US lawmakers accuse China of seeking sensitive research and technology with aluminum bid. Photo:  Reuters.
US lawmakers accuse China of seeking sensitive research and technology with aluminum bid. Photo: Reuters.

More than two dozen US lawmakers have urged US Treasury Secretary Steven Mnuchin to reject the proposed sale of American aluminum products maker Aleris Corp to China Zhongwang Holdings Ltd to protect US security interests.

In a June 9 letter to Mnuchin shared with Reuters, the 27 lawmakers said it would be a “strategic misstep” to allow the US$2.33 billion sale to go ahead.

“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 wrote.

They added: “It would be a serious strategic misstep to permit a company like Zhongwang Holdings Ltd to take control of a U.S. aluminium firm like Aleris.”

The lawmakers said Aleris was involved in the production and testing of specialised alloys used by the defence industry, and the company’s research and technology were critical to U.S. economic and national security interests.

“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,” they wrote.

Liu Zhongtian, chairman of Zhongwang Group, at a Liaoyang city plant. His company has bid US$2.3 billion to acquire US firm Aleris. Photo: AFP/Imaginechina

Additionally, Zhongwang was under investigation by the US Department of Commerce for allegedly evading US import duties, and was being probed by US agencies over allegations of smuggling, conspiracy and wire fraud, they said.

Aleris spokesman Jason Saragian said Aleris did not make defence products in the United States.

“We believe this letter is based on misinformation,” he said. “The facts are that the completion of this transaction would result in job preservation and growth for hundreds of US Aluminum manufacturing jobs,” he said in an emailed response to the letter.

Zhongwang, backed by Chinese aluminum magnate Liu Zhongtian, announced the deal in August, in a bet by the billionaire that the nascent US automotive aluminum sector will be the industry’s next big growth market.

Last November, a dozen US senators wrote to then Treasury Secretary Jack Lew urging him to launch a review of the deal by the Committee on Foreign Investments by the United States.

Lawmakers who signed the new letter include House of Representative Democrats David Loebsack, Tim Ryan, Gene Green, Debbie Dingell, Seth Moulton, Marcy Kapur, Pete Aguilar, Tony Cardenas, Brenda Lawrence, Norma Torres, Linda Sanchez, and Republicans Robert Pittenger, Keith Rothfus, and French Hill.

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