Cleveland-Cliffs, North America's largest producer of iron ore, is buying AK Steel in a stock deal worth about $1.1 billion.
In news releases, the companies said that linking Cleveland-Cliff’s iron ore pellet production with AK Steel’s rolled and stainless steel operations is a smart business move.
"Everything is looking good," Valerie Schmidt, special projects coordinator for the Lincolnland Economic Development Corp. in Rockport, Indiana, said of the AK Steel plant there.
"They say it's going to be business as usual," she said.
That's important because the plant has 1,000 people working there -- 400 direct employees and 600 vendors, contractors and others, Schmidt said.
Brittaney Johnson, president of the Greater Owensboro Economic Development Corp., said she's not sure how many Daviess Countians work at AK Steel.
But 318 people who live in Daviess County work in Spencer County, she said.
After a brief spike in prices, U.S. steel producers have struggled since the Trump administration put a 25% steel tariff into place last year.
Domestic demand has slumped as oil and gas drillers pull back on purchases of steel pipe, with prices for natural gas tumbling 45% over the past 12 months, the Associated Press reported
The price for hot rolled steel has slid almost 30% this year, and the stock of steel producers have fallen accordingly, it said.
The steel industry has added just 1,800 jobs since February 2018, the month before the tariffs took effect, and it employs 10,000 fewer people than they did five years ago.
AK Steel reported net income of $2.8 million for the third quarter of this year -- down from $67.2 million in the third quarter of last year.
Net sales for the quarter were $1.5 billion -- down 12% from a year earlier.
AK Steel Holding Corp. stockholders will receive 0.40 shares of Cliffs stock for each AK Steel share they own.
Cliffs shareholders will own approximately 68% of the combined company, and AK Steel shareholders will own about 32%.
AK Steel will become a subsidiary of Cliffs and keep its branding and corporate identity.
Cliffs will remain listed on the New York Stock Exchange.
Its headquarters will stay in Cleveland.
But it will maintain a significant presence at AK Steel’s current offices in West Chester, Ohio, along with its research and innovation center in Middletown, Ohio.
The deal is expected to close in the first half of next year.
In 1996, the Owensboro region celebrated the announcement that AK Steel had selected Rockport over an Ohio site to build its new $1.1 billion steel-finishing plant.
That announcement said the steel mill would employ at least 400 workers on a 1,700-acre site near the Ohio River about six miles north of Rockport.
The plant quickly became Spencer County's largest employer.
Editor's note: The Associated Press contributed to this article.
Keith Lawrence, 270-691-7301, firstname.lastname@example.org