Autumn Cafiero Giusti and James Leggate
United States Steel Corp. and Nucor Corp. each announced plans this week to build multibillion-dollar steel mills as the steel sector moves to modernize and electrify amid rising demand.
Both mills will operate electric arc furnaces (EAF), which are fed by electricity instead of coal, to produce steel. Philip Bell, president of the Steel Manufacturers Association, says the projects are part of a larger realignment to replace inefficient steel production with efficient steel production.
“This represents the most efficient, sustainable and lowest-carbon-producing way to make steel in the United States,” he says.
After competing with multiple other states in the region, Osceola, Ark., will be the site where U.S. Steel will build its $3-billion steel mill, the Pittsburgh-based steelmaker announced on Jan. 11.
Push to Shrink GHG Emissions
The mill is part of U.S. Steel’s push to shrink its global greenhouse-gas (GHG) emission footprint by the end of the decade. The facility will be close to U.S. Steel’s Big River Steel plant in northeast Arkansas, which also uses an EAF. The two mills combined will form what U.S. Steel describes as a 6.3-million-ton “mega mill” capable of advanced, sustainable steel production.
U.S. Steel told ENR the firm expects construction jobs for the project to peak at 3,500; the mill will create 900 permanent jobs when it begins operations.
Permitting is underway for the project, which is slated to break ground by the end of March. U.S. Steel expects the mill to be complete and fully operational in 2024.
“With this location selected and shovels ready, we are reshaping the future of steelmaking,” U.S. Steel president and CEO, David Burritt, said in a statement. “We had numerous competitive site options, but Osceola offers our customers incomparable advantages.”
Burritt cited the facility’s low-cost structure, energy-efficient production equipment and advanced capabilities among its benefits. The project will pursue LEED certification.
U.S. Steel in September announced it was looking for a site in the U.S. to build a state-of-the-art mini-mill in a step toward achieving its 2030 goal of reducing its global GHG emissions by 20%.
The flat-rolled steel mill, which U.S. Steel touts as the “most advanced steelmaking facility in North America,” will feature two EAFs capable of making 3 million tons of steel per year, along with an endless casting and rolling line and advanced finishing capabilities. U.S. Steel says the mill will be the first in the U.S. to use endless casting and rolling technology, which will bring significant energy, efficiency and capability enhancements to the company’s operations.
Nucor Picks West Virginia
Nucor will build its new $2.7-billion EAF mill beside the Ohio River in Mason County, W.Va., the company announced on Jan. 12.
The Charlotte, N.C.-based firm has also placed an emphasis on its environmental impact. In October, it announced Econiq, which it says is the first line of net-zero carbon steel products offered at scale in the U.S.
Leon Topalian, Nucor president and CEO, said in a statement that the “state-of-the-art” West Virginia sheet mill will produce low-carbon steel and have a capacity to produce 3 million tons of steel annually. It will include a tandem cold mill and two galvanizing lines, including an advanced automotive line and a construction-grade line. It will be capable of producing 84-in. sheet products.
The company says the facility will supply the Midwest and Northeast, and will have a lower carbon footprint than area competitors, thanks in part to the logistics and transportation advantages the riverside location provides.
Construction is expected to take two years, pending permit approvals. West Virginia Gov. Jim Justice said the project will support about 1,000 jobs, and Nucor says the completed plant will employ about 800 full-time workers.
Meeting Demand
The projects are coming at a time when demand for steel continues to rise, says Scott Melnick, senior vice president of the American Institute of Steel Construction. The World Steel Association has projected a 5.7% increase in U.S. steel demand, or 97.5 million metric tons, in 2022.
In addition to the West Virginia project, Nucor is also building a $1.7-billion steel plate mill in Brandenburg, Ky., expected to open this year.
“There is a lot of demand for plate, both from the construction sector and the energy sector, so this mill is coming at a good time,” Melnick says.
More mills are coming soon. Steel Dynamics Inc. has been anticipating the opening of its flat roll mill in Sinton, Texas, with two EAFs, which the company says will be able to produce steel products that are currently unavailable in the U.S.
Evraz is building a long rail mill expansion at its Pueblo, Colo., facility that will be powered by a 300-MW solar project to produce lengths of steel that were previously only available from producers outside the U.S.
On Jan. 10, Commercial Metals Co. announced it was looking for a location to build a micro-mill that will use less energy and cause fewer GHG emissions than traditional processes. It will serve the Northeast, Mid-Atlantic and Midwest markets.
“This is great news for us,” Bell says of the various planned projects. “What you’re going to have is a modern, efficient steel industry that can meet any domestic demand requirements.”
Incentives Sweeten the Deals
Multiple states were in contention for both of the recenty announced mills, and officials in Arkansas say a recently enacted recycling tax credit law gave their state the upper hand.
“Texas wanted that project. Mississippi fought hard for that project. Alabama did. Our economic development folks did a great job on this,” State Sen. David Wallace, R-Leachville, told ENR. U.S. Steel has existing operations in Texas and Alabama.
Wallace was one of the sponsors of the tax incentive law, which the legislature passed in December in a bid to lure the U.S. Steel mill. Under an existing law, projects in the state that use reduction, reuse or recycling equipment can receive a 30% income tax credit. The new legislation amended that law to extend the incentive to facilities that qualify as “growth projects” under state criteria. Qualifying projects need to have common ownership, must be located on or adjacent to the site of an existing steel manufacturer and need to have a total investment of at least $2 billion.
“The steel industry in the United States is highly competitive, and there are presently rising prices and a high level of demand for raw materials in the domestic market,” the bill states. “When considering where to place new American manufacturing jobs, companies will consider the availability of incentives and credits.”
Wallace says that once the mill begins operations, it will meet the recycling tax credit’s job and salary requirements, which are to bring in a minimum of 700 jobs paying $120,000 or more and 200 vendor-affiliated jobs paying $60,000 or higher.
“I was told when we ran this bill that this was the second-largest economic development project in the entire U.S. for 2021. For a little state like Arkansas, that’s pretty darn impressive,” he says.
U.S. Steel’s decision to build its new mill in Osceola comes three years after the company announced in 2019 it would purchase a 49.9% stake in the Big River Steel mill for $700 million. In January 2021, the company purchased the remaining 51.1% share for $774 million.
“Steel is critical to so much of what the world builds, so how we make our products contributes directly to a better, more sustainable world for all. This new facility will build that future,” Burritt said in a statement.
New Tax Credit in West Virginia
In September, Nucor said it was considering sites in Ohio, Pennsylvania and West Virginia for its new mill. The company finally announced its decision the day after West Virginia lawmakers passed a bill creating a new tax credit that applies to the project. Officials haven’t specified the exact incentive offered to Nucor, but the bill offers some details. For facilities that meet criteria such as an investment of $2 billion or more and hiring at least 500 employees, it allows credit of 50% of the cost of property purchased for manufacturing investment.
Some lawmakers questioned the short timeframe given to consider the incentive and said some past incentive packages given to businesses didn’t work out. But the tax credit bill still passed the state Senate 30-1 and the State House 91-2. State House Speaker Roger Hanshaw, R-Clay, said in a statement that the incentive “is not a billion-dollar giveaway” and that no state money will be spent until the company has already invested its money in West Virginia. Hanshaw pointed to an impact study by a West Virginia University economics professor that forecast $25 billion in economic impact from the mill, including potential for as many as 5,000 new downstream jobs.
“The time for us to argue whether economic development incentives should be utilized has long since passed,” he said. “Other states have been doing it for years, and our actions today help the state of West Virginia secure a seat at the table.”
In Arkansas, Wallace is optimistic construction of the new mill will bring the same level of economic activity to the area as the Big River mill did during its construction in 2014.
“When they were building Big River, the hotels were filled up. Restaurants were busy. There were hundreds of thousands of contractors that came into the state of Arkansas just to work on this project, all making good money,” he says, adding that many of those workers eventually became full-time employees of the steel mill. “I think that will happen again.”
