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U.S. Steel wants to sell Granite City blast furnaces to SunCoke Energy

U.S. Steel today announced plans to sell and repurpose the blast furnaces at its Granite City Works as part of a wider metallics strategy aimed at giving it an advantage in the iron ore market.

U.S. Steel signed a Non-Binding Letter of Intent with SunCoke Energy Inc., a raw material processing and handling company in Granite City. The preliminary terms call for SunCoke to acquire the two blast furnaces at Granite City Works and build a 2-million-ton granulated pig iron production facility.

Upon completion of the proposed facility, SunCoke would supply U.S. Steel access to 100 percent of the pig iron production for the next 10 years.

The transaction is not expected to impact immediate staffing levels at Granite City Works, the company said, and is contingent on a number of factors, including board approval.

U.S. Steel intends to supply the needed iron ore to be used to produce the pig iron. Because the iron ore would come from U.S. Steel’s own mines, the company said would realize a significant cost advantage. This pig iron could be used by electric arc furnaces (EAFs) and is expected to supply U. S. Steel’s growing fleet of those furnaces.

By upgrading iron ore capabilities at its Minnesota operations and repurposing blast furnaces at Granite City Works with SunCoke Energy, the company said it aims to expand its domestic, low-cost iron ore advantage.

The moves would increase U. S. Steel’s self-sufficiency by supplying domestic feedstock to its growing fleet of electric arc furnaces. The company expects related improvements to its capital and carbon intensity and financial performance from anticipated future internal and external EAF demand.

U.S. Steel plans to break ground in Fall 2022 at one of its two Minnesota Ore Operations facilities, Keetac or Minntac, to construct a system dedicated to producing DR-grade pellets. This will enable one of the company’s existing pelletizing plants to not only create DR-grade pellets but also maintain the optionality to continue producing blast furnace-grade pellets.

The company said it does not expect the approximately $150 million DR-grade pellet investment to change the 2022 capital spending budget.

DR-grade pellets are considered a critical feedstock for ironmaking in a direct reduced iron (DRI) or hot briquetted iron (HBI) process that ultimately supplies EAF steelmaking.

Upon completion, the company would have the option to sell the new pellets to third-party DRI / HBI producers or use them to feed a potential future DRI or HBI facility of its own. The DR-grade pellets produced would be a new product line for U. S. Steel. The investment and expected timeline are subject to state and local support and receipt of regulatory permitting.

The proposed transaction with SunCoke is contingent upon several conditions, including the negotiation and execution of a definitive agreement, approval by the U. S. Steel Board of Directors, and receipt of all appropriate regulatory approvals. The company said in a release 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.

SunCoke would be leading the efforts in construction of the new facility and repurposing of the blast furnaces. The contemplated pig iron production facility’s permitting and construction is expected to last approximately two years.

Since 2009, SunCoke has operated a coke making facility at Granite City Works, supplying a key ingredient in blast furnace steelmaking.

“Our conviction remains that steel mined, melted, and made in America is vital to our national and economic security,” said David B. Burritt, president and CEO of U. S. Steel. “We are strategically investing in our raw materials that will feed the advanced steel mills of today and tomorrow, making us increasingly self-sufficient. It’s another way that we’re supporting domestic manufacturing, simplifying complex global supply chains, addressing the sustainability demands of our customers, and ultimately creating profitable steel solutions for people and the planet.”

U.S. Steel recently announced an investment in a pig iron caster at Gary Works in Indiana. The approximately $60 million investment will produce up to 500,000 tons of pig iron annually and provide a critical raw material input for the company’s EAFs. Once complete, the Gary pig iron project is expected to provide nearly 50 percent of Big River Steel’s ore-based metallics needs, contribute over $30 million of run-rate enterprise EBITDA benefits and deliver an internal rate of return in excess of 30 percen

U. Pig iron production at Gary Works should begin in the first half of 2023.

3 Comments

  1. Dan Bunker on June 28, 2022 at 4:32 pm

    It will be a sad day in Granite City when the last coil rolls off the hot strip mill. When/if this deal is complete, the steel making and steel rolling operations in Granite City will be idled, aka shut down indefinitely/permanently. Close to 1000 workers will be impacted one way or another. The Granite City plant has made steel since 1895. The entire city has been built around the plant. Hopefully production can resume in the future of a stronger made in America idea takes hold. I’ve been employed at the plant since September 1999 and I am a third generation steelworker. My daughter also works at the facility and has been there only a year. Four generations of steelworkers, so it’s sentimental a bit. Buy American made products!!! It’s worth it. Save American jobs, otherwise the house next to your may become vacant. God Bless!!

  2. Mel on June 28, 2022 at 11:43 pm

    This isn’t something good, it and Suncoke being part of the community shouldn’t want any part in destroying the town and so many peoples lives….

  3. Chris Anderson on June 29, 2022 at 12:40 pm

    I have worked so very hard at this facility. People have dedicated their lives to this facility. This is how people feed their families and make a good honest living. It’s going to be such a sad day when this mill closes forever

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