March 10, 2006 — Steel Dynamics, Inc. has formed a joint venture, Dynamic Composites, LLC, which it will substantially own and control, for the purpose of manufacturing high-strength, long-life composite railroad ties.

The new joint venture plans to invest about $5 million, which will be provided by Steel Dynamics, to equip and start up a facility that will have the capacity initially to produce 250,000 ties per year. Using automated manufacturing processes, the plant is expected to employ about 20 people.

Composite ties will be manufactured under exclusive license from Primix Corp., Atwood, Ind., which previously developed and introduced the product under the "Primix" label. The composite tie consists of a formed steel core which is filled with concrete for stability and mass, and recycled synthetic inserts for spike retention. Both the core and the inserts are encapsulated by a synthetic material primarily made from recycled rubber and plastic. The steel used in the cores will be supplied by SDI's Flat Roll Division.

Steel Dynamics considers the composite tie business to be a natural complement to its rail business, offering specific product benefits to customers. Both products will share the same customer base, which is primarily North America's Class I railroads. North American demand for railroad ties is estimated to range from 15 to 19 million ties per year, a $700- to $800-million market.

Currently, wood ties comprise an estimated 95% of the market, the remainder being concrete, steel, and composite ties. SDI believes there is excellent potential for composite ties to gain a substantial share of this market because of the new product's perceived longer life, operational benefits, and cost-effectiveness.

Although the site for the composite tie plant has not yet been determined, start-up is expected by the end of 2006.