NEW YORK – Zhongwang USA LLC, backed by Chinese aluminum magnate Liu Zhongtian, said on Monday it would buy U.S. aluminum company Aleris Corp in a bet by the billionaire that the nascent U.S. automotive aluminum sector will be the industry’s next big growth market.
The $2.33 billion deal comes as Liu and Zhongwang International Group Ltd, the parent of Zhongwang USA, are embroiled in a dispute over U.S. import duties amid broader trade tensions between the U.S. aluminum industry and China. It marks the biggest entry by a Chinese company into the U.S. aluminum industry since trade tensions began ramping up in recent years.
Zhongwang International is parent of China Zhongwang Holdings Ltd, the world’s second-largest producer of aluminum extrusions. It has been accused of evading U.S. import duties on extruded products, prompting an investigation by the U.S. Department of Commerce (DOC).
The acquisition has strategic importance because Aleris is in the midst of a $350 million expansion of its Lewisport, Kentucky rolling mill to produce automotive body sheet for U.S. auto manufacturers. It hopes to produce 200,000 tonnes per year and begin shipping in 2017.
Liu said in a statement that Aleris is “well-positioned to capitalize on the positive demand trends we see globally.” Auto manufacturers like Ford Motor Co have been moving toward aluminum, which is lighter than steel, to reduce body weight of autos in order to improve gasoline mileage, which will reduce emissions.
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