August 5, 2008
Monessen Coke Plant to Be Sold for $160 Million
By Joe Napsha, The Pittsburgh Tribune-Review
Aug. 5--Koppers Holdings Inc. of Pittsburgh said Monday it is selling its Monessen coke plant to the world's largest steelmaker for $160 million in a deal that will end its involvement in the coke-making business.Koppers Inc., a subsidiary of Koppers Holdings, said it expects the sale to ArcelorMittal SA of Luxembourg to be completed in the fourth quarter. The deal is subject to regulatory approvals.
The sale would affect about 180 employees at the Monessen plant, said Michael Snyder, a Koppers spokesman at the company's Downtown headquarters.
ArcelorMittal said it buys all of the Monessen plant's annual production of 320,000 metric tons of coke, which is produced by burning impurities from coal and is used in blast furnaces to make steel. The coke plant has two batteries housing 56 coke ovens.
For global steelmaker ArcelorMittal, the purchase is an important step towards increasing ArcelorMittal's self-sufficiency in metallurgical coke production during a time when global demand remains strong, said Sudhir Maheshwari, a member of ArcelorMittal's management board.
Koppers, on the other hand, is selling what it considers "a non-core business," and the change of ownership will benefit all parties, including employees of the Monessen plant, CEO Walter W. Turner said in a statement.
Koppers does not own any other coke plants, and the by-products it gets from the production of metallurgical coke are very small, Snyder said. The Monessen plant generated $70 million in revenue in 2007, he said.
By selling the coke plant, Koppers can focus on growth in the aluminum and railroad markets, Turner said. The sale gives the company financial flexibility to pursue acquisition opportunities, refinancing, dividends and share repurchases, he added.
After the sale was announced, Koppers' stock fell 2.1 percent to close yesterday at $42.75 a share, down 91 cents.
A spokesman for the United Steelworkers Local 2698, which represents workers at the coke plant, could not be reached for comment.
The plant, built in 1941 by what was then Pittsburgh Steel Co., was once part of Wheeling-Pittsburgh Steel Corp.'s integrated steelmaking operation in Monessen, which closed in 1986. Sharon Steel purchased the idled coke plant in 1988 and operated it until 1995, when it sold the plant to Koppers for $5 million. Koppers spent an estimated $13 million in repairs and updates to the plant.
Separately, ArcelorMittal also said yesterday it plans to build a $600 million steel mill in Mexico, to produce carbon steel and bars, including rebar, and specialty bar products to serve the construction and automotive industries. The new mill will have the capacity to produce one million metric tons of steel a year.
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