Columbus buy cheaper than building mill: SDI

Jul 21, 2014 | 02:35 PM | Thorsten Schier

Tags  Steel Dynamics, SDI, Mark D. Millett, Severstal Columbus, OAO Severstal, acquisition, OmniSource, Theresa E. Wagler oil country tubular goods

NEW YORK — Steel Dynamics Inc.’s (SDI’s) $1.63-billion deal for Russian steelmaker OAO Severstal’s mini-mill in Columbus, Miss., is "considerably below the cost and time frame of starting up a comparable greenfield facility," president and chief executive officer Mark D. Millett said during a July 21 conference call.

The Fort Wayne, Ind.-based steelmaker estimates that synergies related to the deal will total about $30 million, due mainly to scrap cost savings through its OmniSource Corp. subsidiary, the expansion of supply to its fabrication unit, New Millennium Building Systems LLC—already a customer of Severstal Columbus LLC—and the expiration of legacy supply contracts over the next few years.

"There are a number of legacy contracts that supported a lot of the original (capital expenditures) that are expiring in the next year or so and we believe there are significant cost savings to be had there," Millett said.....

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