Between 1,000 and 1,200 workers – or about two-third of the hourly labor force – face long-term layoffs at Severstal Sparrows Point, John Cirri, president of Local 9477 of the United Steelworkers (USW), told members last night.

The company did not disclose the exact number of layoffs – or when they will begin –during a meeting yesterday, according to Cirri.

The layoffs will extend through December 2010, Cirri said. Management told him it is “still uncertain” whether Severstal will reopen the mill during the first quarter of 2011.

Other than confirming the shutdown, Severstal has not released any additional information.

Mills to be Shut

Under the company’s latest “business plan,” Cirri said the plant’s hot mill, where steel is rolled into flat coils, would operate for another three weeks to consume current inventory, then close for the balance of 2010.

The cold and coated mills – the heart of the Point’s finishing operations – will “run light and once customer needs are met, they, too, will be idled,” Cirri wrote.

Only tinplate operations will stay open because Severstal does not have adequate substitute operations at its plants in Ohio, Mississippi and Michigan.

In July, the “L” blast furnace and other steelmaking facilities were closed.

Discouraging Orders

Severstal has blamed the shutdown, which it confirmed yesterday following a post in the Brew, on a sharp drop in customer orders due to a slowing economy.

While sales have been sluggish nationwide, Sparrows Point is the only major U.S. steel mill to face drastic production cutbacks and mass layoffs.

The company has reportedly been discouraging customers from ordering from the Point (here) and has been locked in a bitter dispute over manning and other issues with the USW (here).

Yesterday, a well-placed source told this website that Severstal will reopen its electric arc furnace near Steubenville, Ohio, to fill existing customer orders rather than restart the “L” blast furnace at Sparrows Point.

The shutdown of the L furnace and related facilities has impacted about 700 hourly workers.

An additional 1,000-1,100 people work in the finishing mills. About 300-400 independent contractors are employed at Sparrows Point as well as about 500 salaried workers.

Selling off Raw Materials

Owned by Russian billionaire Alexei Mordashov, Severstal claims it has lost more than $100 million at Sparrows Point since the beginning of the recession in 2008.

Mordashov has told top aides that the company will no longer sustain these losses.

The company intends to sell its raw material inventory, mostly iron ore, stored in mountainous piles across the southern edge of Sparrows Point.

With iron ore prices at high levels, the sale could generate $200 million or more in cash.

But selling off the inventory also means that the Baltimore mill would not be able to reopen its furnaces until the stock is replenished.