Nucor Makes Bold Investments to Increase Steel Market Stake

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The following is an Advisory by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). In a time of mergers, acquisitions, and downsizing in the North American steel industry, Nucor Corporation (NYSE:NUE)(Charlotte, NC) is making several investments to insure future growth and profitability. Nucor hopes to gain a step up on the competition by spending money on growth and new technology at a time when the industry is cutting back on expenditures and is seeking solutions to international steel market competition. In a series of bold moves to increase market share, Nucor has announced plans to purchase two steel companies for a combined price of $620 million and has embarked on an ambitious capital improvement program at its steel bar group mills for $200 million. The company is also continuing to invest in new technology and steel production facilities and is nearing construction completion of its $150 million CastripTM mill in Crawfordsville, Indiana. The mill will utilize new technology to produce cast strip steel products and is expected to start-up in May of 2002.

In January, the company announced its intentions to purchase the assets of Trico Steel Company, LLC, a partnership between LTV Corporation (50%), Sumitomo Metals Limited (Japan), and Corus Plc (Britain), for $120 million. Trico Steel, one of the casualties of LTV's bankruptcy early last year, was forced to shutdown operations at its Decatur flat rolled steel mill in March of 2001. Lockwood Greene Engineers constructed the 1.9 million ton/year steel mill, beginning in 1995. The mill boasts 600,000 sqft of building space on 850 acres of land and was built at a cost of $650 million. It started operation in 1997. Nucor hopes to restart the Decatur mill operations after the sale closes and certain permitting and facility improvements are made later this year.

The company has embarked on a substantial expansion of their steel bar making capability, with the announcement of $200 million in expansion and modernization at its steel bar mills across the country. Most recently, Nucor has offered to purchase the steel bar mill assets of Birmingham Steel for $500 million. Birmingham Steel Corporation (Birmingham, AL), which reported a $159.6 million loss for the second quarter of 2001, has not accepted the buyout offer. The purchase would add over two million tons a year to Nucor's steel making capabilities.

Nucor has been a leader in minimill technology in the U.S. and one of the great success stories of the steel industry over the last fifteen years. The company has increased its capacity and hopes to boost capacity up to 15 million with the Trico acquisition. If the Birmingham Steel deal were approved, Nucor would have over 17 million tons of annual steel mill capacity in the U.S.