Solar to power CMC’s new Arizona mill

Is the switching to scrap-based electric-arc furnace (EAF) steel production enough to get the industry to net-zero carbon dioxide emissions? The answer is probably not.

In most cases, the electricity used to power EAF technology still relies on coal, emitting large amounts of carbon dioxide. Therefore, a rapid transition to renewable energy is critical to solving the net-zero conundrum.   

Green hydrogen is currently the most discussed renewable energy source in the pursuit of net-zero carbon emissions. But where hydrogen is still very expensive, more sustainable energy sources like hydro, solar and wind power could be the answer. 
 

Solar power is one of the most price-competitive and sustainable energy sources. On-site solar energy is helping to fuel the green transition for North America-based long steel mills, as we discuss. 

An on-site solar array will help power a new $300-million EAF micro-mill that Commercial Metals Co (CMC) plans to build in Mesa, Arizona, near its existing micro-mill built in 2009. 

“This plant will be the first micro-mill in the world capable of producing merchant bar as well as rebar. It will also be the first in North America with the capability to connect directly to an on-site renewable energy source,” Barbara Smith, chairman of the board, president and chief executive officer, said during CMC’s fiscal third-quarter earnings call on June 17.

The new micro-mill is expected to be commissioned in early 2023 and will have an estimated annual production capacity of 500,000 tons, including 150,000 tons of merchant bar quality (MBQ) product.

Fastmarkets last assessed the price for steel reinforcing bar (rebar), fob mill US at $49 per hundredweight ($980 per short ton) on July 14, compared with $28 per cwt in mid-July 2020.

Fastmarkets’ monthly assessment for steel bar 2 x 2 x ¼-inch angle merchant products, fob mill US was $53.80 per cwt ($1,076 per ton) on June 25, up from $33.80 per cwt one year earlier.

The new CMC mill will be the first in North America to use the latest technology in EAF power supply systems from Italy’s Danieli Corp, according to executive vice president and chief operating officer Tracy Porter. 

Danieli’s “Q-One [technology] allows us to directly connect the electric-arc furnace and ladle furnace to renewable energy sources such as solar and wind, rather than be powered by electricity from a utility provider,” Porter said in a statement last August. “With this new advanced technology, coupled with the continuous steelmaking process, we will be one of the most efficient steel producers in the world.”

The solar array will “provide a meaningful portion of the facility’s power,” Porter said when the company first announced plans to build the new micro-mill.

The new mill will replace the production capability of a higher-cost rebar EAF melt shop in Rancho Cucamonga, California. CMC acquired that mill from Gerdau in November 2018 and ended meltshop operations there in October 2019.

“This is a smart growth initiative that feeds the large underlying West Coast demand for rebar and merchant bar, replacing inefficient existing rebar capacity with environmentally friendly technology,” Smith said in a statement last August. 

The company secured an operating air permit from the Maricopa County Air Quality Department this past April, allowing it to begin construction of the new facility.

In a further indication of the company’s commitment to renewable energy sources, CMC last December began receiving solar-generated electricity to help power the existing Mesa micro-mill.

The power was generated by the newly operational Saint Solar 100-megawat solar power plant in Coolidge, Arizona; that plant is operated by the Salt River Project, a subsidiary of NextEra Energy Resources. The Salt River Project also provides its customers, including the Mesa plant, with electricity not generated from solar power, an industry source told Fastmarkets.

CMC’s existing mill in Mesa uses recycled scrap for 98% of its raw material, reducing its need for natural resources, the company noted.

“Our [carbon dioxide] Scope 1 greenhouse gas emissions and energy consumption intensities are approximately eight times less than the global steelmaking average,” the company stated.

CMC and its subsidiaries manufacture, recycle and market steel and metal products, related materials and services. The company operates seven EAF mini-mills, two EAF micro-mills, two rerolling mills, steel fabrication and processing plants, product warehouses and metal recycling facilities in the United States and Poland.

Abby Verret in Seattle contributed to this report.

Decarbonization complicates an already complex marketplace. Our latest analysis, ‘The true price of green steel’, does a deep dive into the ripple effects that overhauling the markets will have on the steelmaking process and supply base.

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