Companies

US steel firm defends Chinese investment

(Agencies)
Updated: 2010-07-07 11:07

A US venture capital steel company that received an investment from a Chinese State-owned firm fought back on Tuesday against national security concerns raised by US lawmakers.

Steel Development Co, whose first project is to build a steel "rebar" production mill in Amory, Mississippi, said less than 20 percent of its total investment came from China's Anshan Iron and Steel Group.

Since the new facility will produce less than three-tenths of 1 percent of the total US market for concrete reinforcing bar steel, "the promotion of national security fears due to the Anshan investment is, at best, difficult to rationalize," the company said in a statement.

Last week, 50 members of the Congressional Steel Caucus urged US Treasury Secretary Timothy Geithner to investigate whether Anshan's investment should be blocked on economic and national security grounds. [US lawmakers urge probe of Chinese steel investment]

The bipartisan group said they were worried Anshan could gain "access to new steel production technologies and information regarding American national security infrastructure projects" through the investment.

Those concerns were echoed on Tuesday by the American Iron and Steel Institute, the main US industry group.

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"This matter certainly deserves very careful and thorough review by the appropriate US authorities," AISI President Thomas Gibson said in a statement.

That followed comments from the China Iron and Steel Association urging the US government to let the deal go through, the Wall Street Journal reported.

Steel Development is led by John Correnti, a former top executive at AISI member Nucor who has a history of forging new steel companies.

Correnti assembled a group of industry experts to 2005 to create SeverCorr, which he and his partners sold in 2008 to Russian steelmaker Severstal.

Steel Development acknowledged on Tuesday it has "come under fire" because of its investment from Anshan.

But the company said it had no plans to abandon the project "notwithstanding the extensive political pressure applied by certain members of Congress and other steel producers seeking to impede competition."

Geithner chairs the Committee on Foreign Investment in the United States , an executive branch interagency panel that reviews foreign investments and can recommend to the president that certain deals be blocked.

CFIUS is barred by law from disclosing any company information it receives as part of the review process.

"Accordingly, the Department does not comment on information relating to specific CFIUS cases, including whether or not certain parties have filed notices for review," a Treasury Department spokeswoman said.