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British Steel is still limping along, losing £5 million a week while it continues looking to secure a buyer.

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After reporting on the group entering into the Official Receiver’s hands in the spring we have been following its ups and downs in the expectation that eventually the most likely bidder would be Britain’s largest steel producer, Liberty House, owned by steel entrepreneur Sanjeev Gupta. The group already owns several other steel assets in the U.K. and mainland Europe.

While Liberty House appeared to be the frontrunner, it seems to have been sidelined in favor of a more controversial bidder: Turkish pension fund Oyak.

The bidder is controversial because Oyak oversees the Turkish military’s $15 billion pension fund. While Turkey was seen as a key NATO ally of the west a decade ago, it has slipped into increasingly nationalistic and antagonistic rhetoric under autocratic leader Recep Tayyip Erdoğan. Clearly, Oyak will be close to both the military in Turkey and the government of President Erdoğan, and have come under criticism from labor unions back home in Turkey.

Oyak recently closed Chemson, a Wallsend-based firm that makes additives used in the production of PVC plastic, moving production to Austria and Turkey at a loss of 64 jobs.

Last week, it announced it would cease production at the site by the end of September, the Guardian reported, raising fears that a successful bid for British Steel could likewise be followed by a hollowing out of jobs as the new owners drive for profits.

But are such fears well-founded?

British Steel has struggled to make a profit and is badly in need of further investment if it is to survive. Indeed, the reason Oyak is preferred over Liberty is the latter has been quite clear that it would close one of Scunthorpe’s blast furnaces and use metal from another of its steel mills in Yorkshire, with the loss of many more jobs than the few hundred Oyak proposes.

Oyak, on the other hand, is looking to raise production. Last year, Scunthorpe produced 2.8 million tons, but the new buyer has plans to raise production to 3 million tons and, eventually, 3.2 million tons, according to the Financial Times. It also intends to dramatically improve productivity, said to be woefully poor by European standards.

Oyak is not new to steelmaking. The fund owns 49.3% of Turkey’s largest steelmaker, Erdemir, as well as a sprawling range of mining and manufacturing assets ramging from automotive to cement (in addition to steel).

Oyak’s plans for British Steel are a double-edged sword.

On the one hand, it wants to preserve and indeed expand production, which will find widespread support in the U.K.

On the other hand, it is coming cap in hand to the British government looking for contributions to improve the steelmaker’s carbon footprint.

The plan is to move from coal to gas-powered blast furnaces and eventually — and most controversially, because it has not been done at scale before — to hydrogen, taking the company to a near-zero carbon footprint.

Oyak said it plans to invest some £900 million in the plant (although over what time frame that investment will come is unclear), but a figure of £300 million from the government has been reported as the sum it is looking for.

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Why Oyak is planning to do this in the U.K. and not at home with Erdemir is a question; the cynic would suggest it know the economics of such a move are shaky but believes the British government may be more up for taking a punt than the authorities back home.

At present, any contribution would have to be on the basis of commercial loans if the U.K. is to avoid falling afoul of E.U. subsidy legislation — although whether the U.K. would be subject to that post-Brexit remains to be seen.

beeboys/Adobe Stock

On April 19, 2018, the U.S. Department of Commerce issued anti-dumping and countervailing duty orders on certain types of aluminum foil from China.

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Chinese producers appealed the decision, but the U.S. Court of International Trade this month opted to uphold the Commerce Department’s determination.

The Chinese plaintiffs lodging the appeal were: Jiangsu Zhongji Lamination Materials Co., (HK) Ltd., Jiangsu Zhongji Lamination Materials Co., Jiangsu Zhongji Lamination Materials Stock Co. Ltd., and Jiangsu Huafeng Aluminium Industry Co., Ltd.

Zhongji’s appeal focused on five aspects of the Commerce Department’s decision, including: the use of South Africa as the primary surrogate country in the case; using Descartes instead of Xeneta data to value international freight; valuing Zhongji’s aluminum scrap using the incorrect HTS classification; calculating Zhongji’s VAT adjustment “based on the wrong transaction”; and the deferment of the Commerce Department’s decision past the statutory deadline.

Zhongji argued the selection of South Africa as a surrogate country for comparison was not appropriate, claiming South African aluminum foil exports were distorted by subsidies and that Bulgaria’s aluminum foil values were more closely aligned with those of Zhongji.

The court, however, said Zhongji’s arguments did not meet the necessary legal standard.

“The subsidies alleged by Zhongji do not meet the ‘reason to believe or suspect’ standard,” the court stated in its case summary. “When there is evidence of a potential subsidy but Commerce has not previously found the specific program to be countervailable, Commerce does not per se reject the data in question and requires evidence of distortion before it will reject it.”

The court acknowledged that the Commerce Department did in fact submit its determination after both the 140- and 190-day statutory deadlines (the latter used for “extraordinarily complicated” cases).

“All parties agree that Commerce violated even the later deadline, which fell on October 4, 2017, by publishing its preliminary determination in the Federal Register on November 2, 2017,” the court summary states. “However, Commerce’s late filing of a preliminary determination does not preclude it from issuing an affirmative preliminary determination, as precedent dictates that statutory deadlines are not mandatory in the absence of an express statement of consequences from Congress.

“In light of this precedent, the court affirms Commerce’s affirmative preliminary determination and collection of duty deposits notwithstanding the missed deadline.”

Ultimately, Judge Gary S. Katzmann ruled in favor of the Commerce Department.

“The court affirms Commerce’s selection of primary surrogate country and data to value Zhongji’s aluminum foil inputs, as Commerce was within its discretion under 19 U.S.C. § 1677b and Policy Bulletin 04.1 in making those selections based on the evidence in the record,” Katzmann wrote. “Additionally, the court grants Commerce’s request for a remand to recalculate its VAT adjustment using the correct sale price. Finally, the court affirms Commerce’s preliminary determination and collection of duty deposits notwithstanding its violation of the statutory deadline.”

The Commerce Department now must file with the court and provide to the parties a revised determination of its VAT calculation within 90 days.

After the requisite determination is filed and provided to the relevant parties, “the parties shall have 30 days to submit briefs addressing the revised final determination to the court and the parties shall have 15 days thereafter to file reply briefs with the court.”

The Aluminum Association expressed its support for the court’s ruling.

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“The Aluminum Association was pleased that the U.S. Court of International Trade affirmed the bulk of the Department of Commerce’s final antidumping determination on certain aluminum foil from China,” said Lauren Wilk, the Aluminum Association’s vice president for policy and international trade. “The court’s decision reinforces the critical role rules play in a functioning global trading system. Targeted trade enforcement – as we’ve seen successfully deployed in the U.S. markets for aluminum foil and common alloy sheet– can have a meaningful and positive impact on U.S. manufacturers.

“The association and its member companies are determined to vigorously defend these orders and are committed to trade enforcement as a tool to address the symptoms of persistent Chinese overcapacity in the aluminum industry, which is impacting the entire value chain.”