Voestalpine Choses Texas for Record $718 Million Pellet Plant

Voestalpine AG (VOE), Austria’s biggest steelmaker, chose Texas as the site for its record 550 million- euro ($716 million) investment in an iron-ore pellet factory, saying it would have been impossible to build in Europe.

The company made its decision because of political support and access to energy supplies in the U.S. state, it said today on its website. The plant will be set on two square kilometers (0.8 square mile) of land with access to Corpus Christi Bay and pellets will be shipped to Europe, the Linz-based company said.

“This is impressive evidence of the USA’s efforts to rapidly and sustainably re-industrialize their economy,” Chief Executive Officer Wolfgang Eder said. “It would have been impossible to build a comparable plant in the European Union.”

Voestalpine, a maker of steel for airplanes, cars and train tracks, says European regulations on carbon emissions hurt its business. U.S. output of gas from shale, cutting prices relative to Europe, has also spurred steelmakers to build iron-processing factories, which use high levels of energy, in the country.

“Environmental regulations in the USA are similarly stringent to those in Europe,” Voestalpine said. “Texas is taking a different route” to regulating carbon. Federal and state authorities are reviewing its air-permit applications.

The Texas plant, Voestalpine’s biggest foreign investment, will produce 2 million metric tons of hot-briquetted and direct- reduced iron a year. Of that, 1 million tons will be delivered to the company’s Austrian steel operations and the remainder will serve as a “strategic reserve,” the producer said.

Operations are expected to start by 2016, it said.

Voestalpine fell as much as 2.1 percent, the biggest drop since March 1, and was at 26.20 euros by 10:55 a.m. in Vienna.

To contact the reporter on this story: Jonathan Tirone in Vienna at jtirone@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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