A steel slab (top) becomes a plate (bottom) at the ISG Burns Harbor 110” Plate Mill (Photos provided)

By KEVIN NEVERS

After nearly five years in moth balls, the 110-inch plate mill at International Steel Group (ISG)-Burns Harbor is back in business.

On Wednesday ISG restarted the mill, in a move which the company says was demand driven. “We couldn’t be more pleased with the successful restart of this facility,” said Thomas Cera, vice-president of plate operations. “Our decision to return this mill to operation was driven by increasing demand from our existing customers and our desire to quickly respond to their needs.”

Bethlehem Steel Corporation idled the 110-inch mill in August 2000, less than 15 months before it filed for Chapter 11 bankruptcy protection. At the time Bethlehem officials spoke of the idling as though it were a short-term response to a temporary softening of the plate market, caused by third-quarter doldrums and a spike in foreign imports, but in the end the 110-inch mill remained shuttered for good.

ISG spokesperson Jolice Pojeta told the Chesterton Tribune today that the primary market for the 110-inch mill is original equipment manufacturers—or OEMs—like Caterpillar, John Deere, and Union Tank Car. But it also produces a healthy quantity of armor plate used by the U.S. Navy’s shipbuilding contractors. And much of the plate—military grade included—is of the value-added variety: heat-treated for fracture resistance and greater formability.

In an interview with the Tribune in January, Cera noted that on paper the restart of the 110-inch mill will give ISG an additional 200,000 tons or so of annual plate capacity. In fact, though, shortly after the company acquired U.S. Steel Corporation’s 160-inch mill at Gary Works—in a straight swap for the No. 2 pickle line at Indiana Harbor Works—ISG idled it. Now only the heat-treating facility at Gary Works is being used, to supplement not only the Burns Harbor heat-treating facility but the Coatesville and Conshohocken, Pa., facilities. And when the 160-inch mill at Gary Works was idled, in October 2003, ISG took off line around 750,000 tons of annual plate capacity, Cera said.

Among other things, Cera told the Tribune in January, the restart of the 110-inch mill gives ISG a great deal more flexibility in its production of plate. Much of the plate produced by the 160-inch mill can also be produced on the 110-inch mill, he said, and it’s simply more efficient to make a 96-inch wide length of plate on the 110-inch than on the 160-inch.

Cera also told the Tribune in January that the restart of the 110-inch mill was made much easier by the “great job shutting it down” done by Bethlehem’s employees. “They deserve to be commended,” he said. “They did a fantastic job when it was idled.”

New Jobs

The restart of the 110-inch mill created 65 new jobs, said Paul Gibson, president of United Steelworkers of America (USWA) Local 6787, all of them filled by relatives of bargaining unit employees, under the union’s collective bargaining agreement with ISG. Another 35 or so members are also working at the 110-inch mill after successfully bidding for positions there. First preference for bids went to members employed at the 160-inch mill, and bidding was then opened to members on a plant-wide basis.

Ironically enough, if anyone had asked Gipson only two months before ISG announced the restart of the 110-inch mill, he would have questioned the wisdom of that move, given the fragmentation of the domestic plate industry and a weak market for the product.

But a lot can happen in two months, Gipson said this morning. For one thing, a weak U.S. dollar has dampened foreign imports. For another, soaring demand in China for steel of all kinds has spiked the price of high carbon plate to virtually unprecedented levels. Only two years ago it was in the neighborhood of $350 per ton, he remarked. Now it’s going for $800 to $900 per ton.

The impending merger of ISG with Mittal Steel Company, however, has also strengthened the case for the restart. When Bethlehem was making its last-gasp efforts to preserve its autonomy, it sold many of its assets, especially energy-related ones, and lost much of its old vertical organization, Gipson said. The result: ISG has been paying “a tremendous price” for coal, scrap, and other raw materials.

Lakshmi Mittal, on the other hand—who with his family will hold 88 percent of the new company when the merger with ISG closes sometime in the next few weeks—“brings to the table a lot of resources for making steel that he already owns,” Gipson remarked. Those resources include over 40 percent captive source of iron ore and 2 billion tons of reserves, according to an investor presentation prepared by Mittal in October 2004; a “significant captive source” of coal and more than 1.5 billion tons of reserves; and more than 15 million tons of production capacity of coke, enough to meet 100 percent of the company’s needs.

The upshot, in Gipson’s view: the restart of the 110-inch mill “is a good thing. It should have a very good market.”

Posted 4/8/2005