March 2, 2007 — Steel Dynamics, Inc.’s Board of Directors has approved the company's participation with Kobe Steel to construct and operate a $235-million iron-making facility in the Hoyt Lakes region of Minnesota.

The company says its support of the project is contingent on the successful arrangement of project financing, including discussions regarding economic development assistance with the State of Minnesota, securing certain land options, and other unresolved issues. A long-term supply agreement for the iron concentrate necessary for iron-nugget production is also needed.

SDI had announced last November that negotiations with four other partners in Mesabi Nugget, LLC, had broken down. Since then, Kobe Steel and Steel Dynamics have now formed a new legal entity to further develop the project.

Under the new arrangement, Steel Dynamics will hold a majority stake in the project and will be responsible for construction and operation of the facility. Kobe will provide the technology license, engineering services, proprietary equipment and technical support for the project.

Designed for an annual production capacity of 500,000 tonnes of iron nuggets, the initial production module will utilize the ITmk3 nugget technology pioneered by Kobe Steel. Steel Dynamics anticipates that substantially all of the first module’s nugget output will be consumed in SDI's minimills, providing the company with a constant supply of high-quality iron units. Melt tests using nuggets produced by a pilot plant have demonstrated that iron nuggets melt more efficiently in electric-arc furnaces than traditional pig iron.

SDI says that additional production modules may be built following successful operation of the first module.