NEW YORK John D.
Correntis proposed $1.1-billion steel project in Osceola,
Ark., aims to displace steel imports by offering higher-grade
product domestically, the steel industry veteran says.
"We hope to sell a lot of steel
that today is imported into the country for whatever
reasonprice consideration is one, but more than likely
its size and a grade situation where some of the
mini-mills wont be able to make (product)," Correnti told
AMM. "Were always importing steel here. In
robust times, we import a lot more than (in) recessionary times
... and, of course, freight and logistics are very important
Correntis new venture
announced last month, Big River Steel LLC, is contingent on the
state legislature authorizing the issuance of $125 million in
general obligation bonds under Amendment 82, which allows the
legislature to approve up to 5 percent of Arkansas
general revenue budget for bonding of "superprojects." The
money generated by the sale of the bonds would provide a
$50-million loan to the company, $50 million for site
preparation, $20 million associated with piling and subsurface
stabilization and $5 million for bond issuance costs.
Once the bill is officially
referred to the states House of Representatives and
Senate by Arkansas Gov. Mike Beebeexpected later this
weekthe legislature has 20 business days to conduct an
economic impact study, after which it will advance through the
usual committee process and be scheduled for a vote.
After the governor officially
sends the measure to the legislature, "the clock starts
clicking. At the end of that, it will be debated and voted on,"
Joe Holmes, director of marketing and communications at the
Arkansas Economic Development Commission, told AMM.
"If the deal is approved, it will move forward."
The new mill is expected to produce hot-rolled, cold-rolled,
galvanized, and pickled and oiled coil for the automotive
sector; grain- and non-grain-oriented electrical steels for the
electrical sector; and substrate for the pipe and tube
amm.com, Jan. 29). Correnti
said the mill would have an annual capacity of 1.7 million
tons, and would have the ability to make 76- to 78-inch-wide by
The proposed mill in Mississippi
County will face some opposition. Charlotte, N.C.-based
steelmaker Nucor Corp.s sheet mill in Hickman is in the
same county, as is Luxembourg-based steelmaker Tenaris
SAs mill, also in Hickman.
"With Nucor (as a competitor),
one problem would be the competition for scrap. (Also),
Im not sure if Hickman aims for the auto market, but they
have a (vacuum) degasser, which would allow them to get into
the auto market," Charles Bradford, president of New York-based
Bradford Research Inc., told AMM. "When it comes to
pipe and tube, thats a market all the flat-rolled
mini-mills go after because the product is pretty ideal."
While Correnti declined to
comment specifically on competition, he noted that "there is
always room for a low-cost, quality producer. In my tenure at
Nucor, thats how we grew the company. In the U.S.,
theres always capacity shortfall."
Arkansas Economic Development
Commission executive director Grant Tennille said during a
Senate committee meeting Feb. 4 that Correntis track
record in steel is proven and that he feels "very good" about
Big Rivers projections for the Arkansas plant, according
to local media reports. He added that Big River believes
theres a 20-percent overlap with products made at
Nucors Mississippi County plants, but representatives
from Nucor had told Tennille that the "percentage might be
Market participants have noted
that ThyssenKrupp AGs plant in Mobile, Ala., is on the
market and would be a good option for investment. But Correnti
said he was not interested in the mill as he would need to
install a melt shop, gassers and continuous casters, which
would have a difficult cost structure.
Even if the bond sale is
approved, the state will not invest any money until $300
million in equity from company investors and commitments from
other lenders is deposited into an escrow account, Holmes said.
He added that $250 million of company money must be spent
before any bond proceeds can be given to the project.
"This amendment was put in place
not by the legislature, but by the citizens in Arkansas to
attract industry," Correnti said, adding that the proposed mill
would provide some 525 permanent jobs and 2,000 construction
Nucor and Tenaris could not be
reached for comment.
Editors note: This
story was updated March 22, 2013, to clarify the products
that are expected to be produced at the proposed Big River
mill in Arkansas.