Union sources were leaking reports to Ohio Valley media last night that Renco Group has become the choice of the United Steelworkers’ top brass to purchase Sparrows Point and two other mills from Severstal.

Meanwhile, a source told The Brew that Argentine steelmaker Ternium – favored by many Sparrows Point employees because it promised to restore production at the mill – was “out of the running.”

According to reports here and here, USW officials have designated Renco as their preferred bidder and expect the company to reach a purchase agreement with Severstal in the near future.

Renco is controlled by New York financier Ira Rennert and has interests in mining and manufacturing.

Under a right-to-bid provision, the USW can put forward a buyer for Severstal’s three mills at Sparrows Point, Warren, OH, and Wheeling, WV.

Using the same provision, the union helped Severstal win control of Warren and Wheeling from rival steel companies in 2008.

The USW also backed Severstal’s purchase of Sparrows Point in 2008. This purchase was conducted under the auspices of a federal trustee to settle a Department of Justice anti-trust suit against ArcelorMittal.

After a brief honeymoon, the USW and Severstal fell to bickering and have never agreed on a new contract to replace a contract that expired in September 2008.

With the three mills now mostly idled – there are about 1,200 laid-off workers at Sparrows Point alone – the union is demanding that the mills be sold.

Last week The Brew reported that Renco was one of the top bidders for the mills, along with Ternium, Optima/MetinvestHolding and Aurora Capital.

Ternium had sought to purchase Sparrows Point by itself. This was not acceptable to USW’s chief negotiator, Dave McCall, who has insisted that the best strategy to assure the future of the three mills was to sell them as a package.

The union also reportedly considered and rejected Optima, which is affiliated with Ukrainian mining kingpin Rinat Akhmetov.

Aurora Capital, a Los Angeles-based investment company, has reportedly joined forces with Renco in its bid for the steel properties.

There has been no official confirmation that talks were proceeding among Renco, Severstal and the USW.  Severstal spokesperson Marika Diamond said this morning that the company would comment when appropriate.  Sparrows Point Local 9477 president John Cirri has not responded to an e-mail seeking comment.

Reach Mark Reutter at reuttermark@yahoo.com