Lawmakers urges U.S. Treasury to reject Aleris sale to China aluminum giant

WASHINGTON (Reuters) - More than two dozen U.S. lawmakers have urged U.S. Treasury Secretary Steven Mnuchin to reject the proposed sale of U.S. aluminum products maker Aleris Corp ALSD.PK to China Zhongwang Holdings Ltd 1333.HK to protect U.S. security interests.

United States Secretary of the Treasury Steven Mnuchin speaks at a news conference on Parliament Hill in Ottawa June 9, 2017. REUTERS/Patrick Doyle

In a June 9 letter to Mnuchin shared with Reuters, the 27 lawmakers said it would be a “strategic misstep” to allow the $2.33 billion sale to go ahead.

“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.

They added: “It would be a serious strategic misstep to permit a company like Zhongwang Holdings Ltd to take control of a U.S. aluminum firm like Aleris.”

The lawmakers said Aleris was involved in the production and testing of specialized alloys used by the defense industry, and the company’s research and technology were critical to U.S. economic and national security interests.

“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 wrote.

Additionally, Zhongwang was under investigation by the U.S. Department of Commerce for allegedly evading U.S. import duties, and was being probed by U.S. agencies over allegations of smuggling, conspiracy and wire fraud, they said.

Aleris spokesman Jason Saragian said Aleris did not make defense products in the United States.

“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 to the letter.

Zhongwang, backed by Chinese aluminum magnate Liu Zhongtian, announced the deal in August, in a bet by the billionaire that the nascent U.S. automotive aluminum sector will be the industry’s next big growth market.

Last November, a dozen U.S. senators wrote to then Treasury Secretary Jack Lew urging him to launch a review of the deal by the Committee on Foreign Investments by the United States.

Lawmakers who signed the new letter include House of Representative Democrats David Loebsack, Tim Ryan, Gene Green, Debbie Dingell, Seth Moulton, Marcy Kapur, Pete Aguilar, Tony Cardenas, Brenda Lawrence, Norma Torres, Linda Sanchez, and Republicans Robert Pittenger, Keith Rothfus, and French Hill.

Reporting by Diane Bartz and Lesley Wroughton; Editing by Marguerita Choy