Nucor Focuses on Existing Operations’ Better Quality, Cost, Service

Nucor starts new iron making project in Louisiana. The firm tries to improve the competitiveness in cost and quality by increasing the captive iron source through the project while the firm postponed construction of blast furnace. The firm also eyes growth opportunities in emerging market through tie-up with Mitsui & Co.

The chairman Daniel DiMicco said the firm selected direct reduced iron facility, not blast furnace for the first step of the project due to the experience for high grade DRI production. He emphasized advantage of DRI plant with 2.5 million ton of annual output capacity including less than half of capital expenditure and a third of carbon dioxide emission compared with blast furnace with 3 million ton of annual output capacity. The firm tries to minimize potential risk when potential US carbon tax and tight supply of coking coal.

Mr. DiMicco said the firm builds 2 DRI plants with 2.5 million ton of annual output capacity each and the first step is the single plant. He said the firm evaluates Midrex process, which is used for plant in Trinidad, and HYL process for the project.

Mr. DiMicco said the firm could build blast furnace with 300 million ton of annual output capacity with coke oven for the second phase while the firm also eyes additional DRI without blast furnace investment depending on carbon tax and coking coal situation. He saidthe iron making project is a part of the strategy to secure 6-7 million ton of high grade iron source in DRI or pig iron.

Mr. DiMicco said the third phase could be steel making and downstream operation including potential rolling mills depending on the market condition. With the steel making shop, the firm expands the annual steel making capacity from current 25-26 million ton without Italian joint venture.

Mr. DiMicco said the firm would expand automotive flat roll business depending on the profitability from annual 2 million ton in higher case. The firm has supplied steel for major US, Japanese and European automakers for years. He indicates the firm could increase the costly long supply chain business only when the firm can make enough money.

Mr. DiMicco said operation of second Castrip plant in Arkansas is much better in technically than expected thanks to the experience from the first facility. He said the second plant can make 300,000-400,000 ton of products if the demand is better but the current operation is lower than that due to slow market. He said the firm still eyes chance for the third plant at home and abroad.

Mr. DiMicco said next Castrip project could be driven by NuMit, which is steel processing joint venture with Mitsui & Co. He said the tie-up with Mitsui & Co. covers projects for Castrip, raw materials, steel making and downstream operations while MuMit doesn’t join Louisiana project. He said Nucor and Mitsui & Co. keep talking for new joint business opportunities while he indicated new project depends on better global economy.

Mr. DiMicco said Nucor focuses on improvement of existing operation in cost, quality and service when the market is slow and slow economy shows sign to continues another 3-4 years. He expects Louisiana project contributes to the operations’ better competitiveness and profitability in raw materials side. Nucor also tries to find business opportunity in South America and Europe through potential joint project with Mitsui & Co.