Ohio May Get $1 Billion Plant: Russian Steel Company Wants to Bring More Than 1,000 Jobs to Scioto County

By Paul Wilson, Randy Ludlow and Mark Niquette, The Columbus Dispatch, Ohio

Sep. 7–HAVERHILL, Ohio — A Russian steel company is reportedly close to building a plant here that would bring more than 1,000 jobs to an economically troubled area of the state.

If Magnitogorsk Iron & Steel Works decides on Scioto County for the plant, valued at more than $1 billion, it would be among the biggest industrial-development projects nationally in recent years.

“A billion-dollar steel plant … wow!” said Harold Adams, who, as postmaster of tiny Haverhill, presides over 75 post-office boxes in leased space inside PJ’s Country Kitchen.

“Good-paying jobs are hard to find in this area,” said Adams, 52. “We’ve heard rumblings, now let’s hope it comes true.”

Viktor Rashnikov, chief executive of the company, told the Russian media this week that he would build the plant in Ohio, pending some final approvals, to supply steel to the automotive sector.

Company leaders plan to come to Ohio this month to meet with Gov. Ted Strickland and other state officials.

“We are flying out for further negotiations as soon as Sept. 17 to talk to the Ohio governor,” said Rashnikov, according to RIA Novosti, a Russian news agency. He said he hoped to get the necessary approvals this year.

Strickland administration officials confirmed that company leaders plan to travel to Ohio this month to continue talks. They declined to comment further about the potential project, citing confidentiality agreements.

A document from the Ohio Department of Development obtained by The Dispatch through a public-records request describes the project as “a billion (dollar) investment project creating over 1,000 jobs for Ohio.”

That would make it one of the largest projects in terms of job growth in the state in years. And only six U.S. projects announced last year cracked the $1 billion mark, according to Site Selection magazine .

“The governor is hopeful the meeting will result in significant investment,” said Keith Dailey, Strickland’s spokesman.

Officials with the Ohio Environmental Protection Agency said consultants hired by the company, commonly called MMK, spoke to them as recently as last week about permits in Scioto County. No applications have been filed.

Rashnikov’s goal of getting the necessary approvals by year’s end is “almost impossible,” said Mike Yandrich, an engineer in the Ohio EPA’s Southeast office. The permit process involves state reviews and public meetings, and could take several more months, he said.

Melissa Fazekas, the Ohio EPA’s deputy communications director, said the process usually takes about six months, but that state officials would “try to expedite it as much as possible” after working with company consultants.

About 15 miles southeast of Portsmouth in Haverhill, the residents were excited that the Russians are coming — or at least, might be coming. Scioto County’s unemployment rate of 7.1 percent is about 20 percent higher than the statewide average.

Up the road at the town of Franklin Furnace, Green Local Schools Superintendent Ron Lindsey welcomes any economic development that brings in bucks for his kids.

“We’re happy for anything here. It’s good news,” said Lindsey, whose 650-student district ranks among the poorest 10 percent in Ohio, with K-2 pupils attending a deteriorating 1920s school.

It depends on how tax abatements are structured, but such a large plant could generate more property taxes and give homeowners some relief from shouldering the load, he said.

There’s still a lot of farming in the township and lots of residents don’t make much money working at blue-collar jobs in Portsmouth or Ashland, Ky., he said.

Many might like a shot at steel jobs. “They’re hard-working, churchgoing folk,” Lindsey said.

Landing the plant would also be a boon after a turbulent decade for the steel industry in Ohio.

Ohio has lost more than 10,000 steel jobs since 1997, though the remaining operations have stabilized, experts said. Some companies invested large sums on existing plants, but it’s been at least a decade — and probably longer — since anyone built something on the scale of the MMK project.

A little more than a decade ago, central Ohio lost out on a bid to land a $1.1 billion steel processing plant that eventually was built in Rockport, Ind.”I just can’t think of the last time someone decided to build a steel mill, nothing of this magnitude,” said Lee Keevican, managing director of Renaissance Partners, an investment-banking firm that works with steel companies. “A lot of it has been in the opposite direction — with others closing down.”

A plant in Scioto County would put MMK in position to serve automakers such as Honda and Toyota. Both companies have plants in the region and are adding manufacturing operations to keep up with increased demand.

The site along the Ohio River would also allow MMK to move its steel cheaply by barge, Keevican said.

The U.S. makes about 100 million tons of steel each year and uses about 130 million tons, Keevican said. That shortfall, and the new auto plants, means there will be more demand for steel.

Still, it won’t be an easy task for regional steel companies to compete with MMK, Keevican said. Existing operations will have to work hard to be “cost-competitive,” Keevican said.

Depending on the type of plant MMK plans to build, the company could buy coke, used to fuel blast furnaces, from SunCoke Energy, which has a plant nearby and is adding another.

Keevican said it’s more likely that MMK wants a steel-processing operation that would finish steel slabs made overseas — and would not need a blast furnace in Scioto County.

A fully integrated operation would likely be more expensive than MMK’s expected price tag, Keevican said.

paul.wilson@dispatch.com

rludlow@dispatch.com

mniquette@dispatch.com

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