“Green Bonds”
United States Steel Corp., located in Pittsburgh, has finalized a deal for closing $240 million environmental improvement revenue bonds issued by the Arkansas Development Finance Authority. These bonds have been labeled “green bonds” by the steelmaker.
Green bonds carry a coupon rate of 5.7 percent and will last until 2053. “Under the agreement with the Arkansas bond issuer, U. S. Steel will pay semiannual interest,” U.S. Steel says.
The International Capital Market Association, based out of Zurich, recognizes that funding Green Bonds, “should provide an investment opportunity with transparent green credentials” using “Green Bond Principles [that] promote integrity in the Green Bond market through guidelines that recommend transparency, disclosure and reporting.”
Big River 2 (BR2)
With funds generated from the green bonds, U.S. Steel has invested into its new electric arc furnace (EAF) flat-rolled steelmaking facility in Osceola, Arkansas called Big River 2 (BR2). “The facility will recycle, refine and process scrap steel into finished steel products,” the steel producer explains.
The investment has become a landmark in the state of Arkansas, becoming renowned as one of its largest private investments to date. Developed to generate 1.6 million tons of steel annually, those behind the project are determined to make the mill an even bigger success than originally planned.
According to the Chief Commercial Officer for Big River Steel, Mark Bula, the organization is anticipating increasing the capacity of the steel mill complex two-fold in the near future. However, he adds that any such development would depend heavily on market conditions.
After starting up its melt shop and hot mill at the end of 2016, BRS was able to produce its first coil of hot-rolled steel by mid-December. Soon after, Zekelman Industries took over ownership and added it to Atlas Tube, one of the company’s structural tube mills located in Blytheville, Arkansas.
Acknowledging the need for high-strength steel, Bula affirms that the company has implemented a flexible approach to production. This comprises of cutting-edge equipment while consuming large quantities of ferrous scrap.
Financing of the Project
“The $240 million green bonds transaction that closed today, together with $290 million of green bonds issued in 2022, concludes the financing available through the Arkansas Development Finance Authority for BR2,” David B. Burritt, CEO and president of U. S. Steel says.
Burritt adds, “The opportunistic transactions completed in 2022 and 2023 carried a weighted average coupon of 5.56 percent with 30-year maturities. Our strong balance sheet and liquidity provide a solid foundation to continue to execute on our Best for All strategy.”
BR2 Facility to Become Operational Soon
Work on the BR2 facility is slated to finish by the end of this year. Once operational, it “will be the most-advanced steelmaking facility in North America, featuring two EAFs, with a total 3 million tons per year of advanced steelmaking capability, a state-of-the-art endless casting and rolling line and advanced finishing capabilities,” U.S. Steel affirms.
U.S. Steel has also announced that its BR2 configuration will reduce greenhouse gas emissions by up to 80 percent in comparison with a blast furnace/basic oxygen furnace setup, and is “directly” in line with its sustainability objectives.
The capital market was boosted by the issuance of green bonds with many big-name brokers involved in the process. These included BofA Securities, Fifth Third Securities, Truist Securities, Wells Fargo Securities, Barclays, Citigroup, Crews & Associates, Goldman Sachs & Co., J.P. Morgan Securities and Morgan Stanley & Co.
