According to a Reuter’s report, a dozen U.S. senators urged the Obama administration on Wednesday that a national security review panel rejects China Zhongwang’s proposed $2.3 billion takeover of U.S. aluminium products maker and a major aerospace supplier Aleris Corp. The deal marks the highest price ever paid by a Chinese firm for a U.S. metals producer and it has shocked many U.S. aluminium-industry officials as the deal has come in a period when the U.S. aluminium industry is taking a stand against Chinese import.
In a letter to the Treasury Secretary Jack Lew the senators requested to launch a review of the deal and "ultimately reject it" on grounds that it would “directly undermine our national security” “by jeopardizing the U.S. manufacturing base for sensitive technologies”. The senators fear that the deal may transfer sensitive technologies and knowhow to China further harm an industry which is already kneeling under China’s market distorting policies.
The U.S. Commerce Department is currently investigating China Zhongwang and its associates in the U.S. over the allegations that it has been evading U.S. import duties by exporting cheap products as fake semis and shipping through third countries.
The petition was signed by Republican Rob Portman of Ohio, the base for Aleris, and Democrats Ron Wyden, Charles Schumer, Bob Casey, Joe Manchin, Kirsten Gillibrand, Joe Donnelly, Debbie Stabenow, Jeff Merkley, Amy Klobuchar, Tammy Baldwin and Al Franken.
They drew attention to the fact that, through this deal sensitive research data can be transferred to China, including advanced modelling techniques for defence applications, high-strength alloys and the design of light armour material.
"China’s overcapacity in aluminum has directly contributed to severe reductions in U.S. domestic production as smelters unable to compete have been forced to close. Each such closure further imperils our nation’s ability to ensure a reliable supply of strategic materials in times of crisis," the senators wrote.
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There was however no official comment on the letter from the Treasury spokesperson.
Aleris however said in a statement that the company's U.S. facilities do not supply to the U.S. defence and the technology for aluminium plate to be used in defence applications are widely used in the industry globally.
"Our facilities in the U.S. produce aluminum for car and truck exteriors, gutters and roofing material," Aleris said. “Less than one percent of our sales go into defense applications, and none of those goods are produced in the U.S," they added.
A Zhongwang spokesperson said in a statement that the CFIUS (The Committee on Foreign Investment in the United States) filing for the transaction is voluntary and that the company and its U.S. subsidiary have no connection with the Chinese government. She added that the deal would add extra resources and capital to Aleris without making any change to the management, employees or business strategies.
The takeover would give China Zhongwang, which is already a leading extruded aluminium products maker in the world, access to U.S. technology and consumers like Boeing Co and U.S. and European automakers that are quickly shifting to aluminium. The deal comes at a time when another Zhongwang subsidiary is embroiled in a dispute over U.S. import duties amid broader trade tensions between the two countries.
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