EoW July 2014

Transatlantic cable

strategic options” it was considering for its US operations might be pursued. According to Bloomberg News sources, Russia’s second-largest steelmaker was weighing a bid from US Steel Corp (Pittsburgh) for two plants, including a furnace originally built by Henry Ford in Michigan. The mills Severstal North America may sell – the Dearborn, Michigan, blast furnace and an electric furnace in Columbus, Mississippi – have a combined annual production capacity of 5.2 million metric tons of steel, or about six per cent of total US production in 2013, according to World Steel data. Christopher Plummer, CEO of the West Chester, Pennsylvania, consultancy Metal Strategies Inc, told Bloomberg reporters Sonja Elmquist and Yuliya Fedorinova that, while Severstal is one of the world’s lowest-cost steelmakers, it has not succeeded in bringing many of its e ciencies to the US. The company’s international unit, which operates the two US plants, had a pro t margin based on earnings before interest, taxes, depreciation and amortisation of 7.4 per cent in rst-quarter of 2014. According to gures from Severstal cited by Bloomberg , that performance was the best among its foreign operations, as measured by pro tability, since at least the start of 2008. Lower raw material costs were a major contributing factor. But according to a 30 th April statement by the company the margin at its Russian business was 15 per cent. Severstal began in the US in 2004 when it bought Rouge Steel, of Dearborn, out of bankruptcy. With a sale of the Dearborn and Columbus plants, in which it invested more than $2 billion, the Russian company would complete a disassembly begun in 2010 when it sold plants in Illinois and Ohio back to Esmark Inc after only two years. Severstal sold mills in Maryland, Ohio, and West Virginia to Renco Group Inc in 2011, losing about $2 billion on the assets in the process. The steelmaker also owns PBS Coal in Pennsylvania, which it bought for about $1 billion in 2008 and then partially closed in 2013. † In other news of Severstal, the Michigan Department of Environmental Quality approved a controversial revised permit that will allow the company’s Dearborn plant – which a DEQ o cial called “the most egregious facility in the state” for pollution violations in 2012 – to release higher levels of smokestack pollutants. Wrote Detroit Free Press sta writer Keith Matheny (12 th May): “Allowing Severstal to operate under 2006 permit rules lets it avoid costly, more advanced and e cient pollution control technologies.” Steel imports into the United States continue to rise, from 28 million net tons in 2011 to 32 million net tons in 2013, an increase of 12.3 per cent. According to a report released on 13 th May by the Alliance for American Manufacturing, the Economic Policy Institute, and a Washington DC-based law rm, the surge in steel imports is undercutting the price of domestically produced steel. Now, more US steel producers all the time are seeking trade remedies – additional and higher tari s on imports – with the US Department of Commerce. Examining overcapacity of steel in the global marketplace, the industry-commissioned study asserts that responsibility for the glut lies with South Korea, India and, chie y, China. The authors blame government-supported steel companies that Approaching record levels, US steel imports are setting o the most trade complaints in more than a decade

Telecom

Huawei’s chief executive to America: “Our idea is to make people perceive [us] as a European company”

“Right now we should not be expending too much e ort in the United States as it might take 10 or 20 years for them to know that Huawei is a company with integrity. We will accelerate e orts in countries that have accepted us.” Speaking with reporters at a 2 nd May brie ng in London, Ren Zhengfei, the founder and CEO of Huawei Technologies Co, said that Washington’s lingering suspicions about his company’s motives had prompted China’s biggest maker of telecom network equipment to re-focus itself. “Our idea,” declared Mr Ren, “is to make people perceive Huawei as a European company.” In 2012 a US government report labelled Huawei and another Chinese network vendor, ZTE, as security threats that could be used as backdoors for Chinese espionage. Both companies have repeatedly said the claims are without merit, but the national security concerns have hampered Huawei in the US network equipment market. A curiosity of the situation was noted by Phil Goldstein of FierceWireless . Even as Huawei has been shut out of working with Tier 1 carriers in the US, the company continues to maintain strong relationships with Tier 2 and Tier 3 US carriers that have been buying Huawei equipment and are pleased with their relationships with the vendor. Among the smaller players provided by the Chinese company with radio access network and core networking equipment are Union Wireless, United Wireless, Nemont Telephone’s Sagebrush Cellular, and SpeedConnect. (“Despite Shifting Focus Away from US, Huawei Still Scores with Tier 2, Tier 3 Carriers,” 6 th May) Mr Goldstein cited the example of SpeedConnect, a wireless service provider which controls 2.5GHz spectrum across the Great Plains and Midwest and has some 35,000 customers, according to founder and managing partner John Ogren. SpeedConnect worked with Huawei to deploy WiMAX services and its customers typically access them in conjunction with TV service from either DirecTV or Dish Network, Mr Ogren said. SpeedConnect has had a three-year relationship with Huawei and uses its SingleRAN BTS platform. Looking to upgrade its network to TD-LTE technology in the near future, the company is considering Huawei, among others, for the job. Mr Ogren told FierceWireless , “They have proven to be a very supportive vendor for us.” † The SpeedConnect-Huawei partnership began before the eruption of security issues, and Mr Ogren said he has never experienced any concerns related to Huawei equipment. “I have [seen] no signs of any of the things that have been reported in the popular press,” he told Mr Goldstein. “Huawei represents no particular risk – no more, no less” than any other vendor.

Steel

After ten years and $6 billion spent, Russia’s Severstal is looking to pull up stakes in the United States

The Russian steelmaker OAO Severstal said on 14 th May that no decision had yet been made as to which, if any, of the “range of

28

www.read-eurowire.com

July 2014