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USS reaches coke self-sufficiency: Surma

Keywords: Tags  U.S. Steel, coke self-sufficiency, John Surma, Gretchen Haggerty, Pro-Tec, Keetac, Michael Cowden


CHICAGO — U.S. Steel Corp. is now self-sufficient when it comes to its North American coke requirements, the company’s top executive says.

The Pittsburgh-based steelmaker recently started up its new "C" coke battery in Clairton, Pa., and one of two Carbonyx units at its operations in Gary, Ind., chairman and chief executive officer John P. Surma said during a conference call with analysts Jan. 29.

"We now have the ability to produce all the coke we need in North America," Surma said.

The increased capability also allows U.S. Steel to adjust blends of coke, injection coal and natural gas for each of its blast furnaces, thereby keeping carbon costs as low as possible, Surma said. In addition, the move eliminates the company’s need to buy coke on the merchant market, which often is of lower quality.

Being self-sufficient in its coke requirements should give U.S. Steel the increased ability "to invest in other potentially high-return projects in the future," Surma said.

U.S. Steel expects capital expenditures to total about $800 million in 2013, investor relations manager Dan Lesnak said during the conference call.

Surma and chief financial officer Gretchen Haggerty said much of that spending is carryover from work at Gary and Clairton, as well as planned maintenance, including some blast furnace work. Surma said the company had no "single nameplate project" currently on its plate, although it might spend more on mining equipment in 2013 than in past years.

U.S. Steel previously said it started one of two Carbonyx modules at its Gary Works in the third quarter of 2012 and that it expects to start up the second in the third quarter of 2013. The two modules are expected to provide some 500,000 tons of a carbon-alloy coke substitute annually once they reach full production.

The company had also said that Clairton’s "C" battery is expected to gradually ramp up production to slightly less than 1 million tons per year by the first quarter (amm.com, Oct. 31).

Also nearing completion is U.S. Steel’s new continuous annealing line at its Pro-Tec Coating Co. finishing facility, a joint venture with Japan’s Kobe Steel Ltd. in Leipsic, Ohio. "We are making good progress. ... We are doing cold commissioning now," Surma said. A coil is expected to run through the system sometime in the next month or two, with product being made in the spring.

Surma said the line’s high-strength steel would allow the company to provide automakers with the manufacturing benefits of steel as well as a lighter weight and a lower price compared to other metals.

One project that does not appear to be progressing with urgency is U.S. Steel’s expansion of its Keetac Mine in Minnesota, for which it has received the necessary permits (amm.com, Jan. 31, 2012).

"The Keetac expansion is certainly a possibility ... but it’s a big project for us," Surma said, citing an uncertain economy and differing iron ore outlooks as reasons for caution. "We’re taking our time to think that one through," he added, noting that "the resource is still there; it’s not going anywhere."

Keetac expansion plans have prompted questions from analysts in the past about whether U.S. Steel might be considering a direct-reduced iron (DRI) project.

Surma said DRI remained attractive but cautioned against too much excitement. "It’s very good technology, and it’s got a really good place in North America because of our energy position. ... But for a project of that magnitude, just given our capital position, we’ve been very cautious."


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