TORONTO Severstal North America Inc. is mulling a potential rebuild of the idled "B" blast furnace at its Dearborn, Mich., steel works as well as constructing a continuous annealing line without Energy Department funding, a company spokeswoman and union official told AMM.
The facility currently operates only its "C" blast furnace, which has an annual production capacity of 2.1 million tons, a figure that would jump to 3.1 million tons if the "B" blast furnace were to be brought back online, the Severstal spokeswoman said, adding that any rebuild would depend on market conditions. "If we need more steel made and we need another integrated furnace, then we would bring back the B blast furnace. But that hasnt been decided yet."
The "B" blast furnace in Dearborn was shut down after molten metal breached the furnaces shell in January 2008, spilling raw materials and liquid metal onto the floor (AMM, Jan. 8, 2008). The accident occurred not long after the "C" blast furnace resumed operations following a major upgrade.
The "B" blast furnace "would need a rebuild to be operational," the spokeswoman said, noting that the potential project is not necessarily a near-term goal. "I dont know if its planned for this year or several years down the road. . . . We have one furnace thats operating at Dearborn, and thats enough for us right now."
The company also is considering moving forward with previously announced plans to build a continuous annealing line, even after the Energy Department backtracked on plans to award the company a $730-million conditional loan to help fund the facilitys build-out following criticism from other steelmakers (AMM, Jan. 10).
The company said at the time that it would use "alternative" means of funding to complete planned upgrades at the plant, including the continuous annealing line.
But that project also faces an uncertain timeframe, the Severstal spokeswoman said. "All I know is there is no specific plan in place right now on when its going to be built, if its going to be built and how we are going to finance it."
Talk of a potential blast furnace rebuild and the possible continuous annealing line construction came on the heels of ratification by United Auto Workers union members of a five-year labor agreement (AMM, April 10).
Bernie Ricke, president of UAW Local 600, which represents workers at both Severstals Dearborn facility and Double Eagle Steel Coating Co., a joint venture with Pittsburgh-based U.S. Steel Corp., told AMM that the new contract makes reference to new investments. "We do have a letter talking about future investments in the contract. There are certain things that we are looking at down the road: another blast furnace, a continuous annealing line," he said, noting that neither investment was directly tied to the labor contract.
"But we know that long-term to keep us in a strong position we need another blast furnace," Ricke said. The same is true of the continuous annealing line, which is "on hold right now" but a key part of Severstals plans to expand into high-strength steel markets needed to serve the automotive industry, he said.
With a five-year labor agreement in place, Severstal can better focus on such long-term investments, Ricke said. "Our main priority (in labor negotiations) is strengthening the economic security of our members, and the investments (Severstal) has made so far and future investments are the key to doing that."
Severstal has invested some $1.2 billion in Dearborn over the past year$700 million for a new pickle line tandem cold mill and about $500 million for a new hot-dipped galvanizing line.
"Every year, weve made some modernizations to the plant," the Severstal spokeswoman said, noting that a "B" blast furnace rebuild or continuation of work on the continuous annealing line would first require board approval. "Potentially, in five years those could be projects that Im sure they would entertain: maybe the blast furnace, maybe the (annealing) line. Those are potential new projects that Severstal will do. There just havent been any commitments or announcements."