Sparrows Point's cold mill to be used for spare parts

An out-of-state steelmaker has bought the most valuable piece of the Sparrows Point plant to use as spare parts, a move that could kill the last hopes that the steel mill might be purchased by an operator and reopened.

American Metal Market reported late Wednesday that Charlotte, N.C.-based Nucor Corp. had acquired the major portion of Sparrows Point's 12-year-old cold mill, the newest part of an old facility. Nucor's president, John Ferriola, told the trade publication that the acquisition would be used for upgrades and to replace parts at the company's own mills.


An official with knowledge of the transaction confirmed Wednesday night that Nucor bought the cold mill and would not operate it at the Baltimore County plant.

Joe Rosel, president of the United Steelworkers Local 9477 in Sparrows Point, was outraged by the news. After a liquidator and redevelopment firm won Sparrows Point at auction from bankrupt RG Steel last summer, both new owners said they would look for operators to buy the property at a second auction. Bids were due by Dec. 21.


Now that auction has been canceled. Co-owner Hilco Trading says on its site for Sparrows Point that it is offering production lines and components in a private sale.

"This is the height of vulture capitalism," said Rosel, vowing to organize a rally in protest. "We'll talk to the state, the politicians, to see if they can do anything to force Hilco to honor its word to try to find an operator for the plant."

The United Steelworkers had been working with an investment banking firm to identify potential operators. Several companies had expressed interest, Rosel said. But with the Nucor deal, all bets are off.

"Nobody would want to buy the plant without the cold mill," Rosel said.

He called Nucor's purchase a "chess move" to ensure that Sparrows Point doesn't reopen, eliminating the plant as a competitor.

The cold-rolling work at Sparrows Point produced precision-thickness steel. Built for $300 million and opened in 2000, the cold mill was hailed as an economic engine capable of making steel for containers, machinery, car parts, metal furniture and other items.

About 2,000 people were laid off from the Sparrows Point plant when RG Steel shut it down over the summer as part of its bankruptcy filing in May. Many more relied on the mill for their jobs, from contractors and suppliers to local bartenders and restaurateurs.

RG Steel's mills sold for pennies on the dollar. Sparrows Point's new owners picked it up for $72.5 million in August, four years after the plant sold for $810 million.


Most of the bidders at that auction were redevelopment firms. No steelmakers showed up.

But some workers held onto hope because Environmental Liability Transfer, which bought the land and some of the buildings, and Hilco Trading, which acquired the rest, said they would try to find a company to restart part or all of the operations.

"Both ELT and Hilco would love to see a continued steel facility at Sparrows Point," Randall Jostes, Environmental Liability Transfer's CEO, said in September. "The market will dictate whether that's possible."

Hilco declined to comment, and ELT could not be reached Wednesday night.

The sprawling Sparrows Point plant is on more than 3,000 acres in a prime location in eastern Baltimore County, nearly surrounded by water. The property's major downside: toxins.

"More than a century of steelmaking and finishing operations have resulted in perhaps the most complex environmental cleanup site in the Chesapeake Bay watershed," Baltimore County's attorneys wrote in court documents.


That's the sort of work in which Environmental Liability Transfer says it specializes. Jostes said in an earlier interview that a cleanup would take "many, many, many years" but the site could be used while the work is under way.

Environmental Liability Transfer acquired another large, bankrupt manufacturer in 2005 — a Missouri brick factory — and got it "up and running and producing brick once more," Jostes said. But most of the company's projects are straight redevelopment.

Sparrows Point steel built the Golden Gate Bridge and Maryland's Bay Bridge, along with hundreds of ships for World War II, but recent years have not been kind. Environmental Liability Transfer and Hilco are Sparrows Point's sixth owners in less than a decade, a tumultuous stretch for workers that included the bankruptcy case of longtime owner Bethlehem Steel.

Some analysts thought the Baltimore County facility would land a new operator, but others were pessimistic from the start, given its age and the tough steel market.

Steel analyst Chuck Bradford suggested last summer that Nucor might want to buy the cold mill "to pick up and move somewhere else." It's a "very good" mill, he said.

"Almost nothing else has any value," Bradford added.


Deborah Rudacille, writer of the book "Roots of Steel: Boom and Bust in an American Mill Town," a workers' history of Sparrows Point, said last summer that Sparrows Point becoming scrap would be sadly ironic. It was built in part from the remains of the Ashland Iron Works in Cockeysville.

"It's just dreadful that we have let our steel industry atrophy as we have," she said. "I don't think any good can come of it."