U.S. Steel is investing more than $50 million in its Gary Works steel mill this year as it looks to make its operations more efficient to capitalize off higher steel prices.
The steelmaker announced a $1.2 billion flat-rolled segment asset revitalization program over the next few years aimed at improving profitability and competitiveness.
"We are seeing a more bullish sentiment in the markets served by our Flat-Rolled and European segments right now, as prices have been increasing and overall demand has been stable," U.S. Steel Chief Executive Officer David Burritt said in a conference call with investors Tuesday. "Our investment in our facilities and our people continues to increase. These strategic investments, combined with our focus on achieving operational excellence, will deliver continuous improvements in safety, quality, delivery and costs that will position us to succeed through business cycles, and support future growth initiatives."
U.S. Steel said it's planning to do $200 million to $250 million in maintenance projects this year. Through 2020, it's planning significant investment in blast furnaces, hot strip mills, cold mill and finishing unit, BOPs, QBOPs and slab casters at its mills, including Gary Works.
The Pittsburgh-based company, one of the largest employers in Northwest Indiana, invested $23 million restoring hot strip mills at Gary Works earlier this year to improve reliability, quality and product capability.
It's planning another investment of $26 million to improve reliability in the #6 Blast Furnace, which will be taken offline but should be back up and running by the fourth quarter.
Additionally, U.S. Steel intends to invest $6 million in capital improvements to the Gary Works Casters A Line Turret Bearing and $1 million in the Gary Works 84” Pickle Waste Liquor Line.
"The real solution is to not have things go wrong," Burritt said. "We're addressing that with asset revitalization."
U.S. had been deferring maintenance for years as part of the Carnegie Way cost-cutting strategy launched by former CEO Mario Longhi. The steelmaker paid dearly for putting off capital expenses in the first quarter, when it posted a surprise loss of $180 million because inefficient equipment kept it from taking advantage of the rising steel prices.