Jul 25, 2017   SOURCE: BusinessWire

ERP Iron Ore and Republic Steel Announce Lorain, Ohio Pig Iron Joint Venture

Republic Steel (“Republic”) and ERP Iron Ore, LLC (“ERP”) have signed a Memorandum of Understanding relating to the formation of a joint venture to produce pig iron at Republic’s steel mill located in Lorain, Ohio. When fully operational the Lorain mill is expected to produce up to one million net tons of pig iron per annum. The Joint Venture will serve the increasing demand for virgin iron required to produce steel in the Electric Arc Furnace (“EAF”) sector.

The Joint Venture benefits from the existing infrastructure located at Republic’s plant in Lorain, Ohio, including its blast furnaces, and its location along the Black River providing cost-effective shipping to major EAF steel producers. ERP plans to rail iron ore pellets to Lorain from its Reynolds, Indiana plant which was recently constructed at a cost in excess of $400 million.

The Joint Venture represents a new chapter of industrial growth in the heartland of America. Lorain, Ohio has played an important part in the history of American steel beginning in 1895 when the first shipment of steel left on six barges for New York City via the Erie Canal. In 1899, the first blast furnaces were completed at Lorain. America has a long history of pig iron production. In 1890 the U.S. surpassed Great Britain in pig iron production, and subsequently became the world’s leading producer of pig iron.

In recent years, American pig iron production declined as imports subsidized by foreign governments replaced the domestic production of pig iron. In 1979, the U.S. Treasury Department ruled pig iron imported from Brazil was being subsidized by the Brazilian government. It was concluded that 16 Brazilian exporters received government subsidies averaging 24 percent. Today, pig iron is almost exclusively imported from the Ukraine, Brazil, and Russia. In an era when traditional blast furnace steel production is being displaced by state-of-the art EAF production, the Republic-ERP pig iron Joint Venture represents an important step in protecting North American independence in steel production.

“We are excited to announce this new venture and look forward to utilizing our assets in Lorain, Ohio to bring back production of pig iron which was previously displaced by foreign imports…” Republic President and CEO Jaime Vigil said in a statement. ERP CEO Tom Clarke added, “We are very excited to partner with Republic in rebuilding a U.S. industry and providing employment in areas economically depressed by foreign imports.”

About Republic Steel

Republic Steel traces its roots back to 1886, with the establishment of Berger Manufacturing Co. in Canton, Ohio. Berger later became part of Republic Steel Corp., the sprawling steelmaker organized by financier Cyrus Eaton in 1930. Throughout the 1900s, Republic's steel was instrumental in fighting a war and building a nation. Its steel bar products were instrumental in developing America's automotive, agricultural and aerospace industries.

In 1984, Republic Steel merged with LTV Corp.'s Jones & Laughlin division to form LTV Steel. In 1989, an employee stock ownership plan bought LTV's steel bar division and renamed it Republic Engineered Steels, marking one of the largest employee ownership transactions in industrial history. In 1998, RES and Bar Technologies combined to form Republic Technologies International, which approximately one year later acquired the steel bar business of USS/KOBE Steel in Lorain, Ohio.

The Lorain facility, located along the Black River, has a rich history dating back to 1895, when Thomas Johnson constructed the Johnson Steel Street Rail Company mill in just 10 months. Throughout its history, the plant has operated under several names, including Johnson Steel, Lorain Steel, National Tube Company of U.S. Steel and Lorain Cuyahoga Works of U.S. Steel, before becoming USS/KOBE in 1989.

Republic Steel now operates the best steel bar and other steel making facilities of these companies and is well positioned to write its own promising history. The company was acquired in July 2005 by Industrias CH, S.A de C.V. (ICH), a rapidly growing steel producer and processor based in Mexico City. Republic Steel is a subsidiary of Grupo Simec, Guadalajara, Mexico, of which ICH is the majority owner. The company's strategic alliance with ICH is helping strengthen its relationships with customers expanding in Mexico and South America.

About ERP Iron Ore, LLC

ERP Iron Ore, LLC is affiliated with a consortium of mining and industrial assets producing coke, coking coal, and iron ore. ERP affiliates have successfully reopened mining operations throughout North America and are now the second largest producer of coking coal in North America, with run-rate production of 10.6 mntpa. ERP acquired the former Magnetation LLC (“Magnetation”) assets with three iron ore beneficiation plants located in and adjacent to Grand Rapids, Minnesota and a state of the art Metso pellet plant in Reynolds, Indiana capable of producing 3.5 mmtpa. ERP affiliates have confirmed a plan of reorganization to invest $250 million of equity capital, to sponsor Mesabi Metallics Company LLC (“Mesabi”) in its reorganization and completion of a 7.0 mmtpa Metso pellet plant in Nashwauk, Minnesota. The Magnetation and Mesabi assets represent over $2.6 billion of recently invested capital with future capacity to produce 10.5 million mmtpa of the highest quality iron ore pellets.