NEW YORK U.S. Steel Corp.
is considering a direct-reduced iron (DRI) venture with
Republic Steel in Lorain, Ohio, it said.
"We are ... working with
Republic Steel on a joint study for a potential DRI joint
venture that would be located at Lorain and primarily feed the
new electric-arc furnace (EF) that they are constructing there.
Phase one of the study was completed last year and were
well into the second phase of the study, where the project will
be defined to the extent required for final decisions by the
potential partners," chairman and chief executive officer John
P. Surma said April 30 during the Pittsburgh-based
companys first-quarter earnings call.
The project "could afford us the
opportunity to leverage the rounds supply agreement, abundant
and competitively priced natural gas, and potentially our iron
ore assets to provide a very attractive cost structure for our
tubular operations at Lorain," he added.
U.S. Steel recently signed an
agreement with Republic for the supply of steel rounds to its
tubular facilities beginning in January 2014 (
amm.com, April 29), which will "largely supplant
commercially purchased rounds that weve been purchasing
from a number of sources," Surma said.
The move also comes as U.S.
Steel has determined that it is possible to make a DRI-grade
pellet from its iron ore operations in Minnesota, he said
during the call.
Surma didnt comment on the
targeted size of the proposed DRI facility with Republic, but
did say that in general "1 million tons, 1.1 million tons might
be the normal size range," with "most projects" reporting costs
of about $318 per ton.
Also in Lorain, U.S.
Steels board has approved an upgrade to its tubular
facilitys No. 4 seamless hot mill, which will allow it to
make larger sizes and increase output, according to Surma.
"This project will increase the mills range of outside
diameters from a maximum of 4.875 inches to just over 6
inches," he said.
"The expansions on the (No.) 4
mill will give us some additional firepower and well have
some additional capacity; how much remains to be determined,"
Surma added during a question-and-answer period.
The mill investment will likely
cost around $100 million, he said during the call.
Surma also said this week that
U.S. Steel doesnt expect a disruption in supply to
customers due to the lockout at its Lake Erie Works in
Nanticoke, Ontario (
amm.com, April 29).
"We have inventory in position
to make sure that our customers of those lines in Canada are
well taken care of. We expect to serve those customers without
missing a beat, and were going to get them what they need
on the terms that we agreed," he said, adding that U.S. Steel
could ship steel from its operations in the Great Lakes to its
finishing lines in Canada if needed.
The lockout could cost the
company $45 million to $50 million per quarter, based on U.S.
Steels experience with the previous lockout at the
facility, Surma said, adding that any labor agreement at the
plant would need to "reflect the position of this facility in a
very, very competitive flat-rolled steel market."