AK Steel Board Okays Long-Term Agreement with Sun Coke
03/25/2008 - AK Steel’s board of directors approves a 20-year supply contract with SunCoke Energy to provide metallurgical-grade coke and electrical power from a new facility to be built adjacent to AK Steel's Middletown Works.
AK Steel’s board of directors has approved a 20-year supply contract with SunCoke Energy, Inc. to provide the company with metallurgical-grade coke and electrical power from a new facility to be built adjacent to AK Steel's Middletown Works.
The new state-of-the-art facility—which would be constructed, owned and operated by SunCoke—would be a heat-recovery coke battery, in which by-products are captured and used to generate electricity. The new Middletown coke battery would be capable of producing about 550,000 tons/year of metallurgical coke and 50 megawatts/year of electrical power.
AK Steel currently produces about 75% of its annual coke requirement from its own coke batteries in Middletown, Ohio, and Ashland, Ky., and said it has no plans to idle any of its existing cokemaking capacity if the proposed SunCoke project is consummated.
Under the agreement, AK Steel will purchase all of the coke and electrical power generated from the new plant—the amount necessary to cover the remaining 25% of the company’s annual coke requirements—for at least 20 years. AK Steel said the project will help it to achieve its goal of more fully integrating its raw material supply.
"This agreement represents an environmentally sound, long-term commitment to Middletown Works' primary operations," said James L. Wainscott, AK Steel’s Chairman, President and CEO. "It will cover our internal coke capacity shortfall, and provide Middletown's blast furnace with a stable, competitive supply of this essential raw material. In addition, we will have the benefit of 50 megawatts of electrical power—or about 25% of Middletown Works' requirement—generated with the waste heat recovered from the coking process itself."
SunCoke said the plant will cost approximately $340 million to build, and is currently awaiting a necessary zoning change requested by the City of Middletown for a portion of the property. The company has an option to purchase sufficient property adjacent to Middletown Works to build the plant.
The agreement is contingent upon, among other conditions, SunCoke receiving all necessary local, state and federal approvals and permits, as well as available economic incentives, to build and operate the proposed new facility.
Sun Coke, a wholly owned subsidiary of Sunoco, Inc., operates a coal mine in Virginia and metallurgical coke plants in Indiana Harbor, Ind., Vansant, Va., (Jewell Coke), Haverhill, Ohio, and Vitoria, Brazil. Together, the plants produce more than 4.3 million tons of coke/year.
AK Steel produces flat-rolled carbon, stainless and electrical steels, primarily for automotive, appliance, construction and electrical power generation and distribution markets. The company employs about 6500 men and women in Middletown, Mansfield, Coshocton and Zanesville, Ohio; Butler, Pa.; Ashland, Ky.; Rockport, Ind.; and its corporate headquarters in West Chester, Ohio.
AK Tube LLC, a wholly owned subsidiary of AK Steel, employs about 300 men and women in plants in Walbridge, Ohio, and Columbus, Ind. AK Tube produces carbon and stainless electric resistance welded (ERW) tubular steel products for truck, automotive and other markets.
