Steel Mills

USS to Stop Steelmaking at Granite City in 2024, Shift to Pig Iron in SunCoke Deal

Written by Michael Cowden

US Steel plans to stop making steel at its Granite City Works near St. Louis in the second half of 2024, a company spokeswoman told Steel Market Update on Tuesday.

The Pittsburgh-based steelmaker expects that the mill’s blast furnaces will switch over to pig iron production as part of a deal with SunCoke Energy Inc., she said.

US Steel

The shift from Granite City making and rolling steel to producing pig iron – a raw material used in electric-arc furnace (EAF) steel production – will be concurrent with the start-up of a second EAF sheet mill at the company’s Big River Steel mill in Osceola, Ark., the spokeswoman said.

“Some employees will remain at GCW to continue operating the finishing lines,” she added.

In the interim, SunCoke (see details below) will begin converting Granite City’s blast furnaces to pig iron production. US Steel will eventually idle steelmaking operations, the hot strip mill, and certain finishing operations. The company will, however, retain ownership of and continue to operate Granite City’s 49-inch galvanizing and Galvalume line, the spokeswoman said.

That’s a big change from Granite City’s current configuration and ownership. US Steel has two blast furnaces at the mill, two top-blown basic oxygen process (BOP) vessels, a ladle metallurgy furnace, two continuous slab casters and an 80-inch hot-strip mill. Its downstream operations include a 51-inch pickle line, a 56-inch cold mill, and a 49-inch galvanizing and Galvalume line.

The US Steel spokeswoman confirmed that company would stop steelmaking in Granite City after Steel Market Update inquired about a big announcement that company had made about its metallics strategy.

A New Deal for Metallics

The metallics strategy includes a potential arrangement in which SunCoke would acquire Granite City’s two blast furnaces. The Lisle, Ill.-based raw materials supplier would then build a granulated pig iron production facility with annual capacity of two million tons per year. Permitting and construction of the pig iron plant is expected to take approximately two years, US Steel said.

That proposed deal would also see SunCoke supply US Steel access to 100% of the pig iron produced at Granite City for the next 10 years. US Steel said it could then use that pig iron to supply its “growing fleet” of EAFs.

Recall that US Steel in February broke ground on a $3 billion expansion at Big River Steel for the construction of a second EAF steelmaking complex. Once finished, it will form a mega-mill capable of producing 6.3 million tons per year.

As for SunCoke, it would take the lead not only in constructing the pig iron operations but also in “repurposing” Granite City’s blast furnaces.

Granite City Works has two blast furnaces, A and B. The A furnaces was indefinitely idled in April 2020, according to SMU’s blast furnace status table.

The proposed transaction with SunCoke hinges on the completion over several steps: the negotiation and execution of a definitive agreement, approval of the deal from US Steel’s board, and regulatory approvals. “There can be no assurance as to the final terms of the proposed transaction, that the conditions will be satisfied, or that the proposed transaction will be completed,” US Steel said.

Another key part of the new raw materials strategy is taking place on US Steel’s iron ore mining and pelletizing operations on Minnesota’s Mesabi Iron Range.

The company announced that it was spending approximately $150 million to add DR-grade pellet production at its Keetac and Minntac facilities in Minnesota. Those plants currently produce blast furnace pellets.

DR-grade pellets are the feedstock necessary to make direct-reduced iron (DRI) and hot-briquetted iron (HBI). The primary consumer of DRI and HBI are EAF sheet mills.

US Steel said it would retain the option to make both blast furnace and DR-grade pellets. It will also have ability to sell DRI and HBI not only to its own mills but also to third parties.

The DR-grade pellet project is expected to break ground this fall. The timeline for completion depend on state and local support as well as regulatory approvals.

US Steel noted that both projects would be low cost because the company can supply them with iron ore from its own mines. That compares to other steelmakers that must source the raw material from outside sources.

Both investments come after US Steel announced plans to build a pig iron caster at its Gary Works in northwest Indiana. That project, too, is aimed at supplying raw materials to Big River’s EAFs.

“Our conviction remains that steel mined, melted, and made in America is vital to our national and economic security,” US Steel president and CEO David B. Burritt said in a statement.

“We are strategically investing in our raw materials that will feed the advanced steel mills of today and tomorrow,” he said.

Expert Insight

“I think this has multiple benefits for USS. BF/BOF operations are very capital intensive. I think this agreement could help USS with managing that expected capex as well as a few other items,” CRU principal analyst Josh Spoores said.

Other benefits include the following:

• US Steel will be better able to manage their metallics needs at known costs. The company will also be able to monetize their iron ore assets because they will be able to sell pig iron to other EAF steelmakers, Spoores said.

• The agreement with SunCoke provides more clarity for the United Steelworkers (USW) union at a time when US Steel’s contract with the USW is coming up for renewal. “Previously the expectation was that Granite City might just close as the new EAF at Big River was brought online. Now, those steelworkers will continue to have jobs while steelworkers elsewhere, such as at their Edgar Thompson Works, might be more optimistic that steelmaking there will continue to have a future,” he said.

Edgar Thompson, which melts steel and casts slabs, is part of US Steel’s Mon Valley Works near Pittsburgh, where both the company and the USW are also headquartered.

• SunCoke is a qualified partner that benefits as well. “They make coke in a world trying to use less coal. So this move to pig iron fits into their capabilities of being a trusted, capable supplier in running industrial equipment for the steel industry,” Spoores said.

The USW Sees ‘Betrayals’

USW International president Thomas Conway slammed US Steel’s decision and said the closure of much of Granite City would be an issue during ongoing contract talks. The labor agreement between US Steel and the USW expires on Sept. 1.

“The company continues to invest heavily in its non-union operations at Big River Steel in Arkansas. … We have no intention of becoming the primary pig iron suppliers to their non-union operations,” Conway said in a press release on Tuesday.

The USW’s antipathy toward Big River is longstanding. It includes US Steel’s decision to move a planned $1.5 billion upgrade that was initially slated for Mon Valley Works, a union-represented mill, to the Arkansas mill instead.

US Steel also operates an EAF mill at its Fairfield Works near Birmingham, Ala. That mill, although it is in the South and an EAF, is represented by the USW. “That’s where the company should have continued to place additional EAF investments. Instead, they chose to double down their investment in their Arkansas facility,” Conway said.

The union in addition alleged that US Steel was downplaying the “massive” job losses that would result from halting steelmaking at Granite City Works.

By Michael Cowden,

Michael Cowden

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