While touring Big River Steel, David Burritt, president and chief executive officer of Pittsburgh-based United States Steel Corp., says he was impressed by Big River’s production speed, high-tech facility and entrepreneurial spirit.
“When you get the opportunity to tour their facility, you get this hometown, make-it-happen, hard-work feel of the minimill,” Burritt says.
In October 2019, U.S. Steel announced it was investing $700 million in Big River Steel, acquiring a 49.9 percent stake in the company. U.S. Steel says it will work to acquire the rest of the company over the next four years, though economic circumstances also will play a part in the timing of the total acquisition of Big River Steel.
The partnership brings together the oldest and second-largest steelmaker in the United States with the newest and most advanced flat-rolled steel mill in North America.
Burritt says the investment will strengthen U.S. Steel’s competitive positioning in high-margin end markets. It also will allow Big River to leverage U.S. Steel’s long-standing relationships, especially in the automotive industry, and expertise in producing high-quality steel.
Big River Steel, a LEED-certified, technology-based steel mill and recycling facility in Osceola, Arkansas, began operations in 2016. With expansion plans well underway at its facility, Big River is on track to become one of the largest electric arc furnace- (EAF-) based mills in North America. Its expansion, which is expected to be completed in 2021, will double the mill’s hot-rolled steel production capacity to 3.3 million tons annually, says Big River Steel CEO David Stickler.
“These are folks that collaborate extraordinarily well,” Burritt says of Big River. “Clearly, they have a great teaming capability and excellent leadership, and we’re going to learn a lot from them.”
Best of both companies
Burritt and Stickler say the partnership will offer customers the “best of both” companies by bringing together the capabilities of integrated and mini-mill steel production.
“The thing to remember with the minimills is they’re low on the cost curve, so they do things very cost-effectively, and the speed in which they can make a steel coil is very rapid,” Burritt says. “A minimill can make a steel coil in 40 minutes, whereas it would take us several days to do that with our existing technology.”
Of Big River, he says, “They can make the products at the lower end a lot better than we can, but because of new capability, Big River is also moving into the high-quality steels, too. If you’re going to have a marriage, this would be the marriage you would want where you do get the best of both.”
When Big River first formed as a company, Stickler says its vision was to “combine the best of the integrated steelmaking community with the best of the minimill steelmaking community.” He says it also wanted to become a world leader in the production of electrical steels that are used in the automotive industry.
“We believe that the partnership will accelerate Big River’s entrance into the automotive community,” Stickler says. “Big River will have the opportunity to benefit from the expertise and knowledge U.S. Steel has in-house regarding electrical steels.”
“We expect the Big River-U.S. Steel partnership will ultimately be pointed to as one of the most highly successful partnerships [in the industry].” – David Stickler, CEO, Big River Steel
Burritt adds, “We can do the introductions with the minimills and help them expand into the auto market.”
In addition, the partnership will accelerate Big River’s ability to produce even higher grades of steel. Stickler says a misperception persists in the industry that minimills can’t produce the high-quality steels that integrated steelmakers are known for.
He says he acknowledges U.S. Steel for “shedding that legacy view and embracing the fact that EAF steel producers will have a clear path to the highest quality steels produced.
“Big River now has access to U.S. Steel’s historical and ongoing product development and product quality expertise rather than us trying to spend the next 10 years trying to catch up to where U.S. Steel and others in the industry already are,” Stickler says.
Big River also will be able to use U.S. Steel’s research facility to test new grades of steel while continuing production as usual, according to the two companies.
“One of the big advantages that we have that will help them is the ability to qualify steel,” Burritt says. “They’ll be able to move faster and get to these advanced markets faster,” he explains.
Another benefit of the partnership is that U.S. Steel has iron ore reserves that could potentially be converted into pig iron and sold to Big River, “thus avoiding Big River Steel from having to buy pig iron from Brazil and Russia,” Stickler says.
The Big River partnership, coupled with U.S. Steel’s other announced investments, including the installation of its first EAF in Alabama and a $1 billion investment in a new endless casting and rolling facility at its Mon Valley Works in Pennsylvania, also will allow U.S. Steel to compete with “anyone, anywhere,” Burritt says.
“The acquisition of Big River creates a very bright future for us,” he adds. “I think people have really embraced our strategy.”
Advancing into the future
Until U.S. Steel’s acquisition of Big River is complete, the two companies say they will continue to operate independently and as competitors within the steel industry.
“They’ll run independently from us, and we’ll get to see how they operate,” Burritt says of Big River. “Frankly, once we acquire all of them, there’s going to be a lot of independence that we want them to have. They’re a newer, leaner company with a big entrepreneurial spirit that we want to make sure continues.”
Over the next few years, U.S. Steel says it will have the opportunity to benchmark performance and understand how the companies can work together in the future, Burritt says.
Of U.S. Steel’s investments, Burritt says, “There are a lot of pieces for us to pull together when steel prices have dropped off significantly. We’re trying to find the right way to bring that together to get to our future faster.”
“[Big River Steel is] a newer, leaner company with a big entrepreneurial spirit that we want to make sure continues.” – David Burritt, president and CEO, U.S. Steel Corp.
He adds, “When you’re fighting the toughest competitors, it’s better to join them than to fight them. Over time, this will be the perfect marriage.”
In the meantime, Stickler says Big River Steel will explore and evaluate opportunities to invest with U.S. Steel to “reconfigure the North American steel industry.”
He adds that Big River will continue to establish its place in the market, completing expansions that including doubling its production capacity by 2021 and completing construction on a $1.6 billion steel mill and distribution facility in Texas.
“If you look around the metals and mining industry, you see the concept of partnerships are fairly common and have proven to be successful,” Stickler says. “We expect the Big River-U.S. Steel partnership will ultimately be pointed to as one of the most highly successful partnerships” in the industry.
Burritt says the future merger of the two companies is going to be “very positive” for their current and potential customers because the combined capabilities of U.S. Steel and Big River will be unmatched.
“We think it really changes our offerings from pure commodity to differentiated, ‘green’ steel because we will be more environmentally friendly and nimble to meet our customers’ needs than ever before,” he says.
“Consolidation is inevitable,” Burritt says of the U.S. steel industry.
“The tariffs and safeguards that were put in place have been a big help to the industry and people have been doing a lot of investing,” he continues, referring to the Section 232 and 301 tariffs the Trump administration introduced in 2018.
“Our investments were a result of having more free trade,” Burritt continues. “I have optimism that we’ll get more free trade over time.
“In the meantime, there’s going to be some pain that we have to endure,” he says. “We have to make sure that we have the right business for the opportunity. We’re going to move as fast as we can to the future.”