US lawmakers urge US Treasury Secretary to reject Aleris sale to China Zhongwang

The sale agreement of Aleris Corp to China Zhongwang Holdings Ltd has been one of the most critical as well as controversial announcements made during 2016. The announcement has created major concern among US lawmakers and aluminium players because of its critical after effects.  About 27 US lawmakers have urged US Treasury Secretary Steven Mnuchin to reject the proposed sale agreement of American aluminium products manufacturer Aleris Corp to China Zhongwang as it may impact US security interests.

In an update to Reuters, shared by Mnuchin, the lawmakers alleged that it would be a “strategic misstep” if the US$2.33 billion sale takes place.

 “It is critical that CFIUS [Committee on Foreign Investment in the United States] exercise extreme caution when a foreign investment transaction includes the transfer of military proficiencies and sensitive technology to China,” the lawmakers wrote.

The lawmakers highlighted the fact that since Aleris was involved in the production and testing of specialised alloys for US defence industry, the company’s research and technology were critical to US economic and national security interests and should not be exposed to a Chinese firm.

 “Chinese entities, including state-owned or state-controlled enterprises, often maintain relationships with China‘s military, compounding the risk that U.S. technologies will fall into the wrong hands,” they insisted.

They also brought about the facts that Zhongwang was also under investigation by the US Department of Commerce for allegedly evading countervailing and anti-dumping duties in the US. The company was also charged for smuggling, conspiracy and wire fraud by the US agencies.

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Aleris spokesman Jason Saragian however negated the fact that Aleris made defence products in the US.

“We believe this letter is based on misinformation,” he said. “The facts are that the completion of this transaction would result in job preservation and growth for hundreds of US Aluminum manufacturing jobs,” he said in an emailed response.

After the controversial sale announcement, in November 2016, about 12 US senators wrote to then Treasury Secretary Jack Lew urging him to launch a review of the deal by the Committee on Foreign Investments.