Minimill King Nucor Steel Snaps Up Another Mill

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). Nucor Corporation (NYSE:NUE) (Charlotte, North Carolina) has acquired a second minimill in as many weeks, this one in Tuscaloosa, Alabama, formerly owned by Corus Group PLC (NYSE:CGA) (London, England). Nucor announced its intention to buy Corus Tuscaloosa for about $90 million on June 8. The mill produces 700,000 tons/year of steel plate and coil (pressure vessel steel coil, discrete plate, cut-to-length steel products). The Tuscaloosa mill was the first in the U.S. to employ the Steckel mill technology to make value added plate from coil.

Just two weeks earlier, on May 27, Nucor announced plans to buy a 1-million-ton-a-year cold mill in Decatur, Alabama, from Worthington Industries Incorporated (NYSE:WOR) (Columbus, Ohio), including all of the buildings, the pickle line, four-stand tandem cold mill, temper mill and annealing furnaces of the Decatur facility, but not including the slitting and cut-to-length equipment, which Worthington will continue to operate. The Worthington mill, which of late has been producing cold-rolled sheet at only half its total capacity, sits adjacent to Nucor’s existing mill, Nucor Steel Decatur, LLC, which Nucor had acquired from Trico Steel Company LLC (a subsidiary of the defunct LTV Steel Company) in 2002.

The former Trico mill, which began operating at full capacity in 4Q03, produces 1.9 million tons/yr of flat-rolled sheet for the appliance and automotive industries. Nucor feels that the addition of the pickle line, cold mill, and annealing equipment enhances its ability to service the value-added sheet market from the Nucor Steel Decatur LLC sheet mill, in a manner similar to the capability of Nucor’s other sheet mills in Indiana, Arkansas, and South Carolina.

In January 2004, Nucor bought a 50% interest in Harris Steel Group Incorporated (TSA:HSG.A) (Willowdale, Ontario) for about $21 million. The interest includes operational mills in Tacoma, Washington; Phoenix, Arizona; Livermore and Modesto, California; Bethlehem, Pennsylvania; Rochester, Massachusetts; and a shuttered mill in Kingman, Arizona, the fate of which is yet to be decided.

Nucor, which began its life as a steel joist and girder manufacturing company, backed itself into steel-making, and has become the EAF steel minimill sector leader. Nucor, which was listed among the Top 10 Steelmakers of 2003, has recently announced its 125th consecutive quarterly cash dividend payment. The company had increased its dividends every year since it began paying dividends in 1973. According to Dan DiMicco, President and CEO of Nucor, the company is using several strategies for growth. Besides outright acquisitions, the company employs disruptive and leap-frog techniques, such as the Castrip technology (a process that helps steelmakers to manufacture flat-rolled, carbon and stainless steel sheets at very thin gauges), which is in use at Nucor’s Crawfordsville, Indiana, facility, and hot charging (hot charging slabs from the caster directly to the rolling mill with minimal reheating, which saves considerable energy, shortens cycle times, and reduces in-process inventory).

See related articles: Primary Steel Manufacturers Continue Industry Consolidation with New Acquisitions Amidst Improving Steel Mill Market and Big Three Steel Makers Emerging as US Steel Industry Consolidates

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