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Austrian-based voestalpine Group Opens Direct Reduction Plant In Corpus Christi, Texas

10/27/2016
Austrian-based voestalpine Group, opened the world’s largest $740 million direct reduction plant in Corpus Christi, Texas.

According to company officials, each year it will produce two million tonnes of high-quality HBI (Hot Briquetted Iron, or sponge iron), a sophisticated pre-material used in steel production. The plant is already regarded as an environmental benchmark and is an important first step on voestalpine's path of reducing CO2 emissions in steel production.

"Today's opening of the direct reduction plant in Corpus Christi is an important step for-and into-the future of our company. The new plant will not only secure the Austrian voestalpine sites by supplying premium pre-materials for steel production, it will also contribute significantly to further strengthening our position in the NAFTA region. Furthermore, over the long term it offers us new technological options for decarbonizing steel production," says Wolfgang Eder, Chairman of the Management Board of voestalpine AG.

From the business year 2017-18 onwards, voestalpine Texas LLC, a company in the Steel Division of the voestalpine Group, will use natural gas to produce two million tonnes of premium HBI (Hot Briquetted Iron-sponge iron) each year, 40 percent of which (800,000 tonnes) will cover internal requirements, officials said. The remaining 60 percent of the production volume goes to external partners, with the corresponding offtake agreements already having ensured full capacity utilization for the next four years.

The plant's own deep-sea port can currently handle five million tonnes of material each year (3 million tonnes of iron ore pellets and 2 million tonnes of HBI). The 137-meter-high reduction tower forms the heart of the plant and is the highest building in southern Texas. voestalpine Texas LLC is creating 190 new jobs at the plant, and will generate value in the region to the sum of around USD 600 million over the coming decade.

A politically stable and predictable environment, professional cooperation with the authorities, cost-efficient energy supply and logistical advantages were the key reasons behind the decision to locate the plant in Corpus Christi, officials said.

"As an investor, during each phase of the project we were able to notice the intense efforts being made to reindustrialize in the USA. The USA has recognized that a sustainable industrial manufacturing base is essential to a country's stable economic development over the long term," says Eder.

According to company officials, compared to the USA, Austria and Europe will doubtless remain an expensive location in the long run, particularly in terms of energy supply: Average industrial gas prices in Austria over the longer-term are around three times as high, and electricity prices around twice as high as those in the USA.

The annual costs of operating an identical direct reduction plant in Austria would be around $225 million higher than in Texas, purely due to the price differences for gas, electricity, and logistics. "In Europe, however, increasing political and social detachment from anything to do with industry is at least equally problematic," Eder concludes.

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