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The line is projected to come online in September 2023 and is expected to have an annual production capacity of 200,000 tons.
According to an investor release on Tuesday, June 8, US Steel plans to “meet the growing electric vehicle demand with the best NGO capabilities” while funding the project “with cash generated from Big River Steel’s robust profitability and cash flow.”
Expected CAPEX for the project was put at $450 million, including $50 million in 2021, $325 million in 2022, and $75 million in 2023. US Steel posted adjusted net earnings of $283 million in Q1 2021, up from an adjusted net loss of $123 million in Q1 2020.
After the completion of the line, US Steel projects earnings before interest taxes depreciation and amortization will be $60 million in 2024, $120 million in 2025, and $140 million in 2026.
US Steel’s investment will put it among a small group of companies capable of producing NGO, and the company promised to deliver “unmatched NGO electrical steel characteristics compared to less capable domestic competition.”
Arkansas-based Big River Steel has planned to focus more on NGO steel since 2019, before it was purchased by US Steel.
US Steel is taking the next step as a “path to enhance its earnings profile” because of recent commitments by the US auto industry to increase the focus and production on electric vehicles.
By 2025, Ford plans to spend more than $30 billion on its electrified vehicles “in anticipation of 40% vehicle volume fully electric by 2030.” Toyota has said 40% of its new vehicle sales by 2025 should be electrified models and General Motors is aiming to produce 30 new global electric vehicles by 2025, according to the investor release.
US Steel said it has an advantage in NGO production because it will have the ability to produce “thinner gauges not widely available today” of 0.10-0.50 millimeters.
“By 2027, over 90% of NGO consumption is expected to be 0.25-0.50mm product,” the investor release said.