United States Steel Corp. (U. S. Steel), headquartered in Pittsburgh, has announced that it has acquired the remaining equity of Big River Steel, Osceola, Arkansas, for approximately $774 million from cash on hand. The company ended November with approximately $2.9 billion in liquidity, including more than $1.7 billion in cash.
According to a news release from U. S. Steel, the transaction is subject to satisfaction of customary closing conditions, including antitrust approval, and is expected to close in the first quarter of 2021.
U. S. Steel made a $700 million investment in Big River Steel in October 2019, acquiring a 49.9 percent stake in the company. At that time, U.S. Steel indicated it planned to acquire the rest of the company sometime before 2023.
According to Recycling Today’s feature on the two companies’ partnership, it combines the oldest and second-largest steelmaker in the U.S. with the newest and most advanced flat-rolled steel mill in North America.
“For months, I’ve said that we can’t get to the future fast enough. Today, I can say the future is now. We are acquiring Big River Steel, the cornerstone of our ‘Best of Both’ strategy,” says David B. Burritt, president and chief executive officer of U. S. Steel. “With Big River Steel, we can offer customers the high performance, innovative steel products they expect from U. S. Steel’s scientists and application engineers made through a state-of-the-art, environmentally sustainable and efficient mini mill process.”
“I’m extremely proud of what our Big River Steel team has achieved in building the most technologically advanced and only LEED-certified steel mill, and I’m equally proud that we are joining a company that not only values our many accomplishments but shares our vision as well,” says Big River Steel CEO David Stickler. “Being an entrepreneurial disrupter is in our DNA, and I’m excited about the possibilities we have already demonstrated by leveraging U. S. Steel’s industry-leading research and development capabilities. I can’t wait to show the world what the ‘Best of Both’ truly means.”
Big River Steel operates a LEED-certified flex mill in northeast Arkansas that U. S. Steel describes as an “advanced flat-rolled mill” that offers products and services to customers in the automotive, energy, construction and agricultural industries. Its manufacturing technology and skilled operators combined with U.S. Steel’s product development capabilities and intellectual property have allowed Big River Steel to produce 11 advanced U. S. Steel grades, including substrate for its XG3 grade of Generation 3 advanced high-strength steels (AHSS), U.S. Steel says.
Big River Steel’s Phase II-A expansion doubled the mill’s hot-rolled steel production capacity to 3.3 million tons annually, establishing it as one of the largest electric arc furnace- (EAF-) oriented flat-rolled mills in North America. The Phase II-A expansion was completed in November of this year, ahead of schedule and below Big River Steel’s previously disclosed budget, according to the company.
Burritt says, “We are acquiring now to expand the benefits of this powerful partnership. This is aligned with the strong strategic execution and meaningful progress we’ve demonstrated in 2020 toward our goal of $1 billion in capital and operational cash improvements. By completing our top strategic priority, Big River Steel, we expect to strengthen our order book, increase our competitiveness and accelerate further product innovation for our customers. Longer term, the lower, variable cost structure will increase our efficiency, profitability and cash flow across the business cycle.
He adds, “We look forward to welcoming the Big River Steel team to the U. S. Steel family. We have already successfully produced 11 of U. S. Steel’s proprietary grades at Big River, including our most innovative Generation 3 grades of advanced high-strength steel. With Big River Steel, we expect to more nimbly respond to improving market conditions in the near-term and disrupt the steel industry to the long-term benefit of our customers.”
U. S. Steel says its partnership with Big River Steel has created strategic benefits, validating the strategic rationale that is expected to be realized upon full ownership of Big River Steel. Some key accomplishments of that acquisition include Big River Steel’s production of substrate for U. S. Steel’s XG3 AHSS and other automotive grades that will increase the company’s competitiveness in a broader range of applications to serve customers and sharing best practices during the completion of U. S. Steel’s strategic investment in EAF steel production to accelerate operational readiness in Alabama. The acquisition also has helped to validate the role Big River Steel’s sustainable steelmaking technology will play in meeting U. S. Steel’s commitment to reduce greenhouse gas emissions across its global footprint by 20 percent by 2030 based on 2018 baseline levels. Big River Steel also has helped to increase the steel recycling intensity within U. S. Steel’s footprint.