Gerdau Ameristeel considers closing Sand Springs steel mill

Gerdau Ameristeel Corp. (NYSE: GNA) said it is suspending production at its Sayreville, New Jersey steel mill and closing its rolling mill in neighboring Perth Amboy, New Jersey due to lower demand for its products resulting from the downturn in the economy.

The company said it expects the moves to occur gradually over the next several months. The company indicated that it would restart operations at the Sayreville facility “when business conditions warrant.”

Gerdau Ameristeel said it is also entering into discussions with the United Steel Workers regarding the potential closure of the company’s steel mill located in Sand Springs, Oklahoma.

The company said that service to its customers will be uninterrupted and will be provided by production from Gerdau Ameristeel’s network of steel mills in the United States and Canada. The Sayreville facility will continue to carry a range of products in inventory available for shipment or customer pickup until production resumes.

In connection with the actions, (and depending on the outcome of the Sand Springs discussions), the company expects to incur an after tax charge from around $80 million to $140 million related to these closures.

Of these amounts, between around $15 million to $30 million are expected to be cash costs for severance and facility closure expenses. Depending on the outcome of the Sand Springs discussions, the company expects to realize annualized pre-tax cash savings of around $35 million to $70 million as a result of the moves.

Gerdau Ameristeel said it anticipates some of these charges to be included in the three month period ended June 30, and some to be included in the three month period ended September 30.

Tampa, Florida-based Gerdau Ameristeel is a mini-mill steel producer in North America with annual manufacturing capacity of around 12 million tons of mill finished steel products.