DELTA, Ohio — The Australian owner of the North Star BlueScope Steel LLC in Fulton County’s York Township said Monday it may invest up to $700 million over the next two to three years to expand the steel minimill’s production by another 600,000 to 900,000 metric tons per year.
The plant, which is owned by Australia’s largest maker of flat steel products, Melbourne-based BlueScope Steel Co., already puts out 2.1 million tons of rolled steel coils per year.
The company said Monday it plans to conduct a feasibility study immediately to determine whether it should go forward with an expansion. If an expansion proves feasible, BlueScope would add a third electric arc furnace and a second slab caster to the plant.
BlueScope said it plans to make a decision before December.
The plant, near Delta, employs about 370 workers. An expansion would almost certainly add more workers and boost the facility’s annual revenues.
York Township officials said there has been talk for some time of adding a third furnace and second slab caster but this is the first time it looks likely to happen. The company’s plans come amidst a protectionist tariff policy on steel and aluminium imports initiated by President Trump.
“If it’s going to bring more revenue and jobs, that’s great. But we may have to look at more of the infrastructure and the roads to see if we can handle it,” York Township Trustee Robert Trowbridge said.
“But whatever they build on the property, if it improves the value, then it improves the tax revenue,” he added.
Township Trustee Thomas Tedrow agreed that an expansion can only be a positive thing.
“It’s good to hear. ...The basic thing is they’ll need more of everything — more businesses to supply their needs, more employment, more revenues. It’s got to be a good thing,” Mr. Tedrow said.
BlueScope announced its intentions during its conference call with investors to discuss its fiscal 2018 annual earnings Monday and profits that doubled over the past year to $1.57 billion. The company said its North Star steel operations reported a 6 percent rise in underlying earnings because of rising demand for steel from U.S. auto and construction industries.
BlueScope CEO and Managing Director Mark Vassella told investors the company is continuing its review of growth opportunities that fit its strategy.
“To that end, we have initiated a comprehensive study to examine expanding our successful North Star business to add at least 600,000 to 900,000 metric tons per annum of steelmaking capacity [to add to the existing 2.1 million tons per annum]. The project under evaluation involves the addition of a third electric arc furnace and second slab caster, which may cost in the range of $500 million to $700 million and if it proceeds, would take two to three years to develop,” Mr. Vassella said. “We believe the project may deliver BlueScope compelling through-cycle economics, and the study will seek to confirm that.”
The steel plant makes hot rolled bands of steel that later are used to make parts for various industry sectors, including the automotive, construction, agriculture and general manufacturing sectors.
In its presentation, BlueScope said the North Star facility’s profit margin is now at about 19.3 percent, compared to its peers’ average profit margin of 9.4 percent. According to Bloomberg News, the Ohio plant is North America's most profitable steel mill.
The York Township facility started as a joint venture in 1997 between Cargill Inc. and Australia’s BHP Billiton, a multinational firm involved in mining, metal, and oil. BHP stands for Broken Hill Proprietary Co.
In 2002 BHP Billiton spun off its steel subsidiary, BHP Steel, which controlled the 50 percent stake in the Fulton County steel plant, which was then known as North Star BHP Steel.
In 2003 BHP Steel changed its name to BlueScope and the plant was renamed North Star BlueScope.
Cargill decided in 2015 to sell its 50 percent stake to BlueScope for $720 million and $40 million in assumed debt, giving the Australian steelmaker sole ownership of the steel plant.
Contact Blade Business Writer Jon Chavez at jchavez@theblade.com or 419-724-6128.
First Published August 13, 2018, 3:14 p.m.
