The leaders of Steel Dynamics Inc. have approved plans for the Indiana-based company to spend more than $2 billion to build an aluminum flat rolled mill in the Southeastern United States as well as two recycled aluminum facilities that will supply about half of the new mill’s raw materials.
Steel Dynamics executives say their plans—word of the $1.9 billion mill’s specific location will come later—will help close a significant flat rolled aluminum supply deficit that’s expected to stay above 2 million tonnes through the end of the decade. Word of their proposal comes less than two months after an investment group and can maker Ball Corp. said they will spend about $2 billion on a New Mexico mill that will have 650,000 tonnes of annual capacity.
The Steel Dynamics mill also will have the capacity to produce 650,000 tonnes per year starting in early 2025 and require 900,000 tonnes of recycled aluminum slabs, half of which will come from onsite. The two planned recycled slab centers will cost about $350 million and be located in the Southwest and North Central Mexico, regions the Steel Dynamics team says have excess supply.
The company’s forecasts call for the mill to generate annual EBITDA of $650 million to $700 million over a cycle. (By way of comparison, Steel Dynamics last year generated EBITDA of $4.6 billion on sales of $18.4 billion.) About 45% of its production will be can sheets while a third will go toward automotive products and the remaining 20% will serve construction and other transportation clients such as truck trailer builders.
“A significant number of our carbon flat rolled steel customers are also consumers and processors of aluminum flat rolled products,” Chairman, President and CEO Mark Millett said in a statement. “We are […] 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.”
Also taking part in the mill project is Unity Aluminum Inc., which has taken a nearly 6% stake and will supply key talent and expertise to Steel Dynamics.
Shares of Steel Dynamics (Ticker: STLD) were down more than 2% in midday trading July 19. Year to date, they have risen about 7%, pushing the company’s market capitalization past $12 billion.
