The state wants to shutter Georgetown’s port – but steel mill buyer needs it open

Georgetown's steel mill to depend on port remaining open

The future of Georgetown’s steel mill depends on the nearby port remaining open.
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The future of Georgetown’s steel mill depends on the nearby port remaining open.

This city on Winyah Bay was settled centuries ago because of the port there, at the confluence of four rivers.

Now, the breakbulk port is struggling to move cargo while nearby Charleston continues to break records for container shipping.

State officials say the Georgetown port is likely on the way to closing, after moving 7,466 pier tons in fiscal year 2017, sharply down from the 249,149 tons in fiscal 2016. The port needs to be dredged of the silt that’s making it too shallow for some ships.

The Army Corps of Engineers estimated eight months ago that could cost north of $70 million to dredge to a depth of 27 feet; a port also has to move at least 1 million tons of material for the Army Corps to continue to maintain it after a dredge.

But just as the port is closing, one group has surfaced that might significantly increase its volume – London-based Liberty House Group, which is in discussions to buy the nearby steel mill.

“We want to use the port,” Gordon Spelich, a consultant for Liberty House, said. “I think at low tide, we’ve got 17 feet right now, which, that’s fine, because we can use barges to get to the facility. Would we like to see it dredged deeper? Yes we would, but that’s going to be a longer-term thing.”

The Sun News learned that Liberty House is intent on using the port of Georgetown after receiving a copy of a presentation given to area officials by Spelich and other consultants on Wednesday.

No price for the mill was included in the package, and Spelich declined to provide a purchase price due to ongoing negotiations with the current owner, ArcelorMittal. Liberty House could spend an estimated $26 million in start-up costs, new equipment and site work, and the reopening could bring up to 350 direct and indirect jobs back to the area.

But the plan to use barges clashes with the S.C. Ports Authority, which says the port is at the end of its useful life, and with area officials who still hope to redevelop the area around the port if it closes.

‘The town got duped’

At the time Georgetown was incorporated in 1732, its port mostly moved products used in shipbuilding – tar, pitch and turpentine.

Just a few years ago, it moved in raw products and moved out finished steel rods from the nearby steel mill.

Now, residents want to keep the port working, former Councilwoman Jeanette Ard said, and city residents helped approve a county-wide 1 percent sales tax in 2014 because it was meant to set aside $6 million for the dredging of the port, in addition to other capital projects.

But more recent cost estimates have far outstripped what that tax might generate before it expires in 2019.

“I think the town got duped,” Ard said. “We lose something significant … if we don’t continue to be a port city.”

Mayor Jack Scoville said local leaders made an honest effort to raise the money.

“I worked as hard as anybody,” he said. “We weren’t able to come up with the money in time [before costs rose].”

Resident Luci Chandler said the possible port closing “just seems kind of sad.”

‘A house divided’

Chandler, who lives in the same house on Front Street that she grew up in, now assists on riverboat tours.

The steel mill, long the driver of the port’s traffic, opened just as she graduated high school in 1970 and operated for much of her adult life.

The wire rod plant has been through many years of difficulty, pausing production at various times since former owners filed for bankruptcy in 2003, when it operated under the name Georgetown Steel.

The city is “a house divided” on its reopening, Chandler said.

“I know a lot of guys that never would have been able to build the homes they did” without steel jobs, Chandler said.

At the same time, she saw houses and nearby car lots covered in red dust thrown into the air from processing iron ore.

Spelich said that a reopened mill would no longer produce red dust, because it would not process raw iron ore.

The sale of the mill would come at an opportune time for the workers who have been idle since the plant closed in July 2015, however.

Steelworkers Local 7898 President James Sanderson said the union’s continuing agreement with ArcelorMittal includes sub-pay for two years: 80 percent pay for the first six months after the layoffs, 60 percent pay for the next six months and than 40 percent the final year.

Former steelworkers are still entitled to health insurance without premiums for a total of 40 months after losing work.

“People are extremely delighted they will be able to get back in that mill running and operating, that’s what they have been trained for, that’s what they have specialty in,” said Sanderson, who said he expects rehiring to begin next month.

Redevelopment in doubt

Scoville said the fact that ArcelorMittal is still bound to a union agreement was an incentive to sell to another steel-producing company, instead of a private developer as the city had envisioned.

A new steel company would take on ArcelorMittal’s current obligations to the union, while a developer or another type of buyer would not.

Before the negotiations with Liberty House were revealed, the city commissioned a study from the Urban Land Institute, which recommended redeveloping the waterfront land around the mill and port into a mixed-use area.

Scoville was a booster of the plan and rezoning the land, which would have given Liberty House a year to open the mill before it went into effect.

As a result, the steelworkers’ union endorsed Brendon Barber, a city council member who challenged Scoville in the Democratic primary for the mayor’s seat.

Barber won a run-off in late June.

“The union played hard against me. I thought that was unfair, but that’s their decision to make,” Scoville said. “I’m sure it was a factor, but whether it was a big factor, I couldn’t say.”

Scoville said he still hopes parts of the redevelopment plan will go into place if Liberty House does not use all of the mill site for production and if the port does close.

But Spelich said that using the port to move raw materials is crucial to Liberty House’s plan, and that the plant could eventually use more land in the area if it chooses to add more operations.

“We would look to expand down the road if we’re successful,” Spelich said, “and I’m fairly confident we’re going to be successful.”

Chloe Johnson: 843-626-0381, @_ChloeAJ