US Steel Advances Metallics Strategy with Pig Iron Investment at Gary Works
by David Fleschen
United States Steel Corporation (NYSE: X) (“U. S. Steel”) today announced that it is advancing its metallics strategy by insourcing pig iron capabilities at Gary Works. The approximately $60 million investment will produce up to 500,000 tons of pig iron annually and provide a critical raw material input for its electric arc furnaces (EAF). Once complete, the Gary pig iron production is expected to provide nearly 50% of Big River Steel’s other ore-based metallics needs, contribute over $30 million of run-rate enterprise EBITDA benefits and deliver an internal rate of return in excess of 30%.
“U. S. Steel’s low-cost iron ore is an important strategic advantage for the company,” said U. S. Steel President and Chief Executive Officer David B. Burritt. “Our ability to control this important steelmaking input is a valuable competitive differentiator for our growing fleet of electric arc furnaces. An investment in pig iron is an important first step to translating our low-cost iron ore advantage to our EAF footprint while driving efficiencies at Gary Works.”
The decision to self-fund pig iron production rather than contract is expected to further enhance Big River Steel’s cost structure while adding value at Gary Works by driving blast furnace efficiencies without reducing Gary Works’ raw steel output. The permitting process is well underway, with construction expected to commence in the first half of 2022. Pig iron production at Gary Works should begin in the first half of 2023. The company expects to maintain its previously stated 2022 capital spending budget of approximately $2.3 billion by offsetting the pig iron investment within the capital budget.
Source: US Steel, Photo: Fotolia