ThyssenKrupp steel projects continue in U.S., Brazil

New plant startups will be stretched out into 2011

Tom Stundza -- Purchasing, 11/15/2009 9:27:39 PM

Germany's biggest steel maker, ThyssenKrupp, is continuing to build carbon and stainless steelmaking and processing facilities in the U.S. and Brazil, "but is responding flexibly to the changed economic conditions" by stretching out construction. As reported earlier, ThyssenKrupp has been planning the U.S. carbon and stainless mill complex since 2006.

ThyssenKrupp admits in its 2008-2009 fiscal year financial report that it "has cancelled or postponed numerous modernization and capacity expansion projects" worldwide-but not the ones in the Americas.

Construction of the new steelmaking and processing plant near Mobile, Ala., "is largely on schedule" and production will start in the second quarter of 2010. Still, capacities are being ramped up over an extended period and are being flexibly adapted to steel demand, the company says. So, until the second quarter of 2011, the slabs to be processed will come from Germany.

A flexible approach also is being taken to the startup of the new U.S. stainless steel mill, also in Mobile, expected to begin production in October 2010. The plant will open with a reduced annual cold-rolling capacity of around 110,231 net tons. The other processing units for stainless steel products will be started up over an extended period, and the melt shop, which was planned for early 2012, "can now be delayed by up to 24 months."

The new steel mill in Sepetiba Bay in the state of Rio de Janeiro in Brazil eventually will have annual steelmaking capacity of five million tons but the ramp-up "has been adapted in line with lower demand expectations." The first production line will start operation with one blast furnace and one steel converter in mid-2010 with the second blast furnace and the second converter being ramped up in 2011. ThyssenKrupp also says it negotiated with Brazilian iron ore producer Vale to increase its share to 27% in Siderurgica do Atlántico (Atlantic Steel).

The America's steel business will "most likely" show a loss again in fiscal 2009-2010 from the costs of building these new steel plants, says Executive Board Chairman Ekkehard Schulz in a statement.

ThyssenKrupp reported a record overall loss of 2.36 billion euros ($3.5 billion) in its 2008-2009 fiscal year, which was attributed to collapsing steel and nonferrous metals demand worldwide, a far cry from the boom in the global metals market of recent years. In addition to steel, the Düsseldorf-based group manufactures elevators and escalators, military and merchant ships, submarines and yachts, wind turbine engines and poser plants, forgings and automotive parts-and steel and nonferrous metals processing and distribution in a newly revamped Materials Services business area.

Commenting on the 2009-2010 fiscal year, Schulz says the emerging economic recovery is fragile, but expects sales to at least stabilize. "Earnings are expected to improve significantly and return to profit, thanks in no small part to the cost-cutting programs we have introduced," he adds. A major part of that has been ThyssenKrupp's global cutback in 11,879 jobs, a 6% reduction in the workforce.