Allvac and AvestaPolarit Agreement Spurs Significant Capital Expenditures

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). A recently signed 20-year agreement between Allvac Incorporated, a subsidiary of Allegheny Technologies Incorporated (NYSE:ATI) (Pittsburgh, Pa.), and AvestaPolarit Incorporated (Schaumburg, Il), a division of AvestaPolarit (Espoo, Findland), is expected to lead to considerable cost synergies for each of the companies' distinct specialty steel product lines. The agreement allows for both companies to process and finish each others product lines at their plants located in Richburg, South Carolina. Allvac operates a specialty steel rolling and forging operation at 4374 Lancaster Highway and about seven miles away AvestaPolarit operates a stainless steel bar processing plant at 3043 Crenshaw Parkway.

"The two companies are initiating significant capital expenditures for additional processing equipment to be installed at both plants in order to streamline and enhance each others processing strengths. All together, about $89 million is expected to be spent over a 2-3 year period," According to Joseph Govreau, Manager of Metals and Minerals for Industrialinfo.com.

"Allvac is in the process of spending about $67 million over a 2-3 year period. AvestaPolarit has promised $22 million, most of which will be spent for equipment at the Allvac site. Allvac completed a $27 million forging and conditioning facility addition last year. This year, plans are underway for a $30 million expansion to the rolling mill and a separate pickling operation. Those two projects will be completed over the next two years."

"AvestaPolarit is talking to equipment vendors for supply of a cold drawing line. The line will be the third production line at the company's Richburg, South Carolina long products plant and is planned to be up and running by the middle of next year. The plant finishes stainless steel round and shaped bar and long products. This project represents $4 million of a $22 million investment, which the company has announced as a part of the agreement. The majority of the $22 million will be spent on equipment upgrades and additions at the Allvac plant."

AvestaPolarit was formed as a result of the merger between Outokumpu Steel and Avesta Sheffield. It is the world's second largest producer of stainless steel.