Last Updated on 12/1/2008

Published on 7/3/2008

By Dedric Bonds

dbonds@gtowntimes.com

Within the next month, ArcelorMittal USA plans to demolish a tall tower used to process iron ore at its Georgetown plant, creating a space for a new office building within the plant's grounds.

The changing exterior of the steel mill signals bigger, long-term changes within, company officials say.

The Direct Reduction Iron (DRI) facility has not been used since 2003, according to ArcelorMittal Controller Legrand Forbes. In its heyday, the DRI facility processed 700,000 tons of iron ore pellets into 450,000 tons of material that was fed into the plant's furnace to make steel.

The Georgetown plant stopped processing iron ore in 2003 when the price of ore and natural gas went "out of sight," according to Forbes.

SEE TOWER, Page 4A

"We are doing the electrical work on the DRI facility now," Forbes said, "and we are starting to cut it up."

The tower will be demolished and the scrap metal fed into the plant's furnace to make steel. The demolition of the DRI facility will mean that the Georgetown plant will use only scrap metal -- primarily junk car bodies -- to produce steel in the future.

The DRI demolition is part of a long-range plan to modernize the mill's equipment and keep the facility in operation for the long term, according to General Manager Marcio Van der Put Jr.

"The buildings have been here for 40 years, but the equipment is not so old," Van der Put said.

The Georgetown facility will spend $10 million on capital improvements this year, including a new furnace for the melt shop in December. "We will see a big improvement next year and an increase in melt shop production," Van der Put added.

The arc furnace in the plant is "not the best but in good shape," he added, and the rolling mill's capacity is not being taxed. In its heyday, the steel mill at Georgetown produced a million tons of steel a year using two furnaces and two ladles. Today, the mill produces around 500,000 tons a year.

"We have spent twice the capital from June '04 to '08 than we did in the 10 years before that," said Forbes.

The plant has spent $3 million on a new laying head, a piece of equipment that bends red-hot wire into loops so it can be packaged and transported. The new machine eliminated six jobs that Van der Put described as some of the most dangerous in the mill. Those employees were re-assigned to a new straightener that produces rebar for reinforcing concrete.

Overall, the plant is increasing its production by 15 percent this year and is on track to make a $30 million profit after being $10 million in the hole in 2007, Van der Put said.

Improvements

Van der Put, who spent 25 years in the steel industry of Brazil before coming to Georgetown, has brought a new awareness of safety to the mill.

"Safety is Priority One," Forbes says.

Other improvements on the way include:

* Paving and landscaping the company parking lot across Front Street from the mill. The work could include a new fence. The projected cost is between $200,000 to $300,000 and it will be tied to the Front Street streetscape design.

* Dredging the harbor in front of the plant's dock. ArcelorMittal will spend $100,000 on dredging its berth so scrap ships can reach the dock. The mill will piggy-back off the dredging operations from the Port of Georgetown. "We are not abandoning the port," Forbes said.

* Reaching ISO Environmental Standards, which involves a long process of self-evaluation that considers the environmental impact of the plant's operations. The standards are set by the International Organization for Standardization and requires that companies control their environmental impact and set goals for improvement. Plant officials hope to receive the designation by the end of August.

"This commitment will be unprecedented," Van der Put says, "because for the first time under any ownership in Georgetown, the mill will have work procedures, employee training and management review systems in place that specifically focus on continual improvement of our equipment and process management capabilities. Also, since steel is the most recycled material on the planet, ArcelorMittal Georgetown contributes to the efforts in the U.S. to recycle and reuse raw materials and minimize waste generation."

New equipment

Van der Put said the plant will be in "like new shape" in five to 10 years with state-of-the-art equipment producing a variety of products from rebar to steel wool. Other expanding uses for the wire made here include chain-link fencing, auto linkage and Eagle fish hooks. Ninety-five percent of the steel made in Georgetown is sold in the U.S., with the remainder sold in Canada.

The Georgetown plant is busy these days making steel wire that reinforces Michelin tires. It is one of the few plants in the world with the specific capability necessary to meet Michelin's needs. Georgetown produces the bead wire for the inside of the tire closest to the wheel rim and the cord wire that supports the rubber where it meets the road.

"We think this will be viable for us," Forbes added. "We'll be around for awhile."

Employment

Van der Put called management's relations with the steelworkers union "very good, compared to other mills" and said ArcelorMittal and the union are in contract negotiations at the corporate level now.

Employment at the mill will remain around 320. "I don't know how we could run this place with fewer people," Forbes said.

The Georgetown plant's workforce is aging -- 36 percent are over the age of 55, according to Hannah Wendt, engineer metallurgist. During the next decade, 80 percent of the mill's workers will retire.

A training committee is working on a program to take to local high schools and develop interest in working at the steel mill. Company officials met with Horry-Georgetown Technical College in March to talk about starting a program to train people in mechanics and electronics to work at the mill.

Experienced electricians and mechanics will be sought, and there will be a push for in-house training for the rank-in-file. Applicants must have a high school diploma and pass a competency exam. Wendt said the company is working on Web-based continuing education for its workers.

Pollution, drainage

The Georgetown mill has been accused of releasing dust and the so-called "red stain" of iron droplets across Georgetown's Historic District and beyond in the past.

Eric T. Evans, environmental engineer, says ArcelorMittal is committed to managing its assets in a way that minimizes environmental impact.

"We ship 1.5 million pounds of dust to be recycled every month," Evans said. "As many as 14 or 15 rail cars carry collections from the bag house to plants in Palmetto, Pa., or Chicago to recycle the zinc in it. The dust is vacuumed from the melt shop and captured in long canvas bags.

"Understanding the technology is very important," Evans says. "It collects and consolidates the dust. A lot of hard hours go into maintenance of the bags. Heat causes finite holes in the fabric that have to be patched."

Evans is required to report all collections and tonnage shipped monthly to the S.C. Department of Environmental Control.

That has been the case at the mill since Georgetown Steel agreed to a consent decree in 1989 after the Environmental Protection Agency filed a complaint alleging that the mill violated segments of the Clean Air Act. The decree did not constitute evidence or admission of guilt.

The agreement provided representatives of the EPA or the S.C. Department of Health and Environmental Control access to the mill at reasonable times to evaluate compliance with the consent decree.

Evans says there are many contributors to Georgetown's dust situation, adding that he has never seen any signs of worrisome soil pollution on the steel mill grounds. There was no response from mill officials to a followup request from the Georgetown Times to grant access to a third party for soil testing to assure that the site would not become a "brownfield" in the future. Brownfields are abandoned or under-used industrial and commercial facilities where expansion or redevelopment is complicated by real or perceived environmental contamination.

As for Georgetown's so-called red stain on houses, businesses, cars and boats, Van der Put doesn't agree with the opinion that it is the result of the steel mill's operations.

"As you know, we are a new company under new ownership (as of September 2007) and we want the Georgetown community to understand that ArcelorMittal takes the responsibility of being a good neighbor very seriously and we continue to believe that superior compliance to all local, state and federal laws prescribed in our operating permits is the guiding principle of our business. We do not agree with the opinion that the staining on area houses and buildings is a result of our operations."

Follow-up requests for officials' reasoning about the staining went unanswered. It was noted the staining did not exist before the mill and that it contains iron oxide, rust. It was also noted the staining exists only on structures close to the mill and that there are no alternative sources for the iron oxide that have been identified.

The mill is situated where stormwater drainage from Front and Fraser streets flows into the Sampit River. A multi-million dollar drainage system proposed for Georgetown will pump stormwater via a lift station through a ditch across steel mill property to the river.

Residents here before the mill was built say a stream was rerouted during construction, changing the natural drainage pattern of the 22 blocks north and northwest of Front and Fraser streets.

Officials said the mill was just one player in the drainage system but would cooperate with the city's efforts.

"Additionally, we do not agree that we are responsible for any of the drainage issues that the City of Georgetown currently faces," said Van der Put.

There was no response to a follow-up request for the reasoning mill officials feel the mill is not responsible for city flooding. They did not argue the rerouting of drainage during the mill's construction and declined comment when the possibility of obtaining an engineer's opinion was raised.

"We are engaged with the entire ArcelorMittal organization to ensure the Georgetown facility is focused on achieving industrial, health and safety and environmental excellence. For us at ArcelorMittal Georgetown, responsible environmental performance is not simply a question of efficiency, but more importantly a journey to sustainability which is at the core of our business model."

There was no response from officials when they were asked if ArcelorMittal would be willing to work with DHEC to get an environmental audit and participate in DHEC's volunteer cleanup program if needed.

Costs

Forbes says the Georgetown mill's payroll runs around $30 million annually. It spends $230 million on purchases. The price of scrap metal has risen from $250 per ton last year to around $700 a ton today as worldwide demand has increased. Electricity, natural gas and diesel fuel are also big-ticket items for the plant.

"One where we do well is electricity," Forbes said. "Santee Cooper is a good friend. We may be their second biggest customer."

The company paid $522,00 in county property taxes and $53,000 in city property taxes last year, according to Adam Warrington, communications manager, and the Georgetown County tax assessor's office.

Community support

Forbes says ArcelorMittal has money set aside to support various charities and community efforts, including sports teams, schools and causes.

The ArcelorMittal website describes the company's commitment to its communities.

"Acting responsibly does not simply mean donating goods and services, or our time, to specific projects -- although this is important. It also implies that we have a wider duty to ensure that the neighborhoods in which we operate are thriving -- not least so that we can attract and retain a healthy and well educated workforce.

"The result is that we must not only contribute to the economic prosperity of local communities, but we must also ensure that there is adequate infrastructure, health care and education -- all of which have significant impacts on the sustainability and well-being of society."

The company has established the ArcelorMittal Foundation to promote its commitment to local communities.

Times Editor Jason Lesley and Publisher John Carr contributed to this story.