AK Steel Tackles Rising Materials Prices

Industry Week reports that AK Steel’s recent moves to become more vertically integrated by securing raw material supplies should help the company more effectively manage rising input costs, said Alan McCoy, vice president and company spokesman. The West Chester, OH steel producer, announced it formed a joint venture with Magnetation Inc. to produce iron ore concentrate. AK Steel also said it purchased Solar Fuel Company Inc., which controls an estimated 20 million short tons of low-volatile met coal.

The joint venture, called Magnetation LLC, is expected to satisfy about 50% of AK Steel’s current iron ore pellet requirements by 2016, the company says. AK Steel does not plan to become a fully integrated steel producer but is seeking a balance that would provide the company with a more stable pricing situation, McCoy said.

AK Steel owns 49.9% of the joint venture, which produces approximately 441,000 short tons of iron ore concentrate annually. The companies will construct a second plant near the existing facility with a targeted annual capacity of 1.1 million short tons when completed in 2016. AK Steel said it will invest $297.5 million into the joint venture.