      (72,754)     (756,114)     (362,708)      (74,221)    1,353,832       535,689       499,477       303,068
Depreciation............................      629,065       632,189       556,215       433,982       413,178       396,836       204,831       213,797
Cash flow...............................      556,311      (123,925)      193,507       359,761     1,767,010       932,525       704,308       516,865
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              Ratio to net sales (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
COGS:
    Raw materials.......................         42.1          45.3          44.3          49.4          51.9          55.8          55.0          58.3
    Direct labor........................         11.3          11.5           9.3           9.8           8.0           7.9           7.8           7.7
Other factory costs.....................         41.5          44.0          44.0          34.9          26.0          27.9          25.9          26.1
                                         ---------------------------------------------------------------------------------------------------------------
        Total COGS......................         94.8         100.8          97.7          94.1          86.0          91.5          88.7          92.1
--------------------------------------------------------------------------------------------------------------------------------------------------------
Gross profit (loss).....................          5.2          (0.8)          2.3           5.9          14.0           8.5          11.3           7.9
SG&Aexpenses............................          3.8           4.2           4.0           4.5           3.1           3.1           2.9           2.7
Operating income (loss).................          1.3          (5.0)         (1.6)          1.5          10.9           5.4           8.4           5.2
Net income (loss).......................         (0.7)         (7.7)         (3.3)         (0.7)          9.1           3.7           6.7           3.7
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               Unit value (per short ton)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total net sales.........................         $551          $499          $524          $535          $677          $711          $735          $728
COGS:
    Raw materials.......................          232           226           233           264           352           396           404           424
    Direct labor........................           62            58            49            52            54            56            57            56
Other factory costs.....................          228           220           231           187           176           198           191           190
                                         ---------------------------------------------------------------------------------------------------------------
        Total COGS......................          522           503           512           503           583           651           652           670
--------------------------------------------------------------------------------------------------------------------------------------------------------
Gross profit (loss).....................           29            (4)           12            32            95            60            83            57

[[Page 17681]]

 
SG&Aexpenses............................           21            21            21            24            21            22            21            20
Operating income (loss).................            7           (25)           (9)            8            74            38            62            38
Net income (loss).......................           (4)          (39)          (17)           (4)           62            26            49            27
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                Number of firms reporting
--------------------------------------------------------------------------------------------------------------------------------------------------------
Operating losses........................            5            10             7             6             1             4             2             6
Data....................................           18            19            19            19            19            19            19            19
--------------------------------------------------------------------------------------------------------------------------------------------------------
Souce: Compiled from data submitted in response to Commission questionnaires.

    The industry-wide financial results improved sharply from 2003 to 
2004. Per-unit operating income substantially improved as the increase 
in per-unit net sales values ($142 per short ton) was greater than the 
combined effects of an increase in unit cost of goods sold (``COGS'') 
($79 per short ton) and a decline in selling, general, and 
administrative (``SG&A'') expenses ($3 per short ton). The 2003 to 2004 
improvements in operating income was reflected in 18 of 19 reporting 
firms' financial data.
    The domestic industry's total and per-unit operating income again 
declined from 2004 to 2005 and was lower in January--June 2006 than in 
January--June 2005; however, 2005 operating income was still higher 
than in 2000-03. In 2005, the increase in per-unit net sales values 
($33 per short ton) was smaller than the increase in COGS ($68 per 
short ton) and SG&A expenses ($1 per short ton). The overall decline 
from 2004 to 2005 was experienced by the majority (17 of 19 producers) 
of the industry.
    Per-unit net sales values were lower ($7 per short ton) while per-
unit costs and expenses were higher ($17 per short ton) in January--
June 2006 as compared to January--June 2005. The overall decline.

            Table CTL-III-9--CTL Plate: Results of Operations of U.S. Mills and Processors, 2000-05, January-June 2005, and January-June 2006
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                              Fiscal year                                            January-June
                  Item                   ---------------------------------------------------------------------------------------------------------------
                                              2000          2001          2002          2003          2004          2005          2005          2006
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                  Quantity (short tons)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total net sales.........................    4,747,122     4,308,921     4,769,611     5,263,108     5,691,810     5,762,736     2,859,260     3,389,491
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                     Value ($1,000)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total net sales.........................    1,731.020     1,467,318     1,627,675     1,906,404     3,609,040     4,213,623     2,202,648     2,486,482
--------------------------------------------------------------------------------------------------------------------------------------------------------
COGS....................................    1,782,446     1,562,873     1,644,041     1,903,185     2,711,059     3,018,911     1,548,290     1,782,419
Gross profit (loss).....................      (51,426)      (95,555)      (16,366)        3,219       897,981     1,194,712       654,358       704,423
SG&A expenses...........................      111,043       104,762        97,260       136,865       104,440       122,899        58,079        70,415
Operating income (loss).................     (162,469)     (200,317)     (113,626)     (133,646)      793,541     1,071,813       596,279       634,009
Interest expense........................       40,553        50,098        43,096        44,338        43,747        45,283        18,184        15,062
CDSOA income............................            0           827           146         1,508         2,677           413             0             0
Other income/(expense)..................        5,466        (1,824)       19,237        18,185        17,809        23,559          (382)       10,989
Net income/(loss).......................     (197,556)     (251,412)     (137,339)     (158,291)      770,281     1,050,502       577,713       629,935
Depreciation............................      109,461       114,677       127,946       121,969       116,779       116,072        58,565        60,141
Cash flow...............................      (88,095)     (136,735)       (9,393)      (36,322)      887,060     1,166,574       636,278       690,077
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              Ratio to net sales (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
COGS:
    Raw materials.......................         44.0          43.7          43.9          48.8          46.6          45.8          44.8          43.7
    Direct labor........................         14.7          14.4          12.2          11.8           5.5           5.0           4.4           5.2
    Other factory costs.................         44.2          48.4          44.9          39.3          23.0          20.8          21.1          22.8
                                         ---------------------------------------------------------------------------------------------------------------
        Total COGS......................        103.0         106.5         101.0          99.8          75.1          71.6          70.3          71.7
--------------------------------------------------------------------------------------------------------------------------------------------------------
Gross profit (loss).....................         (3.0)         (6.5)         (1.0)          0.2          24.9          28.4          29.7          28.3
SG&A expenses...........................          6.4           7.1           6.0           7.2           2.9           2.9           2.6           2.8
Operating income (loss).................         (9.4)        (13.7)         (7.0)         (7.0)         22.0          25.4          27.1          25.5
Net income (loss).......................        (11.4)        (17.1)         (8.4)         (8.3)         21.3          24.9          26.2          25.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               Unit value (per short ton)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total net sales.........................         $365          $341          $341          $362          $634          $731          $770          $734
                                         ---------------------------------------------------------------------------------------------------------------
COGS:
    Raw materials.......................          161           149           150           177           295           335           345           320
    Direct labor........................           54            49            41            43            35            37            34            38
    Other factory costs.................          161           165           153           142           146           152           162           167
                                         ---------------------------------------------------------------------------------------------------------------

[[Page 17682]]

 
        Total COGS......................          375           363           345           362           476           524           542           526
--------------------------------------------------------------------------------------------------------------------------------------------------------
Gross profit (loss).....................          (11)          (22)           (3)            1           158           207           229           208
SG&A expenses...........................           23            24            20            26            18            21            20            21
Operating income (loss).................          (34)          (46)          (24)          (25)          139           186           209           187
Net income (loss).......................          (42)          (58)          (29)          (30)          135           182           202           186
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                Number of firms reporting
--------------------------------------------------------------------------------------------------------------------------------------------------------
Operating losses........................            8             8             9            10             1             0             1             0
--------------------------------------------------------------------------------------------------------------------------------------------------------
Data....................................           14            13            14            15            16            15            15            15
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: Compiled from data submitted in response to Commission questionnaires.

    The industry-wide financial decline reversed from 2003 to 2005. 
Per-unit operating income substantially improved as the increase in 
per-unit net sales values ($369 per short ton) was much greater than 
the combined effects of an increase in unit cost of goods sold 
(``COGS'') ($162 per short ton) and a decline in selling, general, and 
administrative (``SG&A'') expenses ($5 per short ton). While * * * 
enjoyed some of the largest increases in operating profitability from 
2003 to 2005, the 2003 to 2005 increase cut across the industry, as all 
mills (individually) and processors (collectively) operating 
continuously during this time frame reported increased operating 
profits or smaller losses.
    The domestic industry's operating income was also higher in 
January-June 2006 than in January-June 2005 due to the increase in net 
sales quantity; however, on a per-unit basis, lower net sales values 
($37 per short ton) were greater in magnitude than the net reduction in 
COGS (lower by $16 per short ton) and SG&A expenses (higher by $0.50 
per short ton). The higher operating income level in January-June 2006 
was generally reflected across the industry, as a majority (10 of 15) 
of firms reported greater operating income than in January-June 2005.

Attachment 44--Certain Hot-Rolled Flat-Rolled Carbon-Quality Steel 
Products From Brazil, Japan, and Russia, Inv. Nos. 701-TA-384 and 731-
TA-806-808 (Review), USITC Pub. 3767 (April 2005) at Table III-11

    The attachment is available at the following Web site, http://hotdocs.usitc.gov/docs/pubs/701_731/pub3767.pdf.

Exhibit 2

Weil, Gotshal & Manges LLP

November 15, 2006

Maribeth Petrizzi, Esq.,
Chief, Litigation II Section, U.S. Department of Justice, Antitrust 
Division, 1401 H St., NW., Suite 3000, Washington, DC 20530.

Re: Comments of ThyssenKrupp A.G. Regarding The Proposed Final Judgment 
In United States v. Mittal Steel Company N.V. (Civil Case No. 1:06-
CV01360-ESH)

    Dear Ms. Petrizzi: Pursuant to the Section 2(b) of the Antitrust 
Procedures and Penalties Act, 15 U.S.C. Sec.  16, ThyssenKrupp A.G. 
hereby submits comments on the Proposed Final Judgment in the above-
referenced matter.

 Sincerely,

James F. Lerner.

Encl.

Comments of Thyssenkrupp A.G. Regarding the Proposed Final Judgment in 
United States v. Mittal Steel Company N.V. (Civil Case No. 1:06-
CV01360-ESH)

    Pursuant to Section 2(b) of the Antitrust Procedures and Penalties 
Act; 15 U.S.C. 16, ThyssenKrupp A.G. (``ThyssenKrupp'') hereby files 
these comments demonstrating that the remedies proposed as alternatives 
to the divestiture of Dofasco Inc. (``Dofasco'') to ThyssenKrupp, set 
forth in the Proposed Final Judgment intended to resolve the Complaint 
filed by the United States to prevent the acquisition by Mittal Steel 
Company N.V. (``Mittal'') of Arcelor, S.A. (``Arcelor''), do not 
adequately replace the competition lost in the Tin Mill Products market 
from the elimination of Dofasco as a significant competitor to 
Mittal.\1\ Because the remedies proposed as alternatives to the 
divestiture of Dofasco do not address adequately the harm alleged by 
the Department of Justice (``DOJ'') in the Complaint, entry of the 
Proposed Final Judgment is not in the public interest.
---------------------------------------------------------------------------

    \1\ Although Mittal and Arcelor are now known as Arcelor Mittal, 
we refer to each by their pre-merger names in these comments to 
avoid confusion, unless otherwise indicated.
---------------------------------------------------------------------------

Divestiture of Mittal's Sparrows Point Business or Mittal's Weirton 
Business Will Not Preserve Competition in the Market for Tin Mill 
Products in the Eastern United States

    As set forth in the DOJ's August 1, 2006 Complaint, ``Mittal 
Steel's proposed acquisition of Arcelor would eliminate Arcelor, 
including its subsidiary Dofasco, as an independent competitor in the 
sale of Tin Mill Products in the Eastern United States, further 
consolidating an already highly concentrated market. * * *'' The 
acquisition would remove current constraints on coordination and 
increase the incentives of the two largest firms to coordinate their 
behavior. The acquisition would thus substantially increase the 
likelihood of coordination and would likely lead to higher prices, 
lower quality, less innovation, and less favorable delivery terms in 
the Tin Mill Products market in the Eastern United States.'' \2\ 
Complaint, at ]] 4, 5.
---------------------------------------------------------------------------

    \2\ As defined in the Proposed Final Judgment, ``Tin Mill 
Products'' means collectively black plate, i.e., light-gauge cold-
rolled bare steel sheet; electrolytic tin plate, i.e., black-plate 
electrolytically coated with tin; and tin free steel, i.e., black 
plate electrolytically coated with chromium. Proposed Final 
Judgment, II.M.
---------------------------------------------------------------------------

    The Proposed Final Judgment and Competitive Impact Statement both 
make clear that the divestiture of Dofasco to ThyssenKrupp is the 
preferred remedy for the competitive harm alleged to arise from 
Mittal's

[[Page 17683]]

acquisition of Arcelor. Mittal is ordered to use its best efforts to 
divest the Dofasco Business as expeditiously as possible, Proposed 
Final Judgment, IV.A, and only in the event that Mittal is unable to 
accomplish the divestiture of Dofasco is Mittal then required to divest 
either the Sparrows Point or the Weirton Business (the ``Selected 
Business''), with the decision as to which of these two alternative 
businesses is to be divested resting with the United States.
    The Competitive Impact Statement states that the divestiture of 
either Dofasco or the Selected Business ``is designed to enable whoever 
acquires such divested business to be ''viable and active competitor in 
the Eastern United States Tin Mill Products market,'' Competitive 
Impact Statement, at 2, and goes on to assert that whether the Dofasco 
Business or a Selected Business is divested, ``the preserved competitor 
would have modern and efficient facilities located close enough to 
customers in the Eastern United States to compete effectively.'' 
Competitive Impact Statement, at 11. Despite this assertion, it is 
ThysdenKrupp's assessment that neither Sparrows Point nor Weirton has 
the ``modern and efficient'' facilities necessary to compete in the Tin 
Mill Products market in a manner that adequately would replace the 
competition lost by Mittal's acquisition of Arcelor, including Dofasco.
    ThyssenKrupp received several comments from their key US tinplate 
customers expressing their concerns with the alternative divestiture, 
stressing that divestiture of either of the US Mittal tinplate 
facilities would not have the same effect in addressing their 
competitive concerns. These customers indicated that the divestiture of 
Dofasco to ThyssenKrupp is highly preferred to the divestiture of 
either of the Mittal facilities (i.e., Sparrows Point or Weirton) and 
is the most-competitive solution.
    In line with its customers, it is ThyssenKrupp's firm conviction 
that only direct access to an integrated network ensuring strong R&D 
support, and close coordination across a full-fledged and reliable 
steel production chain (including state-of-the art metallurgy--blast 
furnaces, melt shops, continuous casting--hot and cold rolling, 
annealing and coating) will enable a tinplate producer to compete 
effectively and to meet the increasing demands of its customers in 
regard to Tin Mill Products with thinner gauges and higher surface 
quality.
    In terms of virtually all of the process steps and critical success 
factors for the successful production of tin plate, both Sparrow Point 
and Weirton fall far short of the capabilities of Dofasco. An acquirer 
of either Sparrows or Weirton would not, without a substantial 
investment that would take time (and still might not yield the desired 
results), be able to replace immediately the Tin Mill Product 
competition lost by allowing Mittal to retain Arcelor and Dofasco. 
Therefore, ThyssenKrupp will certainly not acquire Sparrows Point nor 
Weirton.
    In contrast to this, ThyssenKrupp's acquisition of Dofasco will 
preserve a strong local tinplate competitor which will be able to 
continue to provide quality Tin Mill products and preserve meaningful 
competition for tinplate customers in the Eastern US.
    Accordingly, entry of a Proposed Final Judgement that permits 
Mittal to divest either Sparrows Point or Weirton rather than requiring 
the divestiture of Dofasco will not adequately address the competitive 
concerns alleged in the DOJ's Complaint.

    Dated: November 15, 2006.

A. Paul Victor,
Dewey Ballantine LLP, 1301 Avenue of the Americas, New York, NY 
10019, and

Steven P. Bernstein,
James F. Lerner,
Weil, Gotshal & Manges LLP, 767 Fifth Avenue, New York, NY 10153.

Attorneys for Thyssen Krupp, A.G.

Exhibit 3

Hogan & Hartson

Hogan & Hartson LLP, Columbia Square, 555 Thirteenth Street, NW, 
Washington, DC 20004, +1.202.637.5600 Tel, +1.202.637.5910 Fax, 
www.hhlaw.com.

November 15, 2006

Maribeth Petrizzi, Esquire,
Chief, Litigation II Section, Antitrust Division, U.S. Department of 
Justice, 1401 H Street, NW., Suite 3000, Washington, DC 20530.

Re: DaimlerChrysler Tunney Act Comments

    Dear Maribeth: DaimlerChrysler submits that the United States 
Department of Justice antitrust Division (the ``Division'' or 
``Antitrust Division'') should renegotiate its proposed consent 
decree with Arcelor Mittal to ensure that Dofasco is either divested 
as planned or operated separately until it can be sold. The 
alternative divestitures in the proposed consent decree do not 
adequately address the competitive problems created by Arcelor-
Mittal merger.

Introduction

    The Tunney Act requires that a proposed consent decree 
negotiated between the Antitrust Division and the parties be 
published in the Federal Register, with a 60 day period for public 
comment. 15 U.S.C. 16. The Act also requires a federal court to 
determine if the entry of final judgment on the terms agrees to in 
the proposed consent decree, is in the public interest. Id.
    DaimlerChrysler is aware of the Division's position that Tunney 
Act review requires only an examination of whether the relief 
proposed satisfactorily remedies the competition issues pleaded in 
the Complaint. In this case, the Complaint identified competitive 
issues in the market for Eastern United States Tin Mill Products. 
However, this settlement is worthy of reconsideration by the 
Division for several reasons.
     First, although both the Division and Mittal apparently 
believe that Dofasco could be divested, that turns out not to be 
true. The directors of Strategic Steel Stichting, the Dutch 
foundation holding Dofasco's shares (``Dutch trust''), have refused 
to dissolve the Dutch trust and relinquish the shares.
     Second, recent events demonstrate that the automotive 
issues resulting from the merger are far more important for the 
automobile industry than they first appeared.
     Third, the alternative divestitures are not likely to 
preserve competition in either the market alleged in the Complaint, 
Eastern United States tin Mill Products, or the North American Hot 
dipped Galvanized Steel market.
    DaimlerChrysler submits these comments in support of the 
Division's preferred remedy--the divestiture of Dofasco--and to 
explain the infirmities in the alternative divestiture candidates.

The Arcelor-Mittal Merger

A. Merger Chronology

    In January 2006, Mittal Steel Company N.V. (``Mittal'') 
announced its intention to launch a hostile tender offer to acquire 
Arcelor S.A. (``Arcelor''). In an attempt to preempt potential 
antitrust objections to the proposed combination in the United 
States, Mittal simultaneously announced that if it acquired Arcelor, 
it intended to sell Arcelor's subsidiary, Dofasco Inc. 
(``Dofasco''), which Arcelor was in the process of acquiring at that 
time, to ThyssenKrupp, a German-based steel corporation. Arcelor 
initially resisted Mittal's takeover attempt vigorously and, as part 
of that resistance, transferred its interest in Dofasco to the Dutch 
trust as a defense measure against Mittal's tender offer. After the 
Dofasco transfer, Arcelor's Board agreed to recommend Mittal's 
improved 433 billion offer to its shareholders on June 25, 2006, and 
the combination of Arcelor and Mittal is now under way. See Paul 
Glader, Mittal's Founder Asserts Control as Steelmaker, Wall St. J., 
(Nov. 7, 2006). On November 13, 2006, Arcelor announced that the 
directors of the Dutch trust had decided not to dissolve the Dutch 
trust and this action has blocked Arcelor Mittal's divestiture of 
Dofasco--the Division's preferred remedy. See Press Release, Arcelor 
Mittal Press Release on Dofasco (Nov. 13, 2006) available at: http://www.arcelormittal.com/index.php?lang=en&page=49&tbPress=here&tb0=10.

B. Complaint and Proposed Consent Decree

    In May 2006, the Division negotiated a ``pocket consent decree'' 
with Mittal in which Mittal agreed to divest Dofasco. At that time, 
it appears that neither the Division nor Mittal fully appreciated 
the obstacles to

[[Page 17684]]

the Dofasco divestiture created by the Dutch trust. On August 1, 
2006, the Antitrust Division filed a Complaint, proposed consent 
decree, and Competitive Impact Statement with the United States 
District Court for the District of Columbia, conditionally approving 
Mittal's proposed acquisition of Arcelor.

1. Alleged Anticompetitive Effects on Tin Mill Products

    In the Complaint and Competitive Impact Statement, the Division 
alleged that Mittal's acquisition of Arcelor would substantially 
lessen competition in the market for Tin Mill Products in the 
Eastern United States in violation of Section 7 of the Clayton Act. 
The Division alleged that the relevant geographic market for Tin 
Mill Products is the Eastern United States because of a number of 
factors, including shipping costs and anti-dumping duties on Tin 
Mill Products from Japan that effectively close the United States 
market to competition from Japan. Applying this geographic market 
definition to Tin Mill Products, the Division determined that the 
market for Tin Mill Products in the Eastern United States is highly 
concentrated and is dominated by Mittal and ``another integrated 
steelmaker'' (United States Steel). According to the Complaint, 
Mittal accounted for 31 percent of the Tin Mill product tonnage sold 
in this geographic market in 2005, and United States Steel accounted 
for more than 44 percent. The Complaint alleges that Mittal's 
acquisition of a combined Arcelor/Dofasco would significantly 
increase concentration in the already concentrated market for 
Eastern United States Tin Mill Products. The Complaint also alleges 
that the remaining competitors lack the ability and incentive to 
defeat anticompetitive price increases and that de novo or foreign 
entry is neither feasible nor likely.

2. The Proposed Remedies

    The proposed Final Judgment (``the proposed consent decree'') 
aims to preserve competition in the Eastern United States Tin Mill 
Products market by requiring Arcelor Mittal to use its best efforts 
to sell its Dofasco mill in Canada to ThyssenKrupp or another 
approved buyer. In the event that Mittal is unable to dissolve the 
Dutch trust--which now appears to be the case--Mittal may sell 
either Mittal's Sparrows Point or Weirton facilities (collectively 
``alternative divestitures''). While the proposed consent decree 
clearly reveals the Division's preference that Mittal divest 
Dofasco, it states that divestiture of either Weirton or Sparrows 
Point is sufficient to preserve competition. DaimlerChrysler agrees 
that the divestiture of Dofasco solves the competitive problems 
created by the Arcelor-Mittal merger, but disagrees with the 
Division's view that either of the alternative divestitures would be 
sufficient to preserve competition.

C. DaimlerChrysler's Interest--Hot Dipped Galvanized Steel

    DaimlerChrysler is an automobile manufacturer that sources its 
steel from a number of North American steel producers including 
Mittal and Dofasco. DaimlerChrysler does not, however, utilize Tin 
Mill Products in its production of automobiles, nor do the other 
North American automobile manufacturers. If Tin Mill Products were 
the only problematic product market, DaimlerChrysler and the rest of 
the automobile industry would have little interest in Mittal's and 
the Division's choice of remedies. However, DaimlerChrysler and 
other automobile manufacturers are keenly interested in which 
facility is divested because the market for Hot Dipped Galvanized 
Steel would be even more adversely affected by Mittal's acquisition 
of Arcelor. DaimlerChrysler utilizes up to a ton of Hot Dipped 
Galvanized Steel per vehicle produced.
    DaimlerChrysler fully supports the Division's preferred 
divestiture of Dofasco, but submits that the alternative 
divestitures would not preserve necessary competition. The 
divestiture of Dofasco would ensure that Dofasco remains an 
independent competitive restraint on the increasingly consolidated 
Hot Dipped Galvanized Steel market. Further, this divestiture would 
allow for continued regional competition in Canada.

D. Alternative Divestiture Remedies Should Be Rejected

    Divestiture of either Sparrows Point or Weirton likely will not 
preserve competition for Eastern United States Tin Mill Products and 
certainly will not prevent the merger's anticompetitive effects in 
the Hot Dipped Galvanized Steel market. Neither Sparrows Point nor 
Weirton is attractive to potential buyers, nor do they have the 
ability to compete in either market as an independent company. 
Instead, each is a candidate for closure, especially during economic 
downturns. Weirton's steel making capability has already been shut 
down, making Weirton only a rolling mill and coating facility that 
is dependent upon a source of hot bands, which presently are in 
short supply. Sparrows Point still has the ability to make steel, 
but it has never demonstrated that it is viable as a stand-alone 
facility; it has always been part of a larger, multi-facility 
corporation. Dofasco, unlike either of the alternative divestiture 
candidates, was a profitable stand-alone company as late as January 
2006.

North American Hot Dipped Galvanized Steel

    DaimlerChrysler recognizes that the Division's Complaint and 
proposed consent decree focus on the anticompetitive impact of the 
merger on the Eastern United States Tin Mill Products market and not 
the North American Hot Dipped Galvanized Steel market. However, this 
view should be reconsidered.

A. Product Market

    The automotive industry requires various steel alloys for frame, 
shell, and various parts that make up a complete automobile. Because 
of their exposure to the elements, automobiles require steel that 
resists corrosion. But, automobile manufacturers cannot utilize all 
grades of corrosion resistant steel. Automobile-grade exposed 
corrosion resistant steel must also be of high strength and high 
enough quality to apply paint. While corrosion resistant steel of 
lower grades can be used in construction or products like home 
appliances, only sufficiently high quality, automotive-grade 
corrosion resistant steel can be used by the automobile industry. 
The most cost-efficient material to provide this protection is steel 
that is coated with a rust-inhibiting layer, usually composed 
primarily of zinc, which is referred to as Galvanized Steel. 
DaimlerChrysler utilizes up to a ton of Galvanized Steel per 
vehicle.
    Two methods of galvanization are used to provide protection from 
corrosion--Electroplate Galvanizing and Hot Dipped Galvanizing. In 
Electroplate Galvanizing, steel is passed through a zinc-rich bath 
at ambient air temperature. An electric current is passed through 
the steel, which attracts particles of zinc to the steel's surface 
thereby plating it. In Hot Dipped Galvanizing, heated steel sheet is 
passed through a bath of molten zinc resulting in a thin coating of 
an essentially pure zinc layer on the steel. The post-coating 
application of heat to the zinc coated steel promotes a reaction 
between the iron in the steel and the zinc in the coating, creating 
the zinc-iron compound known as ``Galvanneal.'' In contrast, the 
iron and zinc do not react in electroplate galvanization and thus do 
not produce the desirable properties characteristic of Galvanneal.

1. Hot Dipped vs. Electrogalvanizing

    Automotive-grade Hot Dipped Galvanized Steel constitutes a 
separate product market from galvanized steel generally because 
Electroplate Galvanized Steel has more limited uses and 
applications, especially in the automotive industry. Hot Dipped 
Galvanizing is less costly than Electrogalvanizing and requires 
substantially less energy to produce. Hot Dipped Galvanizing also 
impacts desirable high strength to the steel without the addition of 
costly alloying elements. Even if Electrogalvanizing proved to be 
adequate for automotive needs, the differences in stamping 
properties for automotive uses would require major investments in 
stamping, painting and other processes by automobile manufacturers 
that sought to switch from one process to another. As a result, Hot 
Dipped Galvanized Steel and Electroplate Galvanized Steel cannot 
easily be substituted by automobile manufacturers.
    Automotive uses also require much higher grade of steels, which 
Hot Dipped Galvanization can best supply. For example, automotive 
uses require a smooth finish and very precise alloy chemistries. Hot 
Dipped Galvanneal has better cosmetic corrosion performance than 
Electrogalvanized Steel which typically has more surface defects. 
Automotive use also requires very tight width and thickness 
tolerances that Hot Dipped Galvanization can better provide. As a 
result, production yields for automotive-grade Galvanized Steel are 
much lower than for other end uses.

2. Substitutes for Galvanized Steel

    As explained above, steel can be galvanized two ways--by the hot 
dipped or electroplating processes. Automotive companies have 
explored other materials, but none is likely to replace galvanized/
galvannealed steel in the foreseeable future. Like electrogalvanized 
steel, available alternatives are not adequate for automotive

[[Page 17685]]

uses. Non-coated steel is much less corrosion-resistant and fails to 
meet minimum automotive standards for quality. Painted steels 
similarly fail to meet such standards. Stainless steel, while able 
to meet quality standards, is far too costly to serve as a viable 
alternative to Hot Dipped Galvanized Steel. As a result, Hot Dipped 
Galvanized Steel is a separate relevant product market.

B. The Relevant Geographic Market

    For DaimlerChrysler and other North American automobile 
manufacturers, the only practical Hot Dipped Galvanized Steel 
suppliers are in North America.

1. Logistical Limitations

    Reliance on overseas imported steel is not economically feasible 
because of the logistical obstacles presented by the product itself. 
As Susan DeSandre, Director of Body and Chassis Purchasing, North 
America for Ford Motor Company characterized it in proceedings 
before the United States International Trade Commission, ``it's 
heavy, it's bulky, and it rusts on water.''\1\ Automobile producers 
require continuous supply to keep the production lines running and 
it is not economically feasible to transport steel by air to 
accommodate unforeseen variations in demand.
---------------------------------------------------------------------------

    \1\ Certain Carbon Steel Products from Australia, Belgium, 
Brazil, Canada, Finland, France, Germany, Japan, Korea, Mexico, 
Poland, Romania, Spain, Sweden, Taiwan and the United Kingdom, USITC 
Inv. Nos. 701-TA-319, 320, 325-328, 348 and 350 (Second Review) and 
731-TA-573, 574, 576, 578, 582-587, 612, and 614-618 (Second Review) 
Hearing Transcript at 426 (testimony of Ms. DeSandre) (Oct. 17, 
2006).
---------------------------------------------------------------------------

2. Tariffs on Imported Steel

    Currently, Australia, Canada, France, Germany, Japan, and Korea 
are subject to antidumping and/or countervailing duties on corrosion 
resistant flat steel products, including Hot Dipped Galvanized 
Steel. On October 17, 2006, the International Trade Commission heard 
testimony on whether it should renew tariffs on the foreign supply 
of Corrosion Resistant Steel, which are currently being reviewed. 
The six largest automobile producers in North America have advocated 
removal of the duties on Corrosion Resistant Steel because the 
domestic steel industry is healthy and would not be materially 
injured by their removal. In addition, automobile producers have 
argued that non-U.S. sources of corrosion-resistant steel are not 
readily available anyway because these products are in heavy demand 
in foreign markets.
    Although Dofasco is not a U.S. producer, an independent Dofasco 
would indirectly constrain anticompetitive price increases in the 
United States. It would be an alternate supply to DaimlerChrysler's 
Canadian operations and thus reduce the company's dependence on the 
few remaining United States suppliers of Hot Dipped Galvanized 
Steel. If antidumping duties are lifted on Canadian Corrosion 
Resistant Steel, as DaimlerChrysler believes is appropriate, a 
divested Dofasco has the capacity to compete directly with the three 
remaining North American Hot Dipped Galvanized Steel producers, US 
Steel, Arcelor Mittal, and AK Steel.\2\ If Dofasco were controlled 
by Mittal, there would be no incentive for it to do so.
---------------------------------------------------------------------------

    \2\ A fourth supplier, Nucor Corp., is not a practical 
alternative supplier to the auto industry for exposed automotive-
grade corrosive resistant steel because its production method, which 
utilizes recycled scrap metal, produces steel that does not meet the 
tolerances required by automobile makers for substrate.
---------------------------------------------------------------------------

C. Market Concentration

    Today, the market for North American Hot Dipped Galvanized Steel 
is highly concentrated with the top two firms representing 
approximately 73% of capacity and the top three firms representing 
nearly 90%. Arcelor Mittal alone represents nearly half of North 
American capacity for Hot Dipped Galvanized Steel with its 
acquisition of Arcelor (including Dofasco's Canadian facilities). 
Unless Dofasco is divested, the post-merger Herfindahl-Hirschman 
Index for the North American Hot Dipped Galvanized Steel market will 
rise from a premerger total of 2171 to more than 3200--well above 
the Guidelines' threshold of 1800 for a highly concentrated market. 
The change in concentration resulting from the merger would be over 
1000 points--again well above the Guidelines' threshold for concern.

1. Concentration Through Consolidation

    Only five years ago, DaimlerChrysler had a choice of nine 
suppliers to choose from to meet its demand for Hot Dipped 
Galvanized Steel. In 2001, Mittal represented a mere 8% of North 
American Hot Dipped Galvanized Steel capacity. LTV's bankruptcy in 
2001 and subsequent combination with Bethlehem Steel into 
International Steel Group in 2002 ushered in a wave of consolidation 
that continues today. In 2003, US Steel acquired National Steel, 
leaving only seven suppliers of North American Hot Dipped Galvanized 
Steel. Mittal increased its share from 8% to 30% with its 
acquisition of ISG in 2005. Mittal achieved market leadership with 
its acquisition of Arcelor and its Dofasco facilities in Canada, and 
DaimlerChrysler estimates that Arcelor Mittal now has 47% of North 
American Hot Dipped Galvanized Steel capacity.
    Unprintable graph appears here, it purports to show 2006 North 
America hot dip auto capacity by company. A copy of the graph is 
available for inspection at the Department of Justice Antitrust 
Division, 325 Seventh Street, NW., Room 200, Washington, DC 20530.

2. Effect of Consolidation on Prices

    Although it is too early to detect the effect that Mittal's 
acquisition of Arcelor and Dofasco will have on prices, rising 
prices over the last five years, coupled with comments to industry 
analysts and the press by Mittal, indicate that higher prices are to 
come. Indeed, Mr. Lakshmi Mittal has noted that ``[c]onsolidation of 
the industry has accelerated * * * [l]eading to a new market 
oriented behavior * * * [a]nd a new fundamental price dynamic.'' See 
``New Steel Paradigm and Future Challenges,'' Presentation by 
Lakshmi Mittal to Merrill Lynch Conference (May 11, 2006).
    Over the past six years, the average price for Galvanized Steel 
has risen from about $500 per ton in 2000 to nearly $900 per ton 
earlier this year. DaimlerChrysler expects significant price 
increases for contracts starting in 2007. Over this same period, the 
number of industry participants dwindled. Thus, industrial 
production has decreased while prices increased to a new, higher 
band.
    Comments to industry analysts and press by Mittal leave little 
doubt that the goal and likely result of consolidation is the 
continued rise in prices to consumers. The Automotive News observed 
in October of this year that ``Mittal has taken steps to stave off 
price cuts caused by a recent run-up in steel inventories.'' It 
added, ``Mittal is prepared. The company has told analysts that it 
will prop up prices by reducing production at one plant during that 
period.'' A Ton of Trouble, Automotive News (Oct. 2, 2006). ``Mr. 
Mittal also hopes that a new, larger group may be able to set a lead 
for the rest of the industry--sending signals about when to moderate 
production, and so smooth the peaks and troughs in demand that have 
bedeviled the steel business.'' Steel: Age of Giants, The Economist 
(Feb. 2, 2006) (emphasis added).
    As a result, there is reason for concern about the effect of the 
merger on output and prices for North American Hot Dipped Galvanized 
Steel. These effects would be reduced by divestiture of Dofasco--and 
the Division should insist on its original preferred remedy.

Neither Alternative Divestiture is Viable

    Although the unique circumstances existing here warrant 
reconsideration of this transaction's effects on the North American 
Hot Dipped Galvanized Steel market, the alternative divestiture 
remedies also fail to remedy the Division's legitimate concerns 
regarding the transaction's effect on the Eastern United States Tin 
Mill Products market.

A. Alternative Divestitures Will Fail To Preserve Competition in 
Either Tin Mill or Hot-Dipped Galvanized Steel Markets

    Weirton has struggled since the 1970s and has nearly closed 
several times. In 1982, National Steel announced that it would not 
make the capital improvements needed for Weirton to remain 
competitive. In efforts to save the company, Weirton was purchased 
by its employees in 1984. Public offerings in 1989 and 1994 raised 
funds needed to modernize the plant. However, the steel import 
crisis that began in 1998 ``significantly reduced the company's 
production output, harmed its ability to control pricing and 
severely hampered its financial performance.'' See Weirton Steel 
Corporation: History, available at: http://www.weirton.com/company/about/hist.html. Weirton lost nearly $800 million from 1998 until it 
declared Chapter 11 bankruptcy in 2003. ISG purchased Weirton in 
2004, and ISG was acquired by Mittal in 2005. In November 2005, 
Mittal shut down Weirton's steelmaking operations altogether and 
laid off 800 employees.
    Today Weirton produces no steel and instead relies on other 
Mittal facilities to supply the substrate it uses in its production 
of tin plate. It is unlikely that Weirton will produce steel going 
forward. See Vicki

[[Page 17686]]

Smith, Furnace Will Stay Idle at Weirton Steel Mill, Courier-Journal 
(Louisville, Ky.) (Dec. 2, 2005). In any event, Weirton will almost 
certainly never play a role in disciplining price increases in North 
American Hot Dipped Galvanized Steel because it cannot produce that 
product. Its inability efficiently to produce the steel substrate it 
needs for tin mill production, coupled with relatively high 
transportation and raw materials costs, do not bode well for its tin 
mill production prospects either. In fact, Weirton is likely to be a 
victim of the increased concentration in the North American Steel 
market rather than a disciplining force. Since Weirton does not 
produce Hot Dipped Galvanized Steel at all, it is totally unable to 
discipline any output restrictions in that market.
    Sparrows Point has also struggled. In October 2001, Bethlehem, 
which employed about 3,400 workers at Sparrows Point, filed for 
Chapter 11 bankruptcy. By May 2006, the plant employed only 2,500 
employees and had changed hands three times in the past six years. 
Despite cutting costs and the introduction of new ``efficiencies and 
innovations, Sparrows Point is one of Mittal's most expensive plants 
to run because of high energy costs and more environmental 
regulations owing to its location on the Chesapeake Bay.'' Allison 
Connolly, Feeling Pressure for Profits, Balt. Sun, 1C (May 14, 
2006). ``[W]orkers worry that Mittal will take away their incentives 
or force them to make other concessions to keep the plant open.'' 
Id. ``They also worry about layoffs if certain parts of the plant 
are idled, for example, if Mittal sends the tin work back to 
Weirton.'' Id. Today, Sparrows Point is used primarily to supply 
other Mittal plants with substrate. It is unlikely to produce Hot 
Dipped Galvanized Steel for use by the automobile industry and is 
unlikely ever to be able to operate as a stand-alone entity.

B. Divestiture of Dofasco Is the Only Viable Option To Preserve 
Competition

    Unlike either Sparrows Point or Weirton, Dofasco has recently 
been a successful stand alone steel company and continues to thrive 
independently today (pursuant to the Hold Separate Order). If not 
for the Dutch trust issue, Dofasco could clearly be sold to 
ThyssenKrupp or a number of other potential suitors. Indeed, 
analysts agree that Dofasco is by far the most attractive of the 
three mills and that Mittal has little incentive to divest it. 
``Right now time is on their side, and they are generating a lot of 
cash flow. * * * At the end of the day, if they can keep [Dofasco], 
really the winners will be Arcelor Mittal, and the losers will be 
ThyssenKrupp,'' says Alain William, an analyst for Societe Generale. 
Heather Thomas, Poison Pill Is Among the Reasons Mittal Steel Deal 
Remains a Multi-Company Tangle, N.Y. Times (Nov. 3, 2006).
    Sparrows Point and Weirton, on the other hand, will be difficult 
to divest, and incapable of operating as stand-alone businesses. 
``The problem is, who would want to buy either of the two? Mittal 
will have to decide which one to sell, but you can't manufacture a 
customer,'' said Charles Bradford, an independent steel analyst for 
Soleil Securities in New York. See Merger Proviso Gives Hope to 
Weirton Steel, Pittsburgh Tribune Rev. (Aug. 3, 2006). ``Weirton and 
Sparrow's Point are not good plants. Dofasco is * * *. Dofasco's 
good company and I'm not so sure that Mittal wouldn't rather have it 
than Weirton or Sparrow's Point.'' Romino Maurino, Mittal Steel Sets 
Deadline for Sale of Dofasco, Inc., Winnipeg Free Press, (Sept. 28, 
2006).
    The Division, with its investigative resources, has better 
access than DaimlerChrysler does to the underlying facts that 
support these comments. It has prudently reserved the right to 
determine whether a divestiture of either Sparrows Point or Weirton 
would be feasible. The Division should revisit its view that 
divestiture of either Weirton or Sparrows Point would be sufficient.

Conclusion

    An independent Dofasco can discipline anticompetitive price 
increases for Tin Mill Products. But even more important from 
DaimlerChrysler's point of view, it can also act as a competitive 
constraint on anticompetitive output restrictions on the supply of 
North American Hot Dipped Galvanized Steel. Thus, DaimlerChrysler 
urges the Division to reconsider its acceptance of one of the 
alternative divestiture candidates and instead to insist on the 
divestiture of Dofasco. If the Dutch trust proves to be an immovable 
obstacle to the sale of Dofasco, it could simply be spun off as a 
freestanding entity, to operate independently, as it did as recently 
as January 2006. If an adequate remedy requires renegotiation of the 
consent decree, we urge the Division to take the steps that are 
necessary to maintain competition in the steel industry.
 Sincerely,

Thomas B. Leary.
Janet L. McDavid.

cc: Allan M. Huss, Senior Counsel, Antitrust/Regulatory Affairs, 
DaimlerChrysler Corporation.

[FR Doc. 07-1321 Filed 4-6-07; 8:45 am]
BILLING CODE 4410-11-M