Irving, Texas-based Commercial Metals Co. (CMC) says it plans to construct another electric arc furnace (EAF) steel “micro mill” it says will be “geographically situated to primarily serve the Northeast, MidAtlantic and Midwestern United States markets.”
CMC adds it believes the location and capabilities of the planned facility will “significantly augment CMC’s scale in the Eastern U.S. and synergistically complement its existing operational footprint.” The company adds that it is CMC is now in the site selection process and is exploring several suitable options.
“This is an exciting new investment for CMC and our customers,” says Barbara R. Smith, board chair, president and CEO of CMC. “The new micro mill will fortify our position in the large construction markets within the region and optimize CMC’s existing Eastern U.S. operational footprint through enhanced production flexibility, improved service capabilities and logistical efficiencies.”
Adds Smith, “The recent enactment of the Infrastructure Investment and Jobs Act should provide an additional tailwind to what was already an attractive expected return on investment for the project. We anticipate the legislation will stimulate substantial incremental demand for construction steel, particularly in the targeted geographies where core infrastructure is among the oldest in the U.S.”
She continues, “CMC was the first in the world to adopt the innovative micro mill steelmaking process, and today’s announcement further solidifies our position at the forefront of this revolution in long steel production. Once the project is completed, we expect that nearly a third of our North American steel output will be produced in a micro mill, giving CMC the most operationally efficient and environmentally friendly plant network of any long steelmaker globally.”
Dubbed MM4, CMC says its planned scrap-fed micro mill will be “among the most environmentally friendly steelmaking operations in the world.” It calls the technology to be deployed lower in both energy consumption and greenhouse gas emissions compared to traditional steelmaking processes.
“MM4 is a project we have studied for several years and now feel the time is right to execute,” Smith says. “MM4 will be rebar centric with additional capabilities under consideration.”
In terms of timeline for the new mill, CMC says that following “receipt of state and local incentives, permitting and other necessary approvals,” the construction of the planned mill is expected to take roughly two years, pointing to a startup date in early 2024.
The announcement came before the release of the company’s first-quarter fiscal 2022 report. CMC achieved $232.9 million in earnings from continuing operations. The company also had a core earnings before interest, taxes, depreciation and amortization (EBITDA) of $326.8 million, an increase of 109 percent compared to the first quarter of 2021.
According to a news release from CMC, the company recorded a net after-tax benefit of $33.7 million, primarily related to the capital loss on an international tax restructuring transaction. Excluding this benefit, first-quarter adjusted earnings from continuing operations were $199.2 million, or $1.62 per diluted share, compared with adjusted earnings from continuing operations of $69.8 million, or 58 cents per diluted share, in the prior year period.
The North America segment generated record adjusted EBITDA of $268.5 million for the first quarter of fiscal 2022, an increase of 73 percent compared with $155.6 million in the prior year period. The company reports that this improvement was driven by increased margins for steel products and raw materials.
The European segment reported record adjusted EBITDA of $79.8 million for the first quarter of fiscal 2022, up 452 percent compared with adjusted EBITDA of $14.5 million for the prior year quarter. The improvement was driven by a significant expansion in margin over scrap, as well as the receipt of a $15.5 million energy credit.
Smith says the company has improved its energy efficiency by 17.8 percent while the industry’s energy efficiency has declined by 6 percent. Overall, the company’s emissions output has decreased by 6.2 percent per ton of steel produced compared with the company’s 2019 baseline.