Opening of HBI Plant in Texas Marks Start of a New Era at voestalpine

Published Oct 27, 2016
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voestalpine direct reduction plant in Corpus Christi
voestalpine direct reduction plant in Corpus Christi, Texas (photo: PRNewsFoto/voestalpine AG)

With the completion of the direct reduction plant in Corpus Christi, Texas, the voestalpine Group has set a further milestone in implementing its international growth strategy: after around two-and-a-half years of construction, the world’s largest and most state-of-the-art plant of its type was officially opened. At EUR 550 million (USD 740 million), the plant is the largest investment ever made in the US by an Austrian company. Each year it will produce two million tonnes of high-quality HBI (Hot Briquetted Iron, or sponge iron), a sophisticated pre-material used in steel production. The plant is already regarded as an environmental benchmark and is an important first step on voestalpine's path of reducing CO2 emissions in steel production.

voestalpine is continuing to systematically drive forward its expansion in the NAFTA region. In accordance with Group Strategy 2020, it is intended to increase revenue generated in this region from its current level of EUR 1.2 billion (~USD 1.4 billion) to EUR 3 billion (~USD 3.4 billion) by the business year 2020/21. “Today’s opening of the direct reduction plant in Corpus Christi is an important step for-and into-the future of our company. The new plant will not only secure the Austrian voestalpine sites by supplying premium pre-materials for steel production, it will also contribute significantly to further strengthening our position in the NAFTA region. Furthermore, over the long term it offers us new technological options for decarbonising steel production,” says Wolfgang Eder, Chairman of the Management Board of voestalpine AG. From the business year 2017/18 onwards, voestalpine Texas LLC, a company in the Steel Division of the voestalpine Group, will use natural gas to produce two million tonnes of premium HBI (Hot Briquetted Iron-sponge iron) each year, 40% of which (800,000 tonnes) will cover internal requirements. The remaining 60% of the production volume goes to external partners, with the corresponding offtake agreements already having ensured full capacity utilisation for the next four years.

The new plant covers an area of two square kilometres. The plant’s own deep-sea port can currently handle five million tonnes of material each year (3 million tonnes of iron ore pellets and 2 million tonnes of HBI). The 137-metre-high reduction tower forms the heart of the plant and is the highest building in southern Texas. voestalpine Texas LLC is creating 190 new jobs at the plant, and will generate value in the region to the sum of around USD 600 million over the coming decade.

A politically stable and predictable environment, professional cooperation with the authorities, cost-efficient energy supply and logistical advantages were the key reasons behind the decision to locate the plant in Corpus Christi. “As an investor, during each phase of the project we were able to notice the intense efforts being made to reindustrialise in the USA. The USA has recognised that a sustainable industrial manufacturing base is essential to a country's stable economic development over the long term,” says Wolfgang Eder. Compared to the USA, Austria and Europe will doubtless remain an expensive location in the long run, particularly in terms of energy supply: average industrial gas prices in Austria over the longer-term are around three times as high, and electricity prices around twice as high as those in the USA. The annual costs of operating an identical direct reduction plant in Austria would be around EUR 200 million (~USD 225 million) higher than in Texas, purely due to the price differences for gas, electricity, and logistics. “In Europe, however, increasing political and social detachment from anything to do with industry is at least equally problematic,” Eder concludes.

Tags: voestalpine Group


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