Nucor Could Construct New Technology DRI Plant in the U.S., an Industrial Info News Alert

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Researched by Industrial Info Resources (Sugar Land, Texas). Nucor Corporation (NYSE:NUE ) (Charlotte, North Carolina) will spend $10-12 million this year to outfit a former Nucor Fasteners plant in Conway, Arkansas, as a facility to research and develop a new proprietary direct reduced iron technology. Nucor has worked for the past six to eight months to design the new small-scale prototype pilot plant and should begin installing pre-fab equipment for the new operation in an existing building by the end of the year. The Conway Nucor Fasteners plant has been closed since 2000.

Nucor has long-term plans, three to five years down the road, to construct a commercial-scale direct reduced iron plant, most likely at a site close to iron ore feedstock, or near one of its flat products steel sheet rolling mills, which would have a requirement for steel scrap alternative. Cost estimates for such a plant would be in the $200-300 million range. Currently, the main iron ore mining complexes are located in Minnesota and Michigan. Nucor has flat products minimills in Crawfordsville, Indiana; Berkeley, South Carolina; Decatur, Alabama and Hickman, Arkansas.

Nucor is the largest scrap steel user in North America, utilizing more than 20 million tons a year of scrap steel to make its products. According to a 2005 report, about 84.5% of Nucor’s products are derived from recycled steel scrap.

With increasing volatility of scrap steel prices, Nucor has been pursuing sources to supply steel scrap substitute in order to meet a goal to source 6-8 million tons of steel scrap substitute annually for captive use. The company is about half way to meeting that goal with existing projects. For example, commissioning is underway for Nucor’s new DRI plant in Port Lisas, Trinidad & Tobago. See related April 18, 2005 news article - Nucor Relocates Louisiana Iron Plant to $225 Million Start Up in Trinidad. Production is expected to peak at 1.8 million metric tons per year from the $225 million plant to be operated by Nucor subsidiary Nu-Iron, LLC.

Nucor also has a 25% interest in the first commercial plant utilizing HIsmelt technology to produce pig iron from coal and iron ore fines at a recently commissioned plant in Kwinana, Western Australia. If viable, long-term plans include constructing HIsmelt plants at one or more of Nucor’s U.S. minimills.

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