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EX-BETHLEHEM STEEL MILL IN LACKAWANNA WILL BECOME PART OF EUROPEAN COMPANY

International Steel Group's 250-job mill in Lackawanna will become part of a Europe-based steelmaker under a merger plan announced Monday.

Included in the deal is the former Bethlehem Steel property along Lake Erie -- a major source of tax revenue for Lackawanna and the focus of hopes for "brownfields" redevelopment.

ISG, based in Cleveland, acquired Bethlehem's mill and disused property in Western New York last year in a bankruptcy proceeding.

With the ex-Bethlehem property comes a costly environmental cleanup and a $1.1 million annual tax bill to Lackawanna, which ISG is fighting in state supreme court in Erie County.

ISG spokesman Charles T. Glazer said he didn't know how decisions about ex-Bethlehem property will be affected by the merger.

ISG will become part of Mittal Steel if the merger announced Monday is approved by stockholders and regulators next year. Based in the Netherlands, Mittal will be the world's largest steelmaker, with $30 billion a year in sales, company officials said.

The United Steelworkers of America endorsed the merger Monday. The new ownership gives workers a financially healthy employer and enhances the security of retirement benefits, the union said.

"This is a positive development and we are looking forward to a more secure future for our Steelworkers and the domestic steel industry," union president Leo Gerard said in a statement.

But how the deal will affect talks aimed at redeveloping vacant land along Lake Erie is unanswered.

"I don't want to say it's a setback because we haven't talked with (the new owner) yet," Erie County Executive Joel Giambra said.

Talks with ISG officials -- including chairman Wilbur Ross -- had seemed to be making progress toward a deal until recent weeks, when progress slowed, Giambra said.

The county has been involved in talks to exchange cleanup funds for land. The ex-Bethlehem site is included in the federal Renewal Communities Act, making companies that locate there eligible for tax breaks and job-linked tax credits.

However, much of the site is contaminated by cancer-causing benzene and other pollutants, according to the U.S. Environmental Protection Agency. ISG has estimated that a full cleanup would cost $64 million.

Also not known is how the merger will affect negotiations on ISG's local tax bill. Lackawanna has been holding out-of-court discussions with ISG about its disputed tax assessment, Mayor Norman L. Polanski Jr. said. The city and ISG are under court pressure to settle the costly assessment lawsuit, he said. The company owns about 1,400 acres assessed at $37 million -- including mills and empty land -- making it the city's largest taxpayer.

"If we were to get hit hard in a settlement with ISG, people would have to lose their jobs and services would have to be cut," Polanski said.

e-mail: fwilliams@buffnews.com

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