U.S. Steel to spend $1 billion on Mon Valley Works

U.S. Steel plans to announce on Thursday that it will spend $1 billion to upgrade its Mon Valley Works, a move the company says will keep the region’s last integrated steel mill operating for decades to come.

The company will build a combined casting and rolling facility — the first of its kind at any American steel mill — and a cogeneration power plant. Put together, the combination aims to reduce emissions and increase the efficiency and sustainability of steelmaking in the Mon Valley.

The facilities, expected to be running by 2022, will also make the Mon Valley Works the Pittsburgh company’s central source of base material for high-strength, lightweight, flexible steel that feeds the automobile sector.

U.S. Steel had sought to implement such technology for years; the announcement scheduled Thursday at the Edgar Thomson Works in Braddock is the culmination company-wide planning combined with improved financials in 2018, CEO Dave Burritt said in an interview this this week.

The Mon Valley Works includes Edgar Thomson, the Clairton Coke Work and the Irvin Plant in West Mifflin. Together they employ about 3,000.

Daniel Moore / Pittsburgh Post-Gazette

“This is clearly [a] breakthrough,” Mr. Burritt said. “There is nobody in the United States that has this type of technology. This is great for our customers and also positions the community here for a very bright future for generations to come.

“This is where steel started, and this is where steel continues,” he said, sitting at a glass conference table at the company’s engineering offices in Braddock. The table is supported by a section of rail, the Edgar Thomson plant’s first product when it was built in 1875.

“This will be the most innovative steel mill in the United States of America,” he said.

The investment — possibly the largest ever at the Mon Valley Works — comes at a time of rapid development in the American steel industry, which is racing to put its profits into building new mills and rolling out new technology.

Tariffs on foreign imports of steel, imposed by President Donald Trump in March 2018, gave U.S. mills a competitive boost and lifted steel prices. It led to a dramatic turnaround: U.S. Steel’s profits in 2018 reached $1.1 billion, after the company lost $1.5 billion in 2015.

Yet U.S. Steel — which led the charge to impose tariffs and has pushed hard against manufacturers’ attempts to skirt them — is now facing a new generation of American steel plants that use electric arc furnaces. Such furnaces, which melt scrap metal to produce new steel products, are touted by proponents as more cost-effective and sustainable.

About two-thirds of the steel produced in the U.S. involves electric arc furnaces, or mini-mills.

In January, Nucor Corp., the country’s largest steelmaker and an mini-mill producer, announced a new $1.4 billion mill in the Midwest to produce 1.2 million tons each year.

Steel Dynamics, a producer based in Fort Wayne, Ind., plans to build a $1.8 billion mill with an electric arc furnace in the Southwest, with an annual capacity of 3 million tons.

JSW USA is spending $1 billion to revive a mill in Texas and restart a former Wheeling-Pittsburgh Steel mill in Mingo Junction, Ohio.

U.S. Steel, a 118-year-old Pittsburgh steelmaker, has remained committed to blast furnaces, which combine iron ore, limestone and coking coal under intense heat and pressure to produce iron that is then further processed into steel. The company had previously pledged to spend $2 billion to repair and upgrade its existing fleet of plants instead of building new ones.

Mr. Burritt is well aware that mini-mill producers grab headlines for new investments at times when blast furnace producers are losing money.

He formed an “X” with his arms to illustrate a graph of market share: mini-mill producers trending up, blast furnace producers trending down.

The $1 billion Mon Valley Works investment is intended to “lock out the mini-mills from being able to compete at the very high-end,” he said.

U.S. Steel’s customers — including manufacturers of automobiles, appliances, and construction products — want high-strength steel that can also be flexible, said Sara Greenstein, senior vice president of consumer solutions. That new type of steel will be integrated into U.S. Steel’s manufacturing process, an advantage the company has over others, she said. The company has about 20 facilities in the U.S.

“We have iron ore that comes out of the mines in Minnesota. We have the coal that comes out of Appalachia. We have the coke that comes out of the [Mon] Valley,” Ms. Greenstein said. “That gives us a cost position that can compete with any steel producer anywhere in the world, and it gives us a product capability that can serve end markets not just now but far into the future.”

The new processing plant, called an “endless” casting and rolling facility, will replace the existing traditional slab caster and hot strip mill facilities at the Mon Valley Works’ Irvin Plant.

With the new technology, liquid steel can be funneled into molds and immediately hot rolled before being coiled — significantly improving efficiency, the company said.

At the Clairton Coke Works, the new cogeneration plant will convert a portion of the coke oven gases into electricity that powers the Mon Valley Works’ other facilities. The company expects the projects to reduce emissions of particulate matter by about 60%, sulfur dioxide by about 50% and nitrogen oxides by about 80%.

U.S. Steel has faced months of public scrutiny following a fire Dec. 24 fire at the coke works.

The fire disabled pollution control equipment, and sulfur dioxide emissions from the plant exceeded federal standards on 10 occasions. The company took a $40 million charge in January to account for the cleanup.

Meanwhile, the Allegheny County Health Department has imposed fines totaling more than $2.3 million in the last year alone for violations at the Clairton plant.

“We’ve been through a lot — a whole heck of a lot — with the fire, which we deeply regret. And it was incredibly painful for a lot of people,” Mr. Burritt said.

He praised workers for getting the plant up and running last month, sooner than expected. “Sometimes bad things happen to good companies, but you have to look at how they respond.”

Mr. Burritt said the $1 billion investment has been in the works for years.

But when he arrived at U.S. Steel in 2013, he said, the company was losing $2 million a day. Serving as chief financial officer until 2018, Mr. Burritt navigated the sharp downturn in the steel industry and returned the company’s balance sheet to “the best it’s been in years.”

Mr. Burritt shook off some analysts’ projection of a coming fall in steel prices — and fears of a recession.

“We’re now at a right time in our journey to make this billion-dollar investment,” he said. “The business is healthy, and we actually can sustain, for the foreseeable future, the investments to get this thing up and running.”

Daniel Moore: dmoore@post-gazette.com, 412-263-2743 and Twitter @PGdanielmoore

First Published May 2, 2019, 8:30am