U.S. Steel Corporation Looks to Future Despite First-Quarter Loss, Idled Assets

SUGAR LAND--May 4, 2020--Researched by Industrial Info Resources (Sugar Land, Texas)--U.S. Steel Corporation (NYSE:X) (U.S. Steel) (Pittsburgh, Pennsylvania) has idled plants and blast furnaces, and delayed projects, due to the COVID-19 pandemic and volatile oil and gas market -- in order to protect its balance sheet that saw a net loss in first-quarter 2020. But despite those operational adjustments, U.S. Steel is hopeful for the future, as it looks to continue monetizing iron ore assets. Industrial Info is tracking $2.8 billion in active U.S. Steel projects worldwide.

In its first-quarter 2020 earnings conference call, U.S. Steel executives reported a sharp net loss of $391 million, compared with net earnings of $54 million in the first quarter a year prior. The company's adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for the first quarter stood at $64 million, which is a steep decrease from $281 million in first-quarter 2019. On the call, Chief Executive Officer David Burritt acknowledged adverse effects of COVID-19 while projecting financial strength for the future. "Challenging days are ahead," he said, but noted, "We remain calm and focused to ensure a stronger U.S. Steel for all of our stakeholders."

Burritt also announced a part of that future -- monetizing iron ore assets -- as part of the company's "Best of Both" strategy, which leverages both integrated and mini-mill products: On May 1, U.S. Steel granted steel company Stelco Incorporated (Hamilton, Canada) the option to acquire a 25% interest in the Minntac iron ore mining operations, for a purchase price of $100 million and an aggregate purchase price of $600 million. U.S. Steel will remain the operator and major owner of the mine. Click here for the Minntac plant report. This comes after the company acquired a 49.9% interest in Big River Steel for $700 million, by adding steel technology that will position U.S. Steel for $1 billion in cash improvements by 2022; the company plans to purchase the remaining $50.1% within the next three and a half years. Click here for Industrial Info's plant report on Big River Steel's flat-rolled steel mill in Osceola, Arkansas.

The company's future looks promising, but it first has to ride out a series of idlings until market conditions stabilize. On March 27, the company announced a $125 million reduction in 2020 capital expenditures. As such, U.S. Steel has idled three plants indefinitely: the Keetac taconite pellet plant in Keewatin, Minnessota, Lorain steamless steel tube mill in Ohio and Lone Star ERW steel pipe mill in Texas. For more information, see the Keetac, Lorain and Lone Star plant reports.

U.S. Steel also has idled blast furnaces at plants across the country: three at its Great Lakes plant in Michigan, one at its Mon Valley Steel Works Plant in Pennsylvania, three at its Gary, Indiana, steel works plant and one at its flat-rolled steel plant in Granite City, Illinois. For more information, see Industrial Info's reports on the Great Lakes, Mon Valley, Gary and Granite City plants.

Click on the map at right of U.S. Steel plants that have been idled, or otherwise affected in the U.S., due to COVID-19 and the volatile oil and gas market.

Meanwhile, U.S. Steel has delayed three high-dollar projects indefinitely:

• a $1 billion expansion and upgrade at its Mon Valley-Edgar Thomson Plant, which includes construction of a cutting-edge endless casting and rolling facility to combine thin-slab casting and hot-rolled band production into a single process; see project report
• a $750 million upgrade at its Gary, Indiana, hot strip mill; see project report
• internationally, under its subsidiary U.S. Steel Kosice SRO, a $141 million line addition at its mill in Slovakia. The non-grain oriented production line will help support increased vehicle and generator demand; see project report.

Reach out to Lauren Boyd for more info.