United States Steel Corp. has agreed to acquire the remaining 50.1% stake in Big River Steel LLC for $774 million, giving the steelmaker ownership of one of the newest, most advanced steel mills in the country, a person familiar with the matter said.
Control over Big River’s Osceola, Ark., mill will give U.S. Steel access to the same production process used by competitors Nucor Corp. and Steel Dynamics Inc., two of the most profitable companies in the domestic steel industry. The company has said the acquisition is the centerpiece of its drive to raise profit by investing in mills that make steel less expensively by melting scrap in electric furnaces.
U.S. Steel bought a 49.9% stake in Big River in October 2019 for $700 million with an option to acquire the rest of the company within four years. Higher steel prices in recent months have helped U.S. Steel raise enough cash to complete the purchase sooner than expected, the person familiar with the matter said.
The spot-market price for coiled sheet steel in the U.S. has rallied to $856 a ton on Monday from below $500 a ton this summer, as a rebounding manufacturing sector ramps up orders.
More than two-thirds of the steel produced in the U.S. is now made in electric furnaces. But U.S. Steel still mostly makes its steel from iron ore melted in giant blast furnaces fueled by coal. It is a more expensive, labor-intensive process that is difficult to throttle back when demand for steel wanes as it did this spring when the coronavirus pandemic caused the company to idle about half its blast furnaces and lay off hundreds of workers. U.S. Steel has restarted most of those furnaces.
