US push to block China metal move

A GROUP of US senators called on the government on Wednesday to block the Chinese metals giant Zhongwang’s takeover of a US aluminium processor for the auto and aerospace industries.

Writing in a letter to Treasury Secretary Jacob Lew, the 12 senators said the China Zhongwang Holdings group, already reportedly under investigation over alleged import tariff avoidance, should be blocked from the $1.1 billion purchase of Cleveland-based Aleris Corp on national security grounds.

The Committee on Foreign Investment in the United States (CFIUS), chaired by Lew to review foreign investments in sensitive US businesses, should review and reject the deal, they said.

“Zhongwang’s purchase of Aleris would directly undermine our national security, including by jeopardizing the US manufacturing base for sensitive technologies in an industry already devastated by the effects of China’s market distorting policies,” they wrote.

The deal would create “serious risk that sensitive technologies and knowhow will be transferred to China, further imperilling US defence interests”.

Zhongwang, China’s largest aluminium processor, announced the deal to buy Aleris in August. Aleris processes aluminium for numerous industries, particularly the auto and aerospace sectors.

It has an auto industry plant in Duffel, Belgium and is building a new one in the southern US state of Kentucky. Aleris also makes aluminium parts for aircraft bodies and wings in plants in Koblenz, Germany and Zhenjiang, China.

The company also makes aluminium protective plating for militar y vehicles in Germany, a point on which the senators focused in their letter to Lew.

“Aleris’s defence production demonstrates the type of specialised expertise and capabilities that provide the foundation for our defence industrial base,” they said.

“Aleris’ R&D and technology are critical to current and long-term US economic and national security interests.”

The company denied the deal would threaten national security, saying it represents “continued investment in the future of American jobs”.

“Less than 1 percent of our sales go into defence applications, and none of those goods are produced in the United States,” spokesman Jason Saragian said in a statement. “The technology to produce aluminium plate, which is used in some military applications, is standard production technology widely used in the aluminium industry.”

The senators also argued that China’s huge overcapacity in the aluminium industry has led to the decimation of the US industry and “contributed to the hollowing of our nation’s industrial base”.

Zhongwang has already courted controversy in the United States.

The company is under federal probes over alleged smuggling of aluminium into the country disguised as pallets in order to avoid steep punitive tariffs on the company, the Wall Street Journal reported. Washington determined in 2010 that China Zhongwang benefited from illegal subsidies and was dumping its products on the US market.