Nucor Kingman - To Be or Not to Be?

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated, Houston, Texas). The fate of Nucor Steel Kingman, (Kingman, Arizona) (Plant 1015287), a subsidiary of Nucor Corporation (NYSE:NUE) (Charlotte, North Carolina), remains in limbo, until a corporate decision is made whether or not to start up the mini-mill again, with or without the meltshop, or to leave it idle and simply relocate equipment to other Nucor mills. Whatever Nucor decides to do with the mill, it can't lose.

Nucor, the nation's largest mini-mill company, purchased the operating assets of the former North Star Steel (Edina, Minnesota) rebar and wire facility in Kingman for $35 million, less than one-fifth the original construction cost of $150-$200 million in 1996. The mill had struggled for three years with rising electric power costs and an unsound economic operating configuration prior to its closing.

If Nucor does decide to restart the mill, there are several things that will have to be considered, not the least of which is regional competition. The other major contenders in the Western U.S. are:

Cascade Steel Rolling Mills (McMinnville, Oregon) (Plant 1012546), a unit of Schnitzer Steel Industries Incorporated (NASDAQ: SCHN) (Portland, Oregon), which produces an estimated 350,000 to 390,000 Tons/year, and
Tamco (Rancho Cucamonga, California) (Plant 1015119), a joint venture of Ameron International Corporation (Rancho Cucamonga, California) (NYSE:AMN), Tokyo Steel (Tokyo, Japan), and Mitsui Engineering Incorporated (Baton Rouge, Louisiana, a unit of Mitsui & Company, Tokyo), with a capacity of 550,000 Tons/year.

Besides the competitive opposition, there are possible anti-trust matters to be addressed, but Daniel R. DiMicco, Nucor's President and CEO, feels that this is not really an issue, since Nucor produced considerably less than 50 percent of the rebar used on the West Coast. Nucor Kingman has a rolling capacity of 500,000 Tons/year rebar and wire rod, and a melt capacity of 650,000 Tons/year. What most concerns Nucor's competitors is that Nucor, with the purchase of the Kingman minimill, now owns three of the five minimills west of the Rockies. The other two Nucor mills in the Western U.S. are in Plymouth, Utah (Plant 1523457), which rolls 435,000 Tons/year rebar and other product, and Seattle (formerly a Birmingham Steel facility) (Plant 1012433), which produces 250,000 Tons/year rebar and merchant products. Nucor bought out the former Birmingham Steel Corporation for $615,000,000 earlier this year. In a recent statement by Mr. DiMicco, he reiterated that Nucor would not restart the plant "until the proper engineering, financial, operating, state and local tax issues have been settled," providing, of course, that they decide to restart it at all.