Nucor Steel, which purchased the North Star Steel facility and equipment in Kingman, Ariz., a year ago, has no immediate plans to reopen the plant for production.
Nucor vice president Jay Bowcutt said the company would still like to open the Kingman plant, which produces recycled steel. But none of the company’s original issues have been resolved, he added.
“Electricity costs in Arizona are higher than at any of our other 16 mills across the U. S.,” Bowcutt said. “North Star Steel lost money every year they operated with those same electric costs.”
He said Arizona has high prices for electric customers with high loads, such as for steel mills and mining operations.
Bowcutt said steel prices are up but that prices paid for material to recycle are up about the same amount.
Two major costs for a steel recycling facility are power and a supply of recycled materials, said Bob Riley, director of economic development for Kingman. Recycled materials for the Kingman facility would have to come from the West coast, he added.
The 30 percent rate increase for UniSource customers at the Kingman Airport Industrial Park does not mean that Nucor would have had the same increase.
“North Star purchased power wherever they could get the best price on the electric grid and had a distribution contract with Mohave Electric Cooperative,” Riley said. “Nucor could buy power wherever they could get the best price.”
Bowcutt and Riley agreed that electricity costs more in Arizona than in many other states.
Arizona Corporation Commission chairman Mark Spitzer acts as an intermediary between Nucor and Arizona utilities, trying to help find a way for Nucor to purchase electricity at a price that would allow it to reopen the Kingman facility. The commission would not negotiate rates for Nucor, but any agreement would require approval of the five-member commission.
Bowcutt said discussions have been held with third parties to dismantle and sell the equipment in the Kingman plant. Some of it could go overseas. However, he added, sale and dismantling are only in the discussion stage.
Nucor purchased essentially all the operating assets of the Kingman plant in March 2003 for $35 million.
The plant has an annual melting capacity of 650,000 tons, although the melt shop has not operated since January 2000. The state-of-the-art rebar and wire rod-rolling equipment has a capacity of 500,000 tons per year.
North Star employed 300 at peak operation. The company paid more than $7 million in fines to settle environmental issues with the Arizona Department of Environmental Quality related primarily to the melt furnace operation.
The case was settled by then-Attorney General Janet Napolitano, who is now governor. Kingman (Arizona) Daily Miner