) joint venture with Magnetation, Inc - Magnetation LLC - has
successfully completed a senior secured notes offering worth $325
million and into a $50 million senior secured credit facility.
The proceeds from the offering of senior notes will be utilized
to fund the new plant construction in Reynolds, Ind., for
producing high-quality iron ore pellets, a key raw material for
making steel. This new plant's production will be supplied to AK
Steel's blast furnaces situated in Ohio and Kentucky.
AK Steel holds about 49.9% stake in Grand Rapids, Minn-based
Magnetation LLC, which produces iron ore concentrate from a
previously mined ore stockpiles.
AK Steel's strategic investment in the joint venture will provide
it nearly 50% of its annual iron ore requirements starting 2015.
Through this investment, AK Steel will enhance its raw materials
self-sufficiency for steel making, gain greater control over its
cost structure and lessen its exposure to the volatile global
market for iron ore pellets.
In connection with the Magnetation financing completion, AK Steel
has also provided $50 million to Magnetation as part of its
planned remaining $150 million investment in the venture. So, out
of a planned total investment of nearly $300 million, AK Steel
has invested roughly $200 million in Magnetation. AK Steel has
plans to contribute the balance $100 million in 2014 to support
the construction of the new pellet plant.
The new pellet plant is under construction and is expected to be
complete in around 18 months. Initial pellet production from the
plant is expected to begin in the fourth quarter of 2014. The
plant is expected to produce roughly three million tons of iron
ore pellets annually once it is fully operational.
AK Steel currently maintains a Zacks Rank #3 (Hold).
Other companies in the steel industry worth considering are
Angang Steel Company Limited
LB Foster Co.
). While Ternium retains a Zacks Rank #1 (Strong Buy), Angang
Steel and LB Foster hold a Zacks Rank #2 (Buy).
AK STEEL HLDG (AKS): Free Stock Analysis
ANGANG STEEL LT (ANGGY): Get Free Report
FOSTER LB CO (FSTR): Free Stock Analysis
TERNIUM SA-ADR (TX): Free Stock Analysis
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