Steel Dynamics, Inc. announced that its Board of Directors has authorized the company to construct and operate a 650,000-tonne low-carbon, recycled aluminum flat rolled mill, with two supporting satellite recycled aluminum slab centers. The capital investment is estimated to be $2.2 billion for the three facilities, and commercial production is planned to begin in the first quarter 2025. Steel Dynamics’ steel customers are significant consumers and processors of aluminum flat rolled products, and also seek the company’s high-quality, sustainable, customer-centric approach within the aluminum flat rolled market. The state-of-the-art aluminum flat rolled mill will utilize a significant amount of aluminum scrap, and as such is also a complementary extension of the company’s metals recycling platform, which is the largest nonferrous metals recycler in North America. The company estimates the project will generate between $650 million and $700 million of annual EBITDA on a through-cycle basis. The project will be funded with available cash and cash flow from operations, and the company plans to maintain its policy of strong shareholder distributions and investment grade credit ratings.
The North American flat rolled aluminum industry has a substantial and growing supply deficit estimated at over 2.0 million tonnes, based largely on increasing demand from the automotive and sustainable beverage can industries. The lack of aluminum flat rolled availability has impacted automotive producers’ ability to secure supply. The supply deficit is currently being addressed through imports of higher-cost aluminum flat rolled products, which exceeded 25 percent of North American consumption in 2021.
“We are incredibly excited to announce this meaningful growth opportunity, which is aligned with our existing business and operational expertise,” said Mark. D. Millett, Chairman, President, and Chief Executive Officer. “We have intentionally grown with our customers’ needs, providing efficient sustainable supply-chain solutions for the highest quality products. Thus far, this has primarily been achieved within the carbon steel industry – however, a significant number of our carbon flat rolled steel customers are also consumers and processors of aluminum flat rolled products. Today we are announcing our plans to broaden our ability to serve our existing and new customers by adding high-quality, low-carbon flat rolled aluminum to our product portfolio. We are also excited to further diversify our end markets with plans to supply the sustainable beverage can industry. We believe our unique performance-based operating culture, coupled with our considerable experience in successfully constructing and operating cost-effective, highly profitable carbon flat rolled steel mills, positions us exceptionally well to execute this strategic opportunity in an adjacent metal space, and to deliver strong long-term value creation.”
The planned $1.9 billion Steel Dynamics aluminum flat rolled mill will be located in the Southeastern United States, with an annual production capacity of 650,000 tonnes of finished products, serving the sustainable beverage packaging, automotive, and common alloy industrial sectors. The product offering will be supported by various value-added finishing lines, including CASH (continuous annealing solutions heat treating) lines, continuous coating, and various slitting and packaging operations. The rolling mill is currently expected to begin operations in the first quarter 2025. The company’s focus on decarbonization will also be applied to this aluminum operation, including plans to use a significant amount of pre- and post-consumer aluminum scrap in its production process, supported by the company’s metals recycling platform, which is the largest nonferrous metals recycler in North America. The company will own over 94 percent of the rolling mill facility through a joint venture arrangement with Unity Aluminum, Inc., whose employees provide significant aluminum industry operating expertise to the project, complementing the company’s own proven extensive construction and operating talent.
At full capacity, the aluminum rolling mill will require approximately 900,000 tonnes of annual aluminum slab supply. The rolling mill is expected to have the capacity to supply approximately 50 percent of its recycled aluminum slab requirements onsite, with the remaining amount to be provided by the construction and operation of two additional satellite recycled aluminum slab centers, one to be located in the Southwestern United States and the other in Northcentral Mexico. The satellite slab centers will benefit from abundant regional aluminum scrap supply and cost-effective operations. The two facilities are expected to cost approximately $350 million in aggregate, with the Mexico facility expected to begin operations in 2024 and the U.S. facility by the end of 2025. The company will own 100 percent of the satellite facilities.
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