Indian Steelmaker to Invest $500 Million in US, Resurrect 1929 Plant

June 23, 2018 Updated: October 5, 2018

A small town in Ohio will have new life breathed into it via a half-billion-dollar investment into an old steel-processing plant.

The American branch of Indian steel conglomerate JSW acquired the plant in the town of Mingo Junction and plans to revitalize it, after President Donald Trump’s tax cuts and steel tariffs made the investment competitive.

“The Trump administration was the driver behind giving us in the U.S. the ability to compete for capital,” John Hritz, the CEO of JSW Steel USA, told Fox Business on June 21.

JSW agreed to buy the plant from Acero Junction Holdings for $80 million in March.

The investment will bring 300 permanent jobs to a town of some 3,400 and give work to about 1,000 contractors during the revitalization, Hritz said.

“We are going to revitalize that facility and that entire community,” Hritz said.

He plans to have the plant producing steel by September.

Steel plant in Mingo Junction, Ohio. (Screenshot via Google Maps)

Last year, Trump had the Republicans pass a large tax cut package that included slashing the corporate tax to 21 percent from as high as 39 percent.

In March, Trump imposed steep tariffs on steel imports, a move seen as a countermeasure to China’s subsidization of steel production.

“It’s not just the tax cuts, it’s what the president did, and [Commerce] Secretary Ross, about making a fair playing field regarding stopping the dumping of steel from countries that were dumping illegally,” Hritz said.

Hritz said he had to compete for investment dollars within the JSW group and justify why the Ohio plant should get the money instead of another project, such as building a factory in India.

“We have demonstrated that the return on investment that we can gather in this country is going to be outstanding,” Hritz said.

The steel plant in Mingo Junction, Ohio, on May 5, 2009. (Rick Gershon/Getty Images)

His announcement comes after JSW agreed in March to invest $500 million in an existing plant in Baytown, Texas. The company planned to double its workforce at the plant, from 500 to 1,000 workers.

“We need a lot of great craftsmen,” Hritz said at the time. “We need every facet of people that you can imagine.”

As many as 20,000 U.S. manufacturers, including the Baytown plant, have asked for exemption from the tariffs so they can import materials that are hard to obtain in the United States.

While some 8,000 have obtained the exemption, not many more should expect to get one, according to Fox Business’s Edward Lawrence, because their applications are based on price, not availability.

“Hardship on price is not going to get you an exemption,” Lawrence said, relaying information from Commerce Secretary Wilbur Ross.

The investment in Baytown covers building a new steel furnace that will eliminate the plant’s need for an exemption. The Ohio plant won’t need one either.

Town Alive Again

Mingo Junction has been a home of iron works since 1869, according to historical literature. Its massive steel mill, founded in 1929, used to be the largest of the Wheeling-Pitt plants and was still modernizing as recently as 2004, with a $115 million electric arc furnace. But since 2009, the plant pumped out no steel and changed owners multiple times. In 2014, the older parts of the plant were demolished, the Herald-Star reported. The last owner, Acero Junction, tried to get the 80-inch rolling mill into production, but was falling behind on payments to contractors, the paper reported.

The town had struggled ever since the mill slowed production and closed, wrote Joe Porter, a local resident for 37 years, in a 2017 letter to the local paper. The population more than halved, and the village council struggled to maintain services.

“For 2 1/2 years, council beat us down on changing the water bill because the water plant was built too big. It was built for the mill and not for the people who live here,” Porter wrote. “They’d raise the rates and then turn off the street lights. It was always something.”

The steel mill looms over a closed-down business in Mingo Junction, Ohio, on May 5, 2009. (Rick Gershon/Getty Images)

The news of the $500 million investment rocked the town.

“It’s great,” Mayor Ed Fithen told the Herald-Star. “It’s a good mill. I worked there for 35 years. You go out on the streets, and the past two days, it is all anybody talks about.”

JSW will first spend $250 million to restart the electric arc furnace and refurbish the hot strip mill and slab caster. The second half of the investment will add another furnace and hot strip mill, pending permits and results of feasibility studies.

“I hope they do something and it takes over, brings things back,” local man Tom Strohmeyer told the newspaper. “Over half the businesses are gone. No grocery stores, not even a gas station. We have nothing here anymore.”

A retired steelworker Tom “Dilly” Kakascik (R) in the Spuds Parkview Bar in Mingo Junction, Ohio, on June 27, 2009. (Rick Gershon/Getty Images)

Local resident Fred Pernick told the Herald-Star: “It’s good for the city. We were hurting real bad.

“It might bring more businesses, a bigger police force, and bigger public works department. We have hope, movement, prosperity. We are moving in the right direction.”

For the first time in at least a decade, the locals see a bright future, even if it brings more exhaust fumes.

“It’s a blessing,” said resident Therese Elder. “This time it’s real. You won’t see our guys on the streets. They will be working in the mill.”

 

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