U.S. Lawmakers Urge Treasury Secretary to Reject Zhongwang’s Purchase of Aleris
11 June 2017 by Staff
Over two dozen United States legislators signed a letter calling upon U.S. Treasury Secretary Steven Mnuchin to disallow the sale of value-added aluminium firm Aleris to the People’s Republic of China’s controversial aluminium titan China Zhongwang Holdings. The letter, which was distributed to Reuters yesterday, cited national security concerns as their grounds for objecting to the potential sale.
Friday’s letter termed the sale a “strategic misstep” to allow the US$2.33 billion sale to go forward, as Aleris develops and tests aluminium alloys that are of significant import to the nation’s defense industry.
“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 pointed out in their letter. “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.”
As a result of Aleris’ involvement in the production of sensitive aluminium materials, the legislators reasoned that handing the reigns over to a firm domiciled in China.
“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,” opined the lawmakers.
In addition to potential ties to the Chinese military, Zhongwang has spent much of the last two years fending off charges by the U.S. government and others that it had recently been evading import duties via transshipment of “fake semis,” or aluminium that is partially formed and shipped (and taxed) under one customs code, then melted down into ingots and sold as such. Zhongwang has denied the allegations from the beginning, but lawmakers pointed out that the firm still found itself the target of investigations by U.S. law enforcement bodies on allegations of smuggling, conspiracy, and wire fraud.
Aleris responded to the letter by saying that it does not produce defense products in the United States.
“We believe this letter is based on misinformation,” said Aleris spokesman Jason Saragian. “The facts are that the completion of this transaction would result in job preservation and growth for hundreds of US Aluminum manufacturing jobs.”
Signatories of the letter included House of Representative Democrats David Loebsack (Iowa), Tim Ryan (Ohio), Gene Green (Texas), Debbie Dingell (Michigan), Seth Moulton (Massachusetts), Marcy Kaptur (Ohio), Pete Aguilar (California), Tony Cárdenas (California), Brenda Lawrence (Michigan), Norma Torres (California), Linda Sánchez (California). Among the House Republican signers were Robert Pittenger (North Carolina), Keith Rothfus (Pennsylvania), and French Hill (Arkansas).