NEW YORK Nucor Corp. has
pushed back against Big River Steel LLCs proposed
$1.1-billion steel mill in Arkansas, claiming that an
oversupplied steel market and competition over raw materials
could hurt the Charlotte, N.C.-based steelmaker if plans move
"The Big River Steel Project
will directly impact the Nucor mills in Arkansas by driving up
our costs for raw materials, energy, labor, rail car and truck
transportation," Nucor said in a letter sent to legislators in
both the state Senate and House of Representatives. The project
could also impact Nucor by "reducing our operating rate, which
will reduce the pay of our teammates, lowering our overall
profit margin" as well as by possibly forcing the company to
"shift orders, tons and jobs to our three sister
The pushback is in response to
Big River Steels proposed venture in Osceola, Ark.,
announced earlier this year by the state governor, to produce
steel products to serve the automotive, oil and gas, and
electrical energy industries (
amm.com, Jan. 29). The project is spearheaded by
industry veteran John D. Correnti, who resigned as vice
chairman, president, chief executive officer and director of
Nucor in 1999.
If approved, 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 sector. Big Rivers mill would have an
annual capacity of 1.7 million tons and would have the ability
to make 76- to 78-inch-wide by 1-inch-thick coils.
But while Nucor contends the
project would be disruptive, Correnti told AMM in a
March 18 interview that thats not the case.
"Ive seen this movie
before ... (but) theres always capacity for low-cost
quality producers. The U.S. is a steel importer to the tune of
15 to 20 percent. Why is that?" Correnti said in the interview.
"At Big River, were touting the high-end
productelectrical steels, automotive steels,
high-strength low-alloy steels, motor lamination. ... Sure,
well make some vanilla-grade steels, but the bottom line
is that Nucor just doesnt want the competition."
Nucor did not respond to
requests for comment, but in its letter, it claims theres
no room for additional capacity in the United States with the
steel sheet sector today running at between 70 and 75 percent
Additionally, Nucor claims that
Big River Steel will make 100 percent of the same products made
at its Hickman, Ark., facility, which it said is particularly
problematic since the mill hasnt operated at full
capacity since September 2008 due to a "lack of demand."
Nucor Hickman has been producing
sheet and plate products since 1992 and has an annual capacity
of some 2.8 million tons per yearalso the estimated
combined tonnage of unused capacity at Nucors four sheet
mill locations, it said. The letter added that if Big River
Steel is built, "Nucor will seek to maximize profitability" by
diverting orders, tons and jobs elsewhere.
"While Nucor is opposed to
laying off teammates, we are not opposed to transferring them
to our other sheet mills in Crawfordsville, Ind.; Decatur,
Ala.; or Berkley, S.C.," it added.
The U.S. sheet industry has been
hit hard since the recession, with RG Steel LLC filing for
bankruptcy last May and ThyssenKrupp AGs Mobile, Ala.,
facility now up for sale. In recent earnings calls, AK Steel
Corp., a West Chester, Ohio-based producer of electrical
steels, said that the electrical steel market has been
difficult as well.
"Concerning the electrical
steels, there is currently a 21-percent oversupply in the
market of grain-oriented electrical steels a 30-percent
oversupply in the non-grain-oriented electrical steels," Nucor
said in the letter, obtained by AMM from a reporter at
the Blytheville Courier News. "The selling price for
these steels is half of what it was in 2008, and China is still
building steel mills to produce (these products)."
But Correnti denied that Big
River would pose a threat to Nucor, adding that it would focus
on higher-quality steel products rather than commodity-grade
material. While Correntis mill could produce the same
products as Hickman, Big River would only produce, at best, a
20-percent overlap, he said.
"This (mill) is bringing
manufacturing back to the United States. I think theres a
niche for high-quality steel," Correnti said. "Just use common
sense. Big River can make everything Nucor can make, yes, but
were putting in an RH (Ruhrstahl-Heraeus) degasser to
make higher-grade steels. Why would I make vanilla ice cream
steel that I have to sell at $600 per ton when I have the
equipment ... (to make steel) that I could sell for $1,000? It
would be foolish wasting my mill time."
Correntis Big River Steel
venture is contingent on the state legislature issuing a
$125-million bond for funding. Earlier this month, the
Mississippi County Planning and Development Committee, which is
separate from the state, approved $14.5 million in funding for
Arkansas Economic Development Commission director of
marketing and communications Joe Holmes told AMM that
both the speaker of the Arkansas House and the president pro
tempore of the Senate received independent economic analysis
reports on March 15, and that both houses are likely to vote on
the bond issuance in the coming weeks.
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.