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In The Red?

Politicians spar over Chinese government investment in steel mill

 

In Oct. 2008, Steel Development Co. broke ground on a $200-million rebar facility in Amory that would ostensibly employ 175 people in a region that badly needs jobs to replace the ones lost in the furniture manufacturing industry.

Since then, though, the recession has ground construction a halt, and there is no target date for it to resume.

That date could be a little closer to reality, but how that happened is causing a stir among some of the members of the Congressional Steel Caucus.

In a letter sent recently to Treasury Secretary Timothy Geithner, members of the Steel Caucus asked him to open an investigation into an investment into the Amory facility made by Anshan, a Chinese company that receives subsides from China’s Assets Supervision and Administration Commission, making it partially state-owned.

“We believe that this investment allows the full force and financing of the Chinese government to exploit the American steel market from American soil,” read the letter from the Steel Caucus to Geithner. Steel Caucus members said that represented a threat to U.S. national security.

Fifty members from both parties of Congress signed the letter. First District Rep. Travis Childers, D-Booneville, whose area includes Monroe County, is a member of the Steel Caucus, but didn’t sign the letter, which was delivered to the Treasury Department July 2.

“I didn’t know the facts, and I didn’t want to shoot from the hip,” Childers said last week, explaining his decision not to sign the letter. “I wanted a little more time to look at the facts. Honestly I don’t know what the agreement is (between Steel Development and Anshan).”

Steel Development is a private company, and is not required by law to disclose their investors or the mechanics of any agreement it has with them. A company spokesperson did confirm to the Mississippi Business Journal last week that Anshan has purchased a “less than 20 percent” stake in the Amory plant.

“As Steel Development endeavors to finalize the financing necessary to create 1,200 construction jobs and 100 permanent jobs in the domestic steel market, it has come under fire for incorporating this investment from Anshan,” said an e-mailed statement from spokesperson Mark Bula. “With Steel Development projecting production of 350,000 tons of rebar per year in a 120 million ton steel market (less than three-tenths of one percent), the promotion of national security fears due to the Anshan investment is, at best, difficult to rationalize.

“Notwithstanding the extensive political pressure applied by certain members of congress and other steel producers seeking to impede competition by stopping Steel Development’s efforts to build one of the world’s most technologically advanced steel mills, we will continue to focus our efforts on creating jobs right here in America.” 

Steel Development’s website lists no phone number, and Bula did not respond to a follow-up e-mail from the Mississippi Business Journal that sought to clarify construction timetables.

Nucor Steel in Northern Alabama joined the Steel Caucus in calling for an investigation into Anshan’s investment. Amory Mayor Howard Boozer told a newspaper in that region that he saw nothing but “upsides. The economic impact potential is extremely favorable. It would be great not only for this community but for this whole region.”

Boozer did not respond to multiple voicemails left at his office last week.

While Anshan’s involvement in the facility is raising the hackles of the Steel Caucus, most of whose members come from the Rust Belt, local officials are a little less bothered.

“We certainly would like to have the jobs,” said state Rep. Jimmy Puckett, D-Amory. “I don’t have any misgivings about it now. If I found out it was something that was going to be detrimental to us, I certainly wouldn’t be for that.”

State Sen. Alan Nunnelee, R-Tupelo, does not represent Amory or any part of Monroe County, but he hopes to. He is running against Childers in a race national and state political experts deem close to call.

“I think when we’ve got high-paying construction jobs and manufacturing jobs coming to North Mississippi, the fact that a Chinese company has an interest in it, a very insignificant interest, does not concern me at all,” Nunnelee said. “The jobs are desperately needed in Monroe County right now. I don’t know that I see a national security interest in the manufacturing of rebar. That seems like a stretch. Sounds to me like it’s people trying to meddle in Mississippi’s business.”

Should he defeat Childers in November, Nunnelee said, he would have a strong interest in joining the Steel Caucus.

Childers built his campaign for Congress two years ago around job creation. His campaign this year is following a similar theme. He was not as quick, though, to dismiss outright Anshan’s involvement.

“Do I have concerns? Yes,” he said. “I do appreciate jobs, but I’m not willing to sell us out to Red China. I don’t want us to be destroyed from the inside out. Honestly, they already own too big of a stake in us. We owe them a tremendous amount of money. I don’t want to sell us out to the Chinese for the lure of a few hundred jobs. If this begins to affect the U.S. steel market, I may view this differently. Make no mistake: we need the jobs. I’m all for that.”

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About Clay Chandler

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