Severstal Sparrows Point – and its customers – will be walking a legal tightrope in the coming weeks because the steel slabs the company has just imported from Russia are barred from projects funded with federal dollars, including federal stimulus money.

“Buy America” provisions require that all processes that melt, make or modify the shape of steel must be conducted within U.S. borders. The rules cover everything from the steel rebar used in highway construction to hot-band coils used for hundreds of items in projects funded by the American Recovery and Reinvestment Act, commonly known as the Stimulus Act.

Company spokesperson Bette Kovach said, “We will not be responding to your questions,” when asked yesterday how Severstal planned to separate its Russian-made steel from domestic production.

So far, the company has refused to confirm that Russian steel has been shipped and stored at Sparrows Point. Over the weekend, the Bulgarian freighter Pirin delivered nearly 1,000 slabs manufactured by Severstal’s Cherepovets mill in northern Russia.

The slabs, each about 28 feet long and weighing about 24 tons, are expected to be fed into the finishing operations at Sparrows Point to help meet customer orders when the steelmaking side of the mill is closed for 30-45 days next month.

More steel from Russia is expected. Severstal also is shipping slabs from its U.S. mills. These slabs would qualify as domestic steel and could be used in government-funded projects.

Queasy About Overseas Steel

Most of Sparrows Point’s customers are private companies or steel service centers that do not have specific restrictions against foreign-produced steel.

However, some customers are reportedly queasy about buying products that originate overseas, based on questions of quality control and the manufacturing process.

Sparrows Point has been making steel from scratch since 1891. But steel has become expensive to make because of escalating raw material costs. With steel prices low since the start of the world recession, the Point has not turned a profit in nearly two years.

Other Severstal operations in the U.S. have been losing money, putting heavy pressure on the company to turn around these mills. Facilities in Ohio and West Virginia have been semi-permanently closed because of high operating costs.

Rank-and-File Anger

The Brew’s disclosure of the arrival of the slabs has caused anger and fear among the workforce, which is facing hundreds of layoffs during the temporary shutdown of the furnaces.

Rank-and-file workers complain that they are being kept in the dark, without any communication from United Steelworkers Local 9477. Union president John Cirri has not responded to requests for comment about the Russian slabs.

Tomorrow, plant manager David A. Howard is expected to meet with Cirri and other union officers to discuss the temporary shutdown and expected layoffs.

Mark Reutter can be reached at reuttermark@yahoo.com.