(Bloomberg) -- The Austrian company that’s the main steel supplier to the controversial Nord Stream 2 gas pipeline built by Russia is entangled in a fight about pollution from its Texas plant.
Voestalpine AG, which spent more than $1 billion building the facility, in part to supply its steelworks in Austria, wants permission from regulators in Texas to emit more pollution than originally estimated at its plant in the Gulf Coast. Emissions from the five-year-old factory currently exceed limits and nearby residents have already filed a federal class-action lawsuit.
The legal battle casts a light on the ironies in Voestalpine’s global supply chain. The company built the ironworks in Texas to tap abundant supplies of cheap natural gas, but some of the iron product it produced in Corpus Christi was shipped back to the workshops that made the steel for the 1,200-kilometers Nord Stream 2 pipeline. The link between Russia and Germany has been aggressively contested by Texan politicians including Republican Senator Ted Cruz.
The pipeline, which could crimp markets for American gas exports and has been subject to U.S. sanctions, provided Central Europe’s largest steelmaker with a record contract. Still, the company says only an “insignificant” volume from Texas made its way into the Kremlin-backed project, expected to starting flowing gas before the end of the year.
The future of the ironworks is now in the hands of Texas regulators, which need to assess whether the plumes of metallic dust that occasionally billow from the plant’s pipe-stacks are indeed damaging the health and property of residents. A decision against the company would be a major setback after it was forced to write down more than half of its Corpus Christi investment, which also supplies iron to North American steelmakers.
“Adjusting the emission limit values has no negative impact on the environment or air quality,” Linz, Austria-based Voestalpine said in a statement in response to Bloomberg questions. The company, whose shares are up 28% this year, reports fiscal first-quarter earnings on Wednesday.
Texans living near the plant disagree. More than 250 complaints have already been filed, with residents saying they have been unable to have normal use and enjoyment of their property due to the accumulation of the iron ore dust on cars, homes, yards, pools and playgrounds, state investigators wrote in a 338-page report. They also argue efforts to curtail and clean up the pollution haven’t been effective.
“They offered house and car washing programs,” Errol Summerlin, an environmental activist and nearby resident, said at a July 27 virtual hearing called by Texas state Senator Judith Zaffirini and followed by Bloomberg. “Well, you can’t take your lungs to the car wash.”
Scientific studies show that excess industrial emissions lead to at least $150 million in health damages every year in Texas. Residents in the Corpus Christi area want regulators to conduct a cost-benefit analysis of raising Voestalpine’s pollution limits.
Summerlin, who also works as an attorney, said he’s already preparing an appeal should Texan regulators decide to permit the higher emission levels.
Voestalpine signed a record contract to supply 300,000 tons of steel plate to Nord Stream 2 just months before it began making hot-briquetted iron in Texas in 2016.
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