U.S. Steel Expects $2.3 Billion in Capex for 2022, Including Spending on New Mini Mill

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Researched by Industrial Info Resources (Sugar Land, Texas)--United States Steel Corporation (U.S. Steel) (NYSE:X) (Pittsburgh, Pennsylvania) expects its capital expenditures (capex) to amount to about $2.3 billion for 2022, with the lion's share of the spending earmarked for strategic investments such as a new mini mill. In comparison, this year's capex is expected to be about $800 million.

Even with those expenditures, the company has targeted less capital- and carbon-intensive goals moving forward.

"We are investing to get better, not bigger," Chief Executive Officer David Burritt said during U.S. Steel's earning conference call with industry analysts on Friday, explaining the company does not plan to greatly expand its overall capacity even with the new projects.

In September, the company announced plans to build an estimated $3 billion mini mill at a yet-to-be-determined site in the U.S. The 3 million-ton-per-year mill would include two electric arc furnaces (EAF). Potential locations include states in which the company has existing EAF operations as well as greenfield sites.

U.S. Steel said it plans to start construction on its "Mini Mill #2" as early as the first half of 2022, with production expected to begin in 2024. The facility would help the company reach its 2030 goal of reducing greenhouse gas emissions by 20%, compared with a 2018 baseline. U.S. Steel is targeting net-zero emissions by 2050. Subscribers to Industrial Info's Global Market Intelligence (GMI) Metals & Minerals Project Database can click here for a detailed project report.

For 2022, the company expects strategic capital expenditures to be $1.57 billion, including funding to begin construction of the new mini mill, along with ongoing construction of a 200,000-ton-per-year non-grain oriented electrical-steel line at its Big River Steel operations in Osceola, Arkansas, among others. Subscribers can click here for more information on the electrical-steel line. The company also announced plans to build a new steel-coating line at the Osceola mill in Arkansas.

Click on the image at right for a chart showing U.S. Steel 's strategic capex plans.

One potential project that the steelmaker does not plan to bankroll, at least directly, is a new 500,000-ton-per-year pig-iron production machine at its steel works plant in Gary, Indiana. Instead, U.S. Steel has been in talks with an undisclosed company that would fund, install and operate the "pig machine," which would be fed excess iron produced at the Gary Works, Burritt said. The resulting pig iron would be shipped to U.S. Steel's Big River site in Arkansas for consumption. If the deal with the undisclosed party goes through, pig iron production at Gary Works could begin in early 2023, he said.

Buoyed by higher sales volumes and higher prices, U.S. Steel reported a massive swing in its financial results, from a loss of $234 million in third-quarter 2020 to more than $2 billion in profits for third-quarter 2021. Net sales for the just-ended quarter totaled $5.9 billion.

U.S. Steel is the latest steelmaker to report boffo earnings for the third quarter as the industry enjoys skyrocketing demand and continued protective steel import tariffs. On October 22, Cleveland-Cliffs Incorporated (NYSE:CLF) (Cleveland, Ohio) reported net income of $1.3 billion for the just-ended quarter, compared with just $2 million in third-quarter 2020. Nucor Corporation(NYSE:NUE) (Charlotte, North Carolina) and Steel Dynamics Incorporated (NASDAQ:STLD) (Fort Wayne, Indiana) also reported record-high results. For more information, see October 22, 2021, article - Nucor Notes Record 3rd-Quarter Profit, Sees This Year's Capex at $1.7 Billion and October 20, 2021, article - Steel Dynamics Nears Finish Line for Texas Steel Mill, Expects $750 Million Capex for 2022.

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