Ark. Eyes Expanded Recycling Tax Credits to Get New USS Mill to BRS

“This project, if it comes – and I think we’ll know within the next two weeks – will be the second-largest economic development project done in the United States,” Sen. Wallace said in an interview with local news station KAIT8.

U.S. Steel did not confirm or deny whether Osceola might be on the short list for the new sheet mill, which is expected to have capacity of 3 million tons per year, according to SMU records.

“We are considering Arkansas among other locations. State and local support are things that are taken into consideration,” a U.S. Steel spokeswoman told SMU. “I cannot speak specifically to city.”

Other states, including Pennsylvania, are also lobbying for the new mill. U.S. Steel has not said when it will announce the location for the new mill, and the spokeswoman noted that the project was still in the permitting phase.

Industry sources have said an area on or adjacent to Big River Steel’s existing campus in Osceola might be the most logical spot for a new mill. That’s in part because the endless casting and rolling technology initially slated for its Mon Valley Works – an integrated mill in western Pennsylvania – is also compatible with an EAF mill like Big River Steel.

The Bill

The bill, also known as SB10, puts a thumb on the scales to increase the odds of the new mill landing in the Arkansas. It was filed last week, passed the state House and the state Senate, and was delivered to Ark. Governor Asa Hutchinson.

The bill’s goal: “encourage continuing capital investment by steel producers in this state” with “adjustments in the recycling tax credit … appropriate to allow the recycling tax credit to be utilized more fully.” It would provide increased tax credits for “waste reduction, reuse or recycling equipment.”

The text of the bill does not mention U.S. Steel or Big River Steel by name. But it comes very close to doing so, noting that a “steel mill facility” would qualify for the credit. It also notes that Arkansas has become one of the top steel producing states in the country, a trend that state lawmakers want to continue.

Wallace left no doubt as to who the bill’s intended beneficiary might be. And he also indicated that U.S. Steel had a short list of three states: Arkansas, Alabama and Mississippi.

“My bill … allows Arkansas to negotiate incentives for a $3 billion ‘steel mill facility’ … considering locating here in Arkansas, Alabama or Mississippi,” Wallace tweeted on Wednesday, Dec. 8.

In his interview with KAIT8, Wallace explicitly said that the bill was aimed at bolstering the case for U.S. Steel locating the “economic prospect” at Big River Steel.

He said on his twitter feed that new jobs at Big River Steel could pay as much as $106,000 per year, a figure he upped to $120,00 in his interview with KAIT8. That kind of money should make staffing for the new mill a non-issue.

Some industry soures have questioned whether steelmakers will be able to staff and ramp up upcoming expansions given widespread labor shortages.

“They see the opportunity to make $120,000, I think they’re going to be knocking on that door,” Wallace said. “Our young men and women are going to live a much better life than their parents and their grandparents because of these great jobs being brought in by our steel mills.”

The Background

U.S. Steel has not made public a short list of states for its $3 billion, three-million-tpy mill, which is expected to start in 2024. The company previously said that potential locations include areas where it already has EAFs – a reference to Big River Steel in Osceola and its Fairfield Works in Alabama. The company has also said greenfield sites are being considered.

U.S. Steel has in addition said that an “endless caster” initially slated for its Mon Valley Works near Pittsburgh was being relocated in part over concerns about carbon emissions. Integrated mills, which rely on the carbon-intensive coking coal process, typically have higher CO2 emissions than newer EAF mills.

It is possible to operate the endless caster in tandem with EAFs. Italian steelmaker Arvedi, for example, operates a flat-rolled EAF mill that employs an “endless strip production” (ESP) technology “ideal” for installation in the minimills, according to equipment supplier Primetals Technologies. And Primetals said in 2019 that it had agreed to supply U.S. Steel with similar equipment for Mon Valley at what was intended to be the first ESP in the U.S. and the widest ESP ever built.

By Michael Cowden, Michael@SteelMarketUpdate.com