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Austrian-Based voestalpine Group Begins Construction Of Direct Reduction Plant Near Corpus Christi, Texas

Area Development Online News Desk (04/23/2014)
A steel-based technology and capital goods firm headquartered in Linz, Austria, voestalpine Group began construction of a direct reduction plant at the La Quinta Trade Gateway Terminal near Corpus Christi, Texas. This 550 million Euro or $759,770, 000 million investment is the largest foreign investment in the history of the Austrian Group.

According to the firm, starting in 2016 the plant will produce two million tons of Hot Briquetted Iron and Direct Reduced Iron annually. It will supply Austrian locations, such as Linz and Donawitz, with "sponge iron" as a premium raw material. With the new facility, voestalpine can significantly reduce production costs in Europe. The highly automated plant will create 150 jobs.

"We investigated 17 locations in eight countries for this project. In the end, Texas was the most promising on all key criteria, such as logistics, energy supply, well-trained employees, and political environment," said Wolfgang Eder, CEO of voestalpine AG and Head of voestalpine's Steel Division on the decision to choose a location. The property is superbly located right on Corpus Christi Bay, covers an area of about two square kilometers, and provides direct sea access for large ships.

"With our investment in Corpus Christi, we are significantly enhancing the efficiency of the use of raw materials by our company and at the same time demonstrating that this is possible while being responsible with the environment," stated Eder. The Austrian plants in Linz and Donawitz will obtain access to high-quality, environmentally friendly primary materials, and the competitiveness of the European locations will thereby be ensured over the long term.

The direct reduction plant will use iron ore pellets to produce high-quality DRI/HBI or "sponge iron" comparable to the highest quality scrap or pig iron, which is an excellent primary material for the production of crude steel. In contrast to the coke- and coal-based pure blast furnace route, only natural gas is used as a reduction agent in direct reduction, which is more environmentally friendly.

The price of natural gas in the U.S. is about a half of what it is in Europe, the company said. The plant - with its 150 employees - will produce two million tons of DRI/HBI annually, of which about half will be shipped by sea to the steel plants in Linz and Donawitz. The other half will be used as a strategic reserve and sold to long-term partners.

"We can supply ourselves with competitively priced energy in the U.S. in a politically stable, reliable environment," stated Eder. "Moreover, this investment also creates an additional long-term growth option in North America for the voestalpine Group." The construction of the plant is a heavy construction project in the truest sense. The EUR 550 million investment covers 20,000 tons of constructional steel and 13,000 tons of mechanical equipment. Construction of the plant will employ about 1,000 people for a period of one and a half years.

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