Big River Steel
Building on its earlier successes leading greenfield projects, GPP formed Big River Steel with a group of private equity and strategic investors to build a next generation scrap metal recycling flat-rolled steel mini mill. And what a tremendous success it was! Following a highly successful self-managed construction effort, Big River Steel was quickly recognized for producing the highest quality steels and operating with an industry leading environmental sustainability position, both while generating superior profit margins.
Among the many Big River Steel accomplishments, the one accomplishment that GPP is most proud of is the fact that we created over 650 high-paying industrial jobs in the Mississippi River Delta, one of the most economically challenged regions of the United States. Under GPP’s leadership, Big River Steel’s employees produced almost 5,000 tons of steel per year per employee. This compares to other North American steel producers that struggle to reach 900 tons of steel per year per employee. The level of employee productivity allowed Big River Steel to have the highest paid steel workers in North America (if not the world), yet still have the lowest labor cost per ton of steel produced.
Typical of the lean project development model used by GPP, all the tasks that needed to be completed prior to beginning construction were completed by GPP and two industry professionals. These tasks included conducting the site search, obtaining the environmental permits, negotiating a technology purchase agreement, negotiating the power, rail and government incentive agreements, and raising the $1.6 billion in capital required to build and start-up the facility. All of this was completed while spending less than $6 million. This $6 million, included engineering and legal work as well as covering the bank group’s due diligence costs. GPP is aware of companies that spend tens of millions of dollars and hire dozens of employees to complete the same tasks. Such behavior sets the wrong tone for a lean organizational structure. If you have professionals that know what they are doing, you don’t need a lot of people and you don’t need to spend a lot of money to develop a project.
Following Big River Steel’s industry-leading start-up, GPP began contemplating a doubling of production capacity. Part of this effort included introducing the Big River Steel story to some of the world’s most sophisticated institutional bond investors. These investors supported Big River Steel’s placement of “Green” bonds in the debt capital markets. The placement of Green bonds was an steel industry first in North America, and facilitated Big River Steel’s highly profitable expansion project. The $700 million expansion project doubled Big River Steel’s capacity. And, most importantly, the project was completed ahead of schedule and under budget.
Big River Steel is the world’s first LEED certified steel production facility. Achieving such designation is consistent with GPP’s ongoing efforts to continue leading the world’s steel industry in sustainable steel production.
Based on the tremendous success Big River Steel had in terms of environmental sustainability, labor productivity, product quality, and profitability, U. S. Steel bought Big River Steel in early 2021 as the foundation for its pivot from using the traditional iron ore-based integrated steelmaking model to the environmentally focused scrap metal recycling mini mill model. GPP continuing in its role of chief executive officer and chief financial officer of Big River Steel during a six-month transition period worked to draw the best of U. S. Steel’s 120-year-old culture and Big River Steel’s more nimble entrepreneurial culture which became known industry wide as the “Best of Both.” U. S. Steel’s acquisition has been a roaring success for all involved, including GPP and Big River Steel’s other original equity investors, Big River Steel’s employees, and U. S. Steel.
Following U. S. Steel’s highly successful acquisition of Big River Steel, U. S. Steel then engaged GPP to find a site for U. S. Steel’s second flat-rolled mini mill. The site search for this $3 billion investment, which was led by GPP, involved evaluating over forty sites in fourteen states, negotiating one the largest power contracts ever entered into by Entergy Corporation, structuring a multi-state rail haulage agreement with BNSF Railway, and obtaining highly technical construction and air permits. Under GPP’s leadership, all of this was completed in less than six months! This compares to the twelve- to eighteen-month time period some involved in the second flat-rolled mini mill project originally envisioned.
In December 2023, Nippon Steel Corporation announced its intention to acquire U. S. Steel. Key drivers in support of Nippon’s decision to spend over $15 billion to acquire U. S. Steel were the product capabilities, profitability levels, and sustainability footprint of Big River Steel. Supplementing these value drivers was the ongoing effort to double the volume of flat-rolled mini mill capacity by completing U. S. Steel’s second mini mill project GPP helped develop.
Among the many other accomplishments the Big River Steel team achieved while operating under GPP’s leadership were:
- Generating operating margins that in some quarters exceeded 40%.
- Being recognized as the only North American steel producer to run full out during the height of the COVID pandemic, and doing so profitability.
- Limiting scope one carbon emissions to a world-leading 0.123 tons of carbon emitted per ton of steel produced (the world average scope one level is 1.85 tons of carbon emitted per ton of steel produced).
- Receiving the 2021 Daimler/Mercedes Supplier of the Year Global Sustainability Award (this award covered all materials purchased by Daimler anywhere in the world, not just steel).
News
Nippon Steel Corporation (NSC) to Acquire U. S. Steel, Moving Forward Together as the ‘Best Steelmaker with World-Leading Capabilities’
December 2023
U.S. Steel to Acquire Remaining Stake in Big River Steel
December 2020
Grand Opening Today for Big River Steel
March 2017
Big River Steel Begins Full Production
March 2017
Big River Steel Breaks Ground on Osceola Steel Mill
September 2014
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