Kentucky aluminum mill says it’s not subject to national security review

A Russian-backed aluminum mill trying to set up shop in Kentucky insists it is outside the scope of any review by a special government panel charged with scrutinizing foreign investment that could cause national security concerns.

A statement to McClatchy Wednesday from Braidy Industries said that while it “respects and supports the important national security responsibilities” of the Committee on Foreign Investment in the United States, its $1.7 billion mill project in Ashland “does not enter or interfere with (the committee’s) rules or regulations.”

Congressional Democrats want such a review because of a planned $200 million investment from a Kremlin-linked company. The Treasury Department, while not confirming or denying any such review, said in a letter Tuesday that it has the power to lead one.

The Braidy statement refers to the project as a “greenfield.” Under the Committee on Foreign Investment’s regulations, greenfields are a type of project involving a U.S. business that did not exist prior to the foreign investment and are not generally subject to the committee’s review.

Braidy announced in April that it would partner with a Russian company previously blacklisted by the U.S. government for meddling in the 2016 presidential election. Rusal, one of the largest aluminum producers in the world, said it would invest $200 million in the project, take a 40 percent ownership share of the mill and provide aluminum to Braidy Industries from an aluminum smelter that is currently being constructed in Siberia.

The U.S. Treasury Department removed Rusal from its sanctions list in January after a partial owner, Oleg Deripaska, agreed to reduce his holding in Rusal’s parent company, En+.

Braidy said in its statement that the Kentucky project “would bolster U.S. national security through strengthening the U.S. aluminum supply chain with the first new rolling mill in over 35 years.”

Congressional Democrats, however, last month raised national security concerns and asked Treasury Secretary Steve Mnuchin for a committee review. The Democrats contend that the proposed investment by En+ — “a company that is majority-owned by a U.S.-sanctioned Russian national and Russian state bank — in an American aluminum mill, raises serious questions of national security.”

Democrats cited “potential risk to the integrity of our defense supply chain,” noting that the company has said it would supply the Department of Defense.

A Treasury Department senior adviser acknowledged the concern Tuesday in a letter to Sen. Ron Wyden, D-Oregon, the top Democrat on Senate Finance Committee.

And Wyden’s office said Wednesday it believes Braidy is interpreting the definition of a ‘greenfield’ too broadly.

“Based on available information, En+, through Rusal, is investing in an existing U.S. business that already has agreements in place to supply materials to the Department of Defense,” said Wyden spokeswoman Ashley Schapitl. “This is not a brand new business.”

The plant has been touted by Kentucky officials as a potential lifeline for Eastern Kentucky’s faltering economy. Kentucky Gov. Matt Bevin in 2017 helped coordinate a $15 million direct investment in Braidy, using state tax dollars, making every Kentuckian a partial owner of the company.

Braidy said in the Wednesday statement that it will provide advanced manufacturing jobs for as many as 30,000 families in Appalachia “where underemployment has been as high as 40 percent in recent years.

“The disappearance of coal mining and steel jobs in the region has been devastating,” the company said in the statement. “Braidy Atlas will put these forgotten Americans back to work in a mill designed to have the lowest carbon imprint in its global industry.”

U.S. lawmakers last year broadened the power of the multi-agency committee charged with looking at foreign investment in the United States through the prism of national security.

There was still some criticism that the expansion left a loophole by not explicitly addressing the “greenfield” investments. That criticism centered chiefly on China, whose state-owned enterprises are wholly owned subsidiaries of the Chinese government.

“And their purpose is to advance the strategic national priorities of the Chinese regime,” Jim Talent, a former Republican senator from Missouri, wrote in the conservative National Review in June 2018, calling for greater scrutiny of greenfields.

Lesley Clark works out of the McClatchy Washington bureau, covering all things Kentucky for McClatchy’s Lexington Herald-Leader. A former reporter for McClatchy’s Miami Herald, she also spent several years covering the White House.