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Big River ramping up efforts for second steel mill in Texas: CEO

Big River Steel is increasing its efforts to add a second US mill in Brownsville, Texas, according to CEO Dave Stickler.

"We are just now aggressively ramping up efforts for a second flat-rolled mill in Brownsville," Stickler told S&P Global Platts during the World Steel Association's general assembly meeting in Monterrey, Mexico. "We now have a company formed called Brownsville Investment Group LLC, aka BIG LLC ... That is a development company that is now taking over the development work to get that project off the ground."

The potential mill would be situated just 160 miles south of Steel Dynamic Inc.'s (SDI) planned 3 million st/year flat-rolled mill in Sinton, Texas, which is set to be operational in the middle of 2021.

Related: Big River Steel CEO says doubling down on company with US Steel deal

Despite the close proximity, Stickler was not concerned about the competition as the steel market, particularly in the southern US and Mexico, amounts to a "game of takeaway, and the low-cost, most-efficient producer that is also able to produce the highest quality steels is going to win," he said.

"I'm not worried about it at all. People say 'Dave, Mark Millett [CEO of SDI] beat you to the punch.' But what do you mean they beat me to the punch? He's got a site he deemed was best for his company. It happens to be landlocked. I happen to be right on the water. I happen to be right on the on the Mexican border. I happen to be in the middle of hundreds of thousands of tons of scrap every year," said Stickler.

Brownsville provides close proximity to an advantageous supply of prime scrap in the Mexican market crucial for electric-arc furnace production. In addition, the area adds freight advantages when shipping into the Mexican market.

The location has been an appealing prospect to Stickler for years, originally siting the area for the Severcorr mill, which is now SDI's Columbus, Mississippi, sheet mill. Brownsville was also an area of interest when Big River Steel was looking to build its first mill.

The area remained the bridesmaid but never the bride as it lacked an electrical infrastructure that would support a steel mill. However, that issue was resolved just as Big River finished construction at its mill in Oscela, Arkansas, a little over two years ago.

The completion of the electrical grid was also coupled with an incentive from the Texas government that makes the area even more attractive. "Governor [Greg] Abbot, the Texas Governor, has done us a great favor already by making the Brownsville site a designated opportunity zone, which provides huge tax and investment advantages for those that invest in the opportunity zone."

Stickler has been able to shrug off the cries of many in the market about overcapacity. The Big River CEO sees the need for the continued adaptation of the US steel industry even as the impending wave of new US supply has been dubbed "Steelmageddon" by Bank of America analyst Timna Tanners.

"Everybody says to me: 'Dave there's too much capacity' and maybe there is, but it is the wrong type of capacity," added Stickler.

-- Michael Fitzgerald, michael.fitzgerald@spglobal.com

-- Edited by Derek Sands, newsdesk@spglobal.com

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