NEW YORK Nucor Corp. is
pushing forward with various downstream and raw materials
growth initiatives as it looks to broaden its value-added
product offerings and better manage its input costs, the
steelmakers top executives said.
To fund those projects, the
Charlotte, N.C.-based company allotted some $1 billion for
capital expenditures this year, about $692 million of which was
already spent in the first nine months of the year, chief
financial officer James Frias said during the companys
third-quarter earnings conference call.
"The largest project is our
Louisiana direct-reduced iron (DRI) raw materials facility
currently under construction," Frias said. "There are many
other projects being implemented throughout our upstream,
steelmaking and downstream businesses to develop new products,
increase quality and reduce costs."
The DRI project, which saw
construction begin in 2011, is still on schedule for a mid-2013
ramp-up, Nucor president and chief operating officer John
Ferriola said during the conference call.
"Our team at Nucor Steel
Louisiana made excellent progress during the third quarter on
the construction of our new DRI plant in St. James Parish.
Their can-do attitude and high energy level allowed them to
overcome significant challenges arising from this summers
record low level of the Mississippi River," Ferriola said. "Two
major milestones reached this quarter were the placement of the
DRI vessel on the structural module that supports it and the
erection of the iron ore storage domes."
Combining Nucors new
2.5-million-ton-per-year Louisiana capacity with its existing
2-million-ton-per-year DRI capacity in Trinidad "brings us to
about two-thirds of our goal to control from 6 million to 7
million tons of annual capacity in high-quality scrap
substitutes," Ferriola said.
After the company finishes
building the sites first DRI unit, it expects to begin
work almost immediately on a second DRI plant of the same size
at the same location, Nucor chairman and chief executive
officer Daniel R. DiMicco said. "When we start up the one that
we are projecting for mid-year and we see that some of the
different technologies ... than we are used to working with
prove to be as effective as weve been told, we will begin
For the time being, the DRI
plant will be supplied with iron ore pellets from the
companys three existing suppliers: two Brazilian
companies and one Canadian firm. Down the line, Nucor is
looking to secure additional supply sources in "other parts of
the world," DiMicco said, suggesting that acquiring its own
iron reserves is still an option if the economics make
"If we make a move in that
space, it will be because the opportunity says its the
right price and the right time to do it," he said. "We are
constantly exploring opportunities throughout the downstream
(and) through the upstream space literally on a daily
Meanwhile, Nucors efforts
to expand its value-added reach also are progressing. The
company brought online in the third quarter a new vacuum-tank
degasser at its Hertford County, N.C., mill and is now testing
new grades with plate customers, Ferriola said, noting that the
mills new normalizing line is slated to start up by the
middle of 2013.
Nucors Hickman, Ark.,
sheet mill will start up its own vacuum-tank degasser within
the next three weeks, which "will allow Hickman to participate
in the higher-value-added OCTG (oil country tubular goods)
products market along with opening new opportunities in
Mexico," he said.
The steelmakers previously
announced plan to add wider and lighter-gauge sheet products to
its output mix at its Berkeley, S.C., facility also is on
track, Ferriola said. "Equipment orders have been placed and
construction is under way. We expect this project will be up
and running in late 2013."
Meanwhile, a recent slowdown in
demand for special bar quality (SBQ) products has not deterred
Nucors plan to expand SBQ and wire rod capacity by a
combined 1 million tons at three steel mills (
amm.com, Jan. 25).
"What were doing with our
SBQ expansions in Memphis and at two of our other mills that
focus on SBQ is based upon how we see the future. If it was
based upon how we saw it today, we would probably stop them
all," DiMicco said. "But we are very confident that were
going to see an influx of manufacturing coming back to this
country for a host of reasons in sectors that are strong
consumers of SBQ-type products and in the energy area as