Trump's Made-in-America Steel Push Gives Stalled Upstart a Shot
(Bloomberg) -- Steel mill projects that have been languishing for more than a decade may get a new lease on life as President Donald Trump’s America First agenda gives previously untenable ventures a chance.
Take New Steel International Inc., a company founded by a former U.S. Steel Corp. engineer that’s been trying to build a low-pollution mill in the U.S. since 2005. That quest now looks a little less quixotic after a series of policy shifts in the last few months.
Even before Trump ordered tariffs on steel imports, Congress passed a tax bill that’s likely to draw more foreign investment to the U.S. and expanded a tax credit for emitters that capture their carbon dioxide. These policy changes are emboldening New Steel as it plans construction of new mills in Ohio and Michigan. Either would be the first integrated steel-making site to be built in the U.S. since 1964 and a win for Trump, who’s pledged to bring back manufacturing jobs.
If the projects come together -- which may still be a long shot because no significant financial backer has emerged publicly -- it would kick-start new production in a U.S. industry that’s seen employment shrink for decades.
The expanded CO2 tax credit -- included in the government spending bill signed into law last month -- would add hundreds of millions of dollars to the projected annual revenue of New Steel’s mills. It also would enable the company to call the combined iron, electricity and steel complex it’s planning “zero carbon” instead of low carbon, a distinction that President John Schultes says could help attract a new kind of investor.
“People want sustainable opportunities,” Schultes said in an interview. “The steel industry doesn’t have a very good reputation to do this but we will be breaking new ground.’’
Seeking DOE Loan
Schultes still faces a lot of serious obstacles to build his plant, including the need for funding. New Steel applied for a multibillion-dollar Energy Department loan in July 2016, while Barack Obama was still in office. Schultes said he’s been in regular contact with the department under Trump.
Although some Trump advisers were said to have recommended last year the department freeze and consider ending the loan program, which infamously backed the failed solar panel maker Solyndra LLC, the administration has been evaluating the proposal, Schultes said. The program is sitting on more than $40 billion in unused loan and loan guarantee authority for nurturing technology, according to its website.
Energy Department spokesman Brian Mahar declined to comment.
Schultes, a former U.S. Steel engineer who later ran a Thai strip mill, wants the mills in Michigan and Ohio to burn coal from Illinois and West Virginia -- four states with significant midterm election races coming up in November.
Each mill would cost about $5 billion and directly employ around 800 people. They’d produce 500 megawatts of electricity, 8 million tons of C02 and 5 million tons of advanced- and ultra-high-strength steel a year, at lower costs than the processes now in use, according to Schultes.
“If this were simple, gobs of companies would be out there doing it,” said John Catterall, executive director of the Auto/Steel Partnership, a Southfield, Michigan-based research consortium that includes General Motors Co. and AK Steel Holding Corp. “I haven’t seen enough to believe or disbelieve it.”
Citing confidentially agreements, Schultes declined to name New Steel’s investors and potential customers, including any car companies. But he has lined up some suppliers. Munich-based Siemens AG has offered to provide digital process controls and CO2 compressors, said Kevin Yates, head of energy management for Siemens in the U.S.
Andritz AG, an Austrian company that builds hydropower stations, will supply furnaces, rolling mills and carbon-capture equipment, said Executive Vice President Stephan Paech.
For the Michigan mill, Schultes has obtained options to purchase three square miles of land in Durand, a farm town near Flint. For the second mill, he’s negotiating for a 1,000-acre site near Haverhill on the Ohio River.
He’s been trying to break ground for years. The Ohio plant was originally going to be built with a large Russian steelmaking partner, who pulled out due to the financial crisis, Schultes said in testimony before the Ohio legislature in 2014.
Schultes said he’ll be ready to start work on the mills this year and complete at least one of them by 2022. But he said he can’t wait forever.
“If it doesn’t get done in this country,” he said, “it will get done somewhere else.’’
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