NEW YORK Magnetation LLC, AK Steel Corp.s joint venture with iron ore concentrate producer Magnetation Inc., has completed a $325-million notes offering and has entered into a $50-million senior secured credit facility, AK Steel said May 20.
The proceeds from the senior secured notes offering will be used primarily to fund the construction of a new iron ore pellet plant in Reynolds, Ind., the steelmaker said. Production from the pellet plant will supply AK Steels blast furnaces in Ohio and Kentucky, the company said.
Construction of the pellet plant is under way and should be completed in about 18 months, with initial pellet production anticipated during the fourth quarter of 2014, AK Steel said.
When fully operational, the Magnetation LLC plant will produce about 3 million tons of iron ore pellets annually.
AK Steels strategic investment in Magnetation LLC is intended to provide the company with about 50 percent of its annual iron ore requirements beginning in 2015.
"We are excited to reach another milestone event in AK Steels strategic initiative to become more self-sufficient in steelmaking raw materials," AK Steel chairman, president and chief executive officer James Wainscott said.
"This transaction positions Magnetation well to continue on its path of accelerated construction of the pellet plant," he added.
West Chester, Ohio-based AK Steel, which owns 49.9 percent of the joint venture, also said May 20 that it has contributed an additional $50 million to Magnetation LLC. So far, the steelmaker has invested about $200 million in Magnetation LLC of a planned total of nearly $300 million.
AK Steel said it plans to contribute the remaining $100 million during 2014 to support the construction of the new pellet plant.
A version of this article was first published by AMM sister publication Steel First.