Gerdau AmeriSteel is set to announce a modernization program that includes construction of a new electricity substation and power line directly to its Tennessee plant worth $4.7 million and the addition of a $7 million warehouse.
The modernization will take place at the company's 56-acre site in Lonsdale.
The new power line will boost production 10 percent, allowing the plant to operate at maximum capacity.
The company, the state, KUB and TVA are sharing the cost of building the substation and power line. KUB will contribute $3 million; the state's Fast-track Infrastructure Development Program will put in $200,000.
TVA does not release the amount of economic development money granted, citing proprietary reasons for the companies it assists. The company will provide the remainder of the $4.7 million needed for construction beyond what KUB, the state and TVA kick in.
The company dates to 1868, when it was Knoxville Iron Works and located on what would become known as the World's Fair site.
The expansion will help it stay competitive in the steel market, said H. Blair Trimble, Gerdau AmeriSteel senior adviser.
"We'll be more efficient," said Arlan Piepho, Gerdau AmeriSteel vice president and general manager. "It's an investment in the Knoxville mill, saying we're going to stay here. It's the confidence the home office has in the mill and the community."
The new power line, to serve one of KUB's largest metered customers, will help stop interruptions of service that the plant causes in the Lonsdale neighborhood because of its huge use of power.
The plant now receives power through KUB's Coster Shop power station.
"We're tied into the neighborhood," Piepho said. "We could affect all the neighbors and vice versa. This line will allow us to run maximum power input to our furnace and also help our neighbors be protected from any electrical flickering problems."
The new line should be completed in about a year.
"We're excited about it because it allows us to retain one of our largest electric customers and the Knoxville community retains about 300 jobs," said KUB spokesman Brian Shupe. "It frees up capacity in our substation for more development in the area, gives the plant more operational flexibility and improves our service by lessening the plant's impact on power quality."
Knoxville Iron Co. was purchased by Steel Service Co. in 1968, with officials that included Trimble, who has stayed with the company since. In 1987, the company was purchased by Tampa-based Florida Steel Corp. In 1994, it became AmeriSteel.
Gerdau invested $34 million in a modernization program resulting in the building of a new melt shop in July 2000. Knoxville News Sentinel