NEW YORK John
Correntis proposed $1.1-billion steel mill in Arkansas
has moved one step closer to fruition after the state Senate
passed legislation approving funding for the Big River Steel
LLC project and a House committee verbally agreed to push
forward its own version of the bill.
The Arkansas Senate in a 26-to-6
vote on April 2 favored issuing general obligation bonds of
$125 million to help fund the proposed 1.7-million-ton-per-year
mill. In an April 3 House committee hearing on agriculture,
forestry and economic development, House members approved a
similar bill, moving it closer to being heard on the chamber
floor. If the House also approves the bill, it will go the
governor to be signed into law.
In what is being called one of
Arkansas largest economic projects to date, the state
loan for Big River Steels proposed Osceola, Ark.,
facility is contingent on the company investing $300 million of
its own money and creating 525 jobs with an average wage of
The state vote follows the
Mississippi County Quorum Courts unanimous approving of a
conditional $14.5-million grant for the mills
infrastructure-related projects (
amm.com, March 27).
But while local legislators
appear to be backing the proposed flat-rolled mini-mill
project, others continue to oppose the new mill, among them
Charlotte, N.C.-based Nucor Corp. (
amm.com, March 18). Although Correnti maintains
the mill aims to produce value-added products and displace
imports rather than compete domestically in the commodity-grade
amm.com, Feb. 11), Nucor has argued that an
already oversupplied sheet sector cant handle any more
"Nucor does not enjoy being in
the role weve been forced to take in this debate.
However, when no one else is willing to speak ... we had to,"
Samuel Commella, Nucor Steel Arkansas vice president and
general manager, testified at the House committee meeting. "The
sheet market has about five to seven years of excess capacity,
even if another mill is not built. Despite severe overcapacity,
steel companies owned by China continue to build new sheet
mills for political and not business reasons."
The majority of imported steel
is "dumped," Commella said, adding that looking at the market
fundamentals, building a new mill will only mean further
squeezed margins in a market that faces some 20 million tons of
unused sheet capacity.
IHS Global Insight Inc.,
Lexington, Mass., wrote last month in an economic analysis of
Correntis proposed mill that the U.S. sheet market could
likely absorb the capacityas long as no other additional
tons come online (
amm.com, March 26).
Nonetheless, Nucor said it is a
concern. "The bottom line here is supply and demand. If the
supply goes up, the prices go down. Its that simple. As a
result of all of this, our costs will go up and the cost which
we sell our products for will go down," Commella said at the
hearing, adding that the sheet mill industry isnt
expected to grow significantly by the time Big River is set to
operate. "Itll be a dog fight."
Correnti, who also testified,
said similar push back was seen when he partnered with Russian
steelmaker OAO Severstal to construct SeverCorr LLC, now
Severstal North America Inc.s Columbus, Miss., mini-mill.
Osceola was also a choice for SeverCorrs mill, he said,
but it was later moved to Mississippi after meeting
"Ive seen this movie
before from Nucor. I saw it back in 2002 when we tried to put
SeverCorr in Osceola," according to Correnti, who resigned as
vice chairman, president, chief executive officer and director
of Nucor in 1999.
Correnti, whose mill aims to
serve the automotive, oil and gas, and electrical energy
industries, maintains it is foreign steel, not Nucors
share, that hes looking to displace.
"Every day, I see barges being
unloaded in Blytheville, Ark., and we see barges being unloaded
from the Port of Little Rock with steel in it," he said. "The
United States imports 20 (million) to 25 million tons of steel
every year. Its done because of economic and quality
Big River Steel would have the
"highest paying steelworkers in the world" and the "lowest
labor cost to produce a ton of steel for anyone in the world,"
A number of companies have
already expressed interest in relocating to Arkansas, provided
the millwhich will have 3,500 acres and access to the
Mississippi Riveris constructed, Osceola Mayor Dickie
Kennemore said during the hearing.
Construction of the mill would
likely take two years, and after a testing phase the company
would start selling steel around mid-2016, participants at the
"John has proposed ... running
the mill like the Walmart theory," Kennemore said. "You sell a
lot of goods and your margins arent a lot, but you sell a
lot of goods. That little margin makes you a lot of money ...
and it will benefit us all."