Capital expenditures for 2012 for United States Steel (NYSE:X) are expected to total approximately $900m, with part of that money going toward new coal-based coke and carbon alloy facilities to support steel production, U.S. Steel said in its Feb. 28 annual Form 10-K report.
“We have made significant progress to improve our self-sufficiency and reduce our reliance on coke for the steel making process through the application of advanced technologies, upgrades to our existing coke facilities and increased use of natural gas and pulverized coal in our operations,” the Form 10-K noted. “This may enable us to minimize additional capital investments in coke and carbon alloy projects in the future.”
Engineering and construction of an advanced coke battery at the Mon Valley Works’ Clairton plant in southwest Pennsylvania, with a projected capacity of 960,000 tons per year, is underway with completion expected near the end of 2012. U.S. Steel is also constructing a carbon alloy facility at the Gary Works in Indiana that utilizes an environmentally compliant, energy efficient and flexible production technology to produce a coke substitute from coal feedstock. The Gary facility has a projected capacity of 500,000 tons per year with completion expected in the second half of 2012. The company expects both of these projects to reach full production capability in 2013.
Notable is that a Illinois Environmental Protection Agency air permit for the Gary carbon alloy project, issued in August 2010, said that to keep this within a “minor” permitting program, U.S. Steel has to shut its coke oven Batteries No. 5 and No. 7 to offset some of the emissions from the new facility. Each of those batteries has 77 ovens and was built in 1954. The No. 5 and No. 7 batteries have a combined maximum pushing capacity of 103 tons of coke per hour, the permit said. The carbon alloy facilities will use the Cokonyx process.
Also, U.S. Steel some time ago entered into a 15-year coke supply agreement with Gateway Energy & Coke, a unit of SunCoke Energy (NYSE:SXC), in connection with its heat recovery coke plant located at the steel producer’s Granite City Works in Illinois, with that facility having begun operations in the fourth quarter of 2009. That facility produces 650,000 tons of coke per year. With its own coke production facilities and a long-term coke supply agreement with Gateway Energy & Coke, U.S. Steel said it has the capability to be nearly self sufficient for coke in North America at normal operating levels. It also has multi-year contracts for some of its North American coking coal requirements.
U.S. Steel’s coke production in North America has declined over the last several years mainly due to the closure of one coke battery at the Gary Works in 2005 and three coke batteries at the Clairton plant in 2009. Additionally, some of its existing coke batteries are reaching the end of their useful lives. Improving its coke self sufficiency and expanding its use of natural gas as a coke substitute are important strategic objectives, the company pointed out.
U.S. Steel plants with coke batteries are:
- The Gary Works, located in Gary, Ind., has annual raw steel production capability of 7.5 million tons. Gary Works includes three coke batteries and four blast furnaces. Gary Works generally consumes all the coke it produces and sells coke by-products.
- The Clairton plant is comprised of nine coke batteries. Almost all of the coke produced is consumed by U. S. Steel facilities or swapped with other domestic steel producers. Coke by-products are sold to the chemicals and raw materials industries.
- Granite City Works, located in Granite City, Ill., has annual raw steel production capability of 2.8 million tons. Granite City’s facilities include two coke batteries and two blast furnaces. Granite City Works generally consumes all the coke it produces and sells coke by-products.
- Lake Erie Works, located in Nanticoke, Ontario, Canada, has annual raw steel production capability of 2.6 million tons. Lake Erie Works facilities include a coke battery and a blast furnace.
- Hamilton Works, located in Hamilton, Ontario, has annual raw steel production capability of 2.3 million tons. Hamilton Works facilities include a coke battery and a blast furnace.
A decrease in the company’s coke production in 2009 resulted from the temporary idling of cokemaking facilities at the Clairton, Granite City, Hamilton and Lake Erie for part of the year as well as the permanent shut down of three coke batteries at Clairton. In 2010, U.S. Steel restarted the facilities that were idled in 2009, resulting in an increase in coke production. Coke production in 2011 was 7.6 million tons.
In March 2008, U. S. Steel entered a settlement with the Allegheny County, Pa., Health Department (ACHD) to resolve alleged opacity limitation and pushing and traveling violations from older coke oven batteries at Clairton and to resolve alleged opacity violations from its Edgar Thomson Plant. The settlement, among other things, requires U. S. Steel to conduct interim repairs on existing batteries. The deal also required that coke Batteries 1-3 be shut down by Aug. 11, 2015. In September 2010, U. S. Steel amended the deal to require it to bring Batteries 1-3 into compliance rather than shutting them down. The Form 10-K said the company is currently repairing existing Batteries 19 and 20 and that it continues to make improvements on Batteries 1-3. U. S. Steel shut down Batteries 7-9 in 2009 as required by the settlement with the county health department.