Company announces joint venture

Republic Steel to produce pig iron in local mill

Republic Steel will partner with a mining firm on a joint venture to process iron in Lorain to feed steel mills of other producers.

On July 25, Republic Steel and ERP Iron Ore LLC announced a memorandum of understanding to partner on producing up to 1 million net tons of pig iron a year at Republic Steel’s Lorain mill.

The joint venture will serve the increasing demand for virgin iron required to produce steel in the electric arc furnace, or EAF, sector, according to the companies.

ERP Iron Ore will send iron ore pellets to Lorain via rail from its plant in Reynolds, Ind., which was built at a cost of more than $400 million, according to the companies.

“We are excited to announce this new venture and look forward to utilizing our assets in Lorain, Ohio, to bring back production of pig iron which was previously displaced by

“I think it’s an incredible catalyst for new employment, new commerce.”

— Mike Luther, ERP Iron Ore spokesman

foreign imports,” said Republic President and Chief Executive Officer Jaime Vigil.

ERP Iron Ore CEO Tom Clarke agreed.

“We are very excited to partner with Republic in rebuilding a U.S. industry and providing employment in areas economically depressed by foreign imports,” Clarke said.

A tentative schedule is to begin production in July 2018, company spokesmen said. They added it is too soon to tell how many jobs could come to Lorain with the work.

The companies have not indicated what level of capital investment could come to Lorain, but City Hall wants to help, said Mayor Chase Ritenauer.

“We’ll certainly be welcoming anything that they can bring to the city,” he said. “We’re here to help as much as we can. We’ll streamline and expedite as much as we can to get people working faster.”

The news coming out of a Lorain steel mill is good, which is a change from recent years, Ritenauer said.

‘Cautiously optimistic’

The mood at ERP is “very excited” but “cautiously optimistic,” said company spokesman Mike Luther.

“I think it’s an incredible catalyst for new employment, new commerce,” Luther said about the plan.

Based on the history of steelmaking in Lorain, there are a lot of people who want to get back to work, he said.

“I think people are cautiously optimistic that we’re going to do something good,” Luther said. “We have to take baby steps on this. It’s just the right project at the right time.”

The companies billed it as “a new chapter of industrial growth in the heartland of America.”

In an era when traditional blast furnace steel production is being displaced by state-of-the art EAF production, the Republic-ERP pig iron Joint Venture represents an important step in protecting North American independence in steel production, according to a joint statement from the companies.

‘Modern way’

In the 21st century, some companies continue to use blast furnaces for “old

school” steel production, Luther said.

Those also are called basic oxygen furnaces, or BOFs, said Republic spokesman Ted Thielens.

However, other businesses have created “minimills” with electric arc furnaces that use different metals, or feed stock, to create steel, Luther said.

About 60 percent of American steelmaking is done with electric arc furnaces and about 40 percent is done with basic oxygen furnaces, according to the American Iron and Steel Institute.

The mini-mills can melt down recycled and scrap metal, from items such as old cars or refrigerators, to create steel, Luther said.

“It tends to be cleaner, it tends to be more efficient in terms of cost,” he said. “It’s the modern way of steel production.”

However, steelmakers using electric arc furnaces also use pig iron to blend with the recycled metal feed stock to create steel, Luther said.

Making pig iron

Pig iron is an intermediate product of smelting iron ore with a high-carbon fuel, according to the International Iron Metallics Association.

It takes its name from the traditional shape of molded ingots branching off a central runner, “similar in appearance to a litter of piglets suckling on a sow.”

America has a long history of pig iron production, according to Republic and ERP Iron Ore.

In 1890, the U.S. surpassed Great Britain in pig iron production, and subsequently became the world’s leading producer of pig iron, according to Republic Steel and ERP.

In recent years, American pig iron production declined as imports subsidized by foreign governments replaced the domestic production of pig iron, according to Republic Steel and ERP.

Currently, domestic companies must import much of the pig iron used in steel production, with much of the pig iron coming from Ukraine, Brazil and Russia, Luther said.

He suggested many domestic steel producers would “say heck yes” to a secure supply of American made pig iron.

ERP hopes to push down its transportation costs compared to the pig iron coming to the United States from overseas, Luther added.

“The bottom line is, this will be the first merchant pig iron producer in America,” he said. “It’s big. It’s not going to happen overnight, but something good is happening here.”

In the Lorain mill

Republic Steel made regional news in 2011 when the company announced plans for a new electric arc furnace, an $85 million addition that was expected to create almost 450 jobs at its Lorain mill.

In November 2013, production was delayed due to a fire at the mill. The company restarted the furnace, but by early 2016, economic conditions hurt Republic Steel and idled the Lorain mill.

Currently, Republic Steel operates a small area of its steel conditioning department, Thielens said.

To make pig iron, the company would use one of its two blast furnaces at the Lorain site, he said.

“Certainly, it would be a great first step toward utilizing the assets there,” Thielens said. “A lot of work to be done, a lot of analysis to be completed, but a great step in the right direction toward potentially restarting the blast furnace operation.”