U.S. Steel Corp. CEO David Burritt delivered some surprising comments Friday about the Pittsburgh-based steelmaker’s plans to spend some $1.5 billion upgrading its Mon Valley Works with a combined casting and rolling mill: The company could decide to cancel the project here and invest the money elsewhere.
"The key word in all of this is really the optionality. We can decide to put it in Mon Valley. We can decide to put it somewhere else,” Mr. Burritt told analysts at the tail end of the company’s third-quarter earnings conference call. “We have a lot of flexibility to decide where this goes."
The Mon Valley project was announced with great fanfare in May 2019.
At the time, it was touted as ensuring the future of the steelmaker’s iconic Mon Valley operations — which include the Edgar Thomson Works in Braddock, Irvin Plant in West Mifflin and Clairton Coke Works that together employ about 3,000 people — by making it a central source of material for high-strength, lightweight, flexible steel that feeds the automotive sector.
U.S. Steel originally planned to break ground on the project this September, with start-up in the fourth quarter of 2022. The groundbreaking was delayed indefinitely earlier this year, in part because of lags in permitting caused by COVID-19.
Besides the combined casting and rolling mill at Edgar Thomson, the investment includes a cogeneration power plant at the Clairton Works. Both are the first of their kind in the U.S., the company has said.
“We build optionality into everything we do,” spokeswoman Amanda Malkowski said in an email when asked for further comment on the possibility of picking another site for the project. “Clairton Plant, Edgar Thomson and the other facilities comprising our Mon Valley Works are key to our ability to execute our ‘Best of Both’ strategy,” she said.
During Friday’s conference call, the company said it was planning to spend $150 million on the project next year to purchase equipment. That still leaves between $1 billion and $1.2 billion to spend on the remainder of the venture, an official said.
U.S. Steel reported its fifth consecutive quarterly loss on Thursday, though Mr. Burritt said business was picking up, especially for its flat rolled steel segment.
The loss amounted to $234 million, or $1.06 per share, for the third quarter. That compares with a loss of $84 million, or 49 cents, in the same three months last year.
In the second quarter this year, the company lost $589 million, or $3.36 per share.
Sales in the most recent period slumped 24% to $2.3 billion, down from $3.1 billion a year earlier.
In the conference call, Mr. Burritt emphasized that market conditions were improving. “We are optimistic about the recovery that has been underway for the past several months,” he said.
“We believe today’s market demand is sustainable and will continue into next year. As vacations, movies, concerts and dining out have been replaced by vehicle and appliance sales and home-improvement projects, we have continued to see a noticeable increase in steel demand.”
Patricia Sabatini: PSabatini@post-gazette.com; 412-263-3066.
First Published: October 30, 2020, 4:32 p.m.
