Alabama’s Port of Mobile has turned out to be the perfect match for German steel manufacturer ThyssenKrupp.
In its search five years ago for a U.S. Southeast site for two plants, the steelmaker wanted to be near a seaport where it could import steel slabs and export finished products to Mexico and overseas markets, or ship by barge to other U.S. Gulf ports.
The Port of Mobile needed the steel volume to wean itself away from dependency on the coal trade, its chief cargo commodity before APM Terminals completed a new container terminal at the port at the end of 2008. Mobile, however, didn’t have room on the side of its harbor with the 45-foot depth needed for the steel project. ThyssenKrupp had to be able to load the slabs bound for its new mills on inbound ships. A competing port in Louisiana had both the depth and the room.
The investment eventually would turn out to be $4.6 billion, about 70 percent of it for a carbon steel plant that would produce about 4 million metric tons of carbon steel a year. Much of that product would move through the port closest to where ThyssenKrupp decided to build the mills.
“Access to deep water was a critical factor,” said Andreas Ebensperger, director of supply chain management for ThyssenKrupp’s carbon steel plant. “From the beginning, it was clear that slabs would come from Brazil by deep-sea vessels, so we needed a deep-sea port that could handle Panamax-size vessels, and we needed a port close by. Without that, it’s quite possible Alabama would not be our new home. It was a huge challenge.”
That’s when Jimmy Lyons, CEO of the Alabama State Port Authority, played his trump card. Lyons and his team knew there was only one place remaining on the Mobile River with that depth: an abandoned shipyard on Pinto Island used most recently to break up ships for scrap. The authority bought the property and came up with a unique design for the new terminal.
“There’s no other terminal with a design like this anywhere in the world,” Lyons said.
The terminal has an outer dock with a waterside leg on which the cranes rest. Behind it is a barge slip where the cranes load barges that carry the steel slabs up behind it and then there is an inner dock on the landside.
Mobile beat out its competition, built the terminal, and ThyssenKrupp built the two mills at Calvert, Ala., some 48 miles up the Tombigbee River. Barges carry product to and from the port.
Four years later, ThyssenKrupp has four mills up and running at its carbon steel plant. The operation started in July 2010 with the hot strip mill, followed that September by two cold roll mills, then in March 2011 by the coating line. ThyssenKrupp sold its stainless steel division, Inoxum, including the new mill in Calvert, to Finnish company Outokumpu in February for approximately $3.5 billion, thus creating the world’s largest stainless steel manufacturer.
Production at the carbon steel complex has increased steadily. The plant has 1,750 employees and will move to full production in the last quarter of this year.
Mobile handled about 3 million tons of steel last year from all the steel plants in Alabama and expects to handle as much as 4 million this year.
ThyssenKrupp uses gearless breakbulk vessels to import steel slabs that are offloaded by gantry cranes at Mobile’s Pinto Island terminal, about half directly to barges for transport to the Calvert plant and half to ground for later loading onto barges. At the carbon steel complex, the slabs are heated to red-hot temperatures at the strip mill and reduced to various thicknesses so they can be shipped either as finished products to steel service centers in the U.S. and overseas or cleansed in an acid bath and oiled to prevent rusting and then sold as a finished, coated product in coils.
Most of ThyssenKrupp’s current customers are in the U.S., but at some point after the carbon steel complex gets to full production, the steelmaker will have more customers in Mexico than in the United States. Some of the plant’s output is being shipped monthly on breakbulk ships to Altamira, Mexico, and then to steel service centers that fabricate the product for automobile plants that supply the U.S. and other Latin America markets.
The finished products produced at the plant are tested for quality by many of the foreign automobile companies that have set up plants in Alabama and the mid-South and by oil and gas pipeline companies in Texas and along the Gulf Coast. A major portion of its output is shipped by barge through Mobile into the Intercoastal Waterway to steel service centers around Houston all the way down to Brownsville, Texas. “Houston is probably my biggest market right now, and I load barges right here at the plant straight through to Houston,” Ebensperger said.
ThyssenKrupp built the plant to supply the NAFTA market in Mexico, the U.S. and Canada, but some product also is loaded on breakbulk or container ships at Mobile bound for other destinations, including Egypt, India and South America. The product sold to Canadian customers is shipped by rail through the plant’s own switching facility. The plant expects to develop more customers in the Gulf of Mexico area that will be supplied by sea.
“Without the Port of Mobile, we would have a serious inbound supply problem, but also outbound,” Ebensperger said. “We go by water to Mexico, but we also use the port to access railroads that go west of the Mississippi. The port is a partner that allows us to avoid bottlenecks here and get material out.”