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Big River Steel clears big hurdle with Arkansas permit

May 31, 2014 | 08:00 PM | Fastmarkets AMM staff

John Correnti’s project took a big step forward when environmental officials rejected Nucor’s complaints and upheld an air permit ruling.

Construction of the proposed Big River Steel plant in Arkansas could move forward after a favorable ruling by state environmental officials in April.

There is ample room for Big River Steel LCC in a U.S. market awash in imports and high-priced domestic steel, chief executive officer John D. Correnti told AMM

The United States currently imports 20 million to 30 million tons of steel per year, which doesn’t make sense in a country with low electricity costs, a strong domestic market and an ample supply of scrap, Correnti said. “This is the place to melt and make steel. So why is so much foreign steel coming in? ... It’s either the steel mills in this country cannot make the quality or the price is too high. That’s it. All this crying about ‘Dumping! Dumping! Unfairly traded steel!’ It’s poppycock.”

Efficient mills that make quality products shouldn’t feel threatened by a new player, Correnti said. “But you can’t (compete) with 20- to 60-year-old equipment. You’ve got to invest in the newest tools and steel mill equipment, not only from an environmental standpoint but also from a cost standpoint.”

Correnti, former vice chairman, president and chief executive officer of Nucor Corp., announced plans to build the steel mill in January 2013.

Big River Steel will focus much of its effort on the electrical steel market, where the company sees opportunities to take market share not only from a limited number of domestic suppliers but also from imports, Correnti said. “I’m a capitalist. It’s called survival of the fittest. And if you have a better mousetrap than somebody else, you’re going to survive,” he said, brushing aside concerns about potential domestic overcapacity.

The company expects solid demand from the transformer market as well as potentially strong future demand from the automotive market as electric motors become more common, Correnti said. “It’s a good niche, a lucrative market and, unfortunately, one of these days we’ll all be driving big golf carts,” he quipped.

Correnti also swatted away questions about whether Big River Steel would be up against stiff competition from Charlotte, N.C.-based Nucor, estimating that his company would have only minimal overlap with Nucor facilities in the area. “If you are a low-cost, efficient producer and you put out a quality product, you are going to survive,” he said. “If you’re not, you won’t—I’ve seen that for 40 years in the steel industry.” 

The proposed $1.1-billion steel mill appears poised to move forward after Arkansas environmental officials decided in favor of the mill April 25.

The Arkansas Pollution Control and Ecology Commission upheld a ruling granting an air permit to the proposed mill. “The commission’s decision was to affirm the recommended decision and uphold the permit,” Charles Moulton, the commission’s administrative law judge, told AMM via e-mail.

The commission’s decision came after complaints filed by Nucor were denied. Nucor argued that the air permit shouldn’t have been issued to Big River Steel, alleging that the potential rival’s plans fail to meet state and federal air pollution standards. “One of the biggest concerns is that the emissions limits proposed by Big River Steel are substantially below levels that other EF (electric-arc furnace) operators have found to be achievable using the same technology,” the company said.

If Big River Steel were to fail to meet air quality standards, it could hurt industrial development in and around Osceola, Ark., where the project is expected to be built, as well as prevent the expansion of existing facilities, according to Nucor. The company wants to ensure that Clean Air Act requirements are, therefore, “evenly applied and properly followed” by Big River Steel.

Nucor noted that Armorel, Ark.-based Nucor Steel-Arkansas and Blytheville, Ark.-based Nucor-Yamato Steel Co., both within 30 miles of Osceola, could potentially be impacted by emissions from Big River Steel.

Nucor said it was “disappointed” by the decision to uphold the permit. “We are reviewing the commission’s decision and our options for appeal going forward,” a Nucor spokesman said in an e-mail to AMM.

Moulton said the matter could next go to state circuit court, and there are provisions in the law that could see it removed to the Arkansas Court of Appeals or the Arkansas Supreme Court. He declined to speculate whether the April 25 decision meant the Big River project would move forward. “(Nucor and Big River Steel) will make the next moves and the next decisions,” he said.

Correnti told AMM in an interview that the commission’s decision represents a “big step” toward the Big River project getting under way, brushing aside Nucor’s objections to the air permit as an attempt to stifle competition. “If you say it’s about the environment and not the competition, it’s probably about the competition,” he said.

“Hopefully we will start moving dirt in late June or early July,” Correnti said, estimating that the mill could take about two years to build. “So if we get started in July 2014, we should be melting steel by July 2016, maybe a little bit earlier.” The exact timing will depend in part on when equipment is delivered, but should proceed smoothly given the long building season in the South, he said. 

The project has received “a lot of interest” to date, Correnti said. “Customers are smart and they want another option.” 

Correnti also is making plans to establish an electronics recycling facility near the site of his proposed project.


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