Severstal issued the following statement to the Brew tonight:

“The primary steel making facilities at Severstal Sparrows Point will be idled in response to weakening market conditions as well as the need to balance inventories within the plant. The facilities will be idled for about 30 days beginning in late June but no later than July 1. The affected facilities include ironmaking, steelmaking and continuous casting. Employees placed on layoff will be eligible for state unemployment compensation as well as company-provided supplemental unemployment benefits.”

Severstal plans to temporarily close the steelmaking half of Sparrows Point by the end of June, according to a union official – a move that could potentially affect about 700 jobs and adds a new level of uncertainty to the future of Baltimore’s biggest manufacturing plant.

Russia-based Severstal will fulfill customer orders by importing semi-finished slabs from its mills in Russia and Dearborn, Mich. The slabs would then be finished into standard steel products at the Baltimore County facility, according to John Cirri, president of United Steelworkers Local 9477.

In an e-mail to union members last night, Cirri said, “We will be meeting next week [with Severstal] to review the [closure] plans and at that time will have a clearer picture of the affect it will have on our workforce.”

The idling of plant facilities comes at a time when the company and union have been locked in a battle over a restructuring plan that could cut 600 jobs from the mill’s 1,800-member workforce.

Last month, the company and union agreed to extend restructuring talks by another 120 days.

In his e-mail last night, Cirri accused Severstal of violating the current contract by supplying slabs from other mills. He warned that “grievances/arbitration will commence.”

About 700 jobs on the “steel side”

Idling the steel side of Sparrows Point would include closing the mammoth “L” blast furnace, which makes pig iron from iron ore; the basic oxygen furnace, which makes steel from pig iron; and two continuous casters, which produce semi-finished steel slabs. In addition, there are various material-handling and disposal operations handled by subcontractors.

The “L” and BOF currently operate around-the-clock. Cooling down the furnaces, which make steel at 3,900 F, and then shutting down the equipment would cost several million dollars in labor and materials.

Likewise, restarting the furnaces is an expensive and delicate process. Severstal has told the union that it fully plans to reopen the facilities, but once a furnace is closed, there is a chance that the facility will not reopen.

Such a scenario has played out at Weirton, W.Va., and several other steel plants to the consternation of employees who were first told that the furnace shutdown was “temporary.”

Still One of Biggest Mills

Although greatly downsized, Sparrows Point remains one of the largest integrated steel mills in the U.S. It has the capacity to make 3 million tons of steel annually, or more than 8,000 tons a day.

The mill was said to have a “full” order book as recently as two months ago. But Severstal told Cirri yesterday that the steel side is closing because of “low market demand.”

A year ago, Local 9477 and Plant Manager Thomas J. Russo successfully resisted efforts from Severstal headquarters in Moscow to shut down the L blast furnace as a cost-cutting measure.

Instead, the furnace was kept open with a different “diet” of raw materials, which has led to an ongoing investigation by the Maryland Department of Environment regarding the discharge of pollutants.

In March, Russo was fired. Since then, several senior Sparrows Point managers have taken early retirement, most prominently Jim Jeff Weitzel and Jim Knott.

Severstal is majority owned by billionaire Russian businessman Alexei Mordashov, who is also the company’s CEO.

Reach Mark Reutter at reuttermark@yahoo.com.