Lawmakers push to block Chinese takeover of US aluminum firm

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Washington (AFP)

A group of US senators called on the government Wednesday to block the takeover of a US aluminum processor for the auto and aerospace industries by Chinese metals giant Zhongwang.

The 12 senators said in a letter to Treasury Secretary Jacob Lew that the China Zhongwang Holdings group, already reportedly under investigation over alleged import tariff avoidance, should be blocked from the $1.1 billion purchase of Cleveland-based Aleris Corp on national security grounds.

They said that the Committee on Foreign Investment in the United States (CFIUS), which is chaired by Lew to review foreign investments in sensitive US businesses, should review and reject the deal.

"Zhongwang's purchase of Aleris would directly undermine our national security, including by jeopardizing the US manufacturing base for sensitive technologies in an industry already devastated by the effects of China's market distorting policies," they wrote.

The deal would create "serious risk that sensitive technologies and knowhow will be transferred to China, further imperiling US defense interests."

Zhongwang, China's largest aluminum processor, announced the deal to buy Aleris in August. Aleris processes aluminum for numerous industries, particularly the auto and aerospace sectors.

It has an auto industry plant in Duffel, Belgium and is building a new one in Kentucky, in the United States. It makes aluminum parts for aircraft bodies and wings in plants in Koblenz, Germany and Zhenjiang, China.

The company also makes aluminum protective plating for military vehicles in Germany, a point the senators focused on in their letter to Lew.

"Aleris's defense production demonstrates the type of specialized expertise and capabilities that provide the foundation for our defense industrial base," they said.

"Aleris' R&D and technology are critical to current and long-term US economic and national security interests."

They also said that China's huge overcapacity in the aluminum industry has led to the decimation of the US industry and "contributed to the hollowing of our nation's industrial base."

Zhongwang has already courted controversy in the US.

The Wall Street Journal has reported that the company is under federal probes over alleged smuggling of aluminum into the country disguised as pallets in order to avoid steep punitive tariffs on the company.

The US government determined in 2010 that China Zhongwang benefited from illegal subsidies and was dumping its products on the US market.