Mark Millett - Steel Dynamics, Inc.
Mark Millett - Steel Dynamics, Inc.
Mark Millett - Steel Dynamics, Inc.
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<strong>Mark</strong> <strong>Millett</strong><br />
President and Chief Operating Officer<br />
OmniSource Corporation<br />
Executive Vice President<br />
Metal Recycling and Ferrous Resources<br />
1<br />
September 30, 2009
$ billions<br />
8.0<br />
7.0<br />
6.0<br />
5.0<br />
4.0<br />
3.0<br />
2.0<br />
1.0<br />
SDI’s annual sales since 1996 start-up<br />
1997<br />
1996<br />
19981999 1999 2000<br />
SDI acquired<br />
OmniSource Corp.<br />
fourth quarter 2007<br />
2001<br />
2002<br />
2003<br />
2004<br />
2005<br />
2006<br />
2007<br />
2008<br />
2008 Sales<br />
$8.1 billion, total<br />
Metals Recycling<br />
& Ferrous Resources<br />
segment<br />
$3.7 billion<br />
(38% of SDI’s sales)<br />
Resources segment<br />
2008 operating profit<br />
$128 million<br />
2<br />
September 30, 2009
A Winning Culture<br />
Performance-based incentive<br />
compensation<br />
Employees have keen sense<br />
of ownership<br />
Minimal bureaucracy<br />
Productive teams<br />
Adaptable and fast to react<br />
Passionate<br />
3<br />
September 30, 2009
Why have mini-mills invested in<br />
ferrous resources companies<br />
Cost of ferrous resources is 60 to 70 percent<br />
of the cost of EAF steel production<br />
Mills seek to control availability and cost of resources<br />
Domestic and global demand for U.S. ferrous scrap is<br />
rising– potentially resulting in future periods of scarcity<br />
Across business cycles, the scrap business can provide<br />
an attractive return on investment<br />
Synergistic opportunities (logistics, quality control,<br />
reduced inventory investment, etc.)<br />
4<br />
September 30, 2009<br />
4
Metals Recycling & Ferrous Resources Platform<br />
Metals Recycling & Ferrous Resources Platform<br />
OmniSource<br />
Iron <strong>Dynamics</strong><br />
Mesabi Nugget<br />
Mesabi Mining<br />
Type of Business<br />
Metals Recycling<br />
Pig iron (liquid, DRI)<br />
Pig iron (nuggets)<br />
Mining, producing<br />
iron concentrate<br />
Status<br />
Operating<br />
Operating<br />
Starts up Q4/09<br />
2011 (estimate--<br />
permits required)<br />
5<br />
5<br />
September 30, 2009
Use of iron and steel scrap<br />
in EAF steel production<br />
Type of <strong>Steel</strong><br />
“Pure” Iron<br />
Pig Iron<br />
“Prompt’<br />
Industrial Scrap<br />
“Obsolete”<br />
End-of-life Scrap<br />
Flat rolled steel<br />
Specialty bar/rail<br />
Long products<br />
O<br />
10-30% 55-75% 15%<br />
5-10% 25-30% 65%<br />
None None 100%<br />
Iron <strong>Dynamics</strong>/<br />
Mesabi Nugget<br />
Higher<br />
Cost per ton<br />
OmniSource<br />
Lower<br />
6<br />
September 30, 2009<br />
6
Midwest<br />
Kalamazoo<br />
OmniSource<br />
Buys, processes, and trades scrap<br />
Sells ferrous scrap to mini mills,<br />
including SDIʼs mini mills, and to<br />
integrated steel mills and foundries<br />
More than 70<br />
U.S. collection and<br />
processing sites in<br />
Midwest and<br />
Southeast regions<br />
Southeast<br />
Sells and exports nonferrous scrap<br />
7
OmniSource Overview<br />
Ferrous process capacity<br />
2008 Ferrous shipments<br />
Processed vs. traded<br />
Operating shredders<br />
Deployable shredders<br />
2008 Fe shipments to SDI<br />
Collection/process sites<br />
Employee count 09/09<br />
Nonferrous capacity<br />
7 million tons<br />
5.6 million tons<br />
65 /35 %<br />
11<br />
3<br />
2.3 million tons<br />
over 70<br />
2,430<br />
> 1 billion lbs.<br />
Indianapolis shredder--new, summer 2008<br />
2 nd largest ferrous scrap<br />
processor in North America<br />
8<br />
8<br />
September 30, 2009
OmniSource Strategy<br />
Maintain leadership position in<br />
industrial scrap arena<br />
<strong>Inc</strong>rease annual processing volume<br />
of obsolete scrap<br />
– Expand geographic coverage<br />
– Gain market share in “home” regions<br />
– Expand “retail” collection of scrap<br />
Expand nonferrous volume<br />
Develop and employ new technology<br />
for more effective separation of metals<br />
Embrace incentive-based culture to<br />
improve productivity and control costs<br />
9<br />
September 30, 2009<br />
9
For more info, see OmniSource web site<br />
www.omnisource.com
Iron <strong>Dynamics</strong><br />
• Located at Indiana Flat Roll Division<br />
• Produces liquid pig iron and<br />
hot briquetted iron<br />
• All output goes to Flat Roll mill,<br />
used in lieu of imported pig iron<br />
• Provides advantages in EAF:<br />
– <strong>Inc</strong>reased productivity<br />
– Improved yield<br />
– Lower operating cost<br />
– Higher quality product<br />
• Capacity: 240,000 metric tpy<br />
11<br />
11<br />
September 30, 2009
Mesabi Nugget<br />
Hoyt Lakes, Minnesota<br />
97% pure iron nuggets<br />
July 2009 photo<br />
12<br />
• Planned start-up Q4 2009<br />
• Planned 500,000 metric tons per year<br />
• $270 million project<br />
• 81% SDI / 19% Kobe <strong>Steel</strong><br />
• Lower production cost, higher volume<br />
than Iron <strong>Dynamics</strong>
Mesabiʼs s environmentally friendly ITmk3 ironmaking process<br />
uses less energy and produces less greenhouse gases<br />
Mesabi Mining, LLC<br />
Hoyt Lakes, Gaseous Minnesota<br />
Emissions<br />
Blast furnace process<br />
®<br />
KG per MT of <strong>Steel</strong> produced<br />
ITmk3 process<br />
Will produce only 4% of the<br />
carbon gases of blast furnaces<br />
13<br />
13<br />
Carbon gases<br />
September 30, 2009
Mesabi Mining, LLC<br />
Hoyt Lakes, Minnesota<br />
• Former LTV “Erie” mine site<br />
• SDI owns/leases more than 6,000 acres<br />
• Captive, domestic ferrous resources<br />
• Ample long-term supply of iron ore<br />
• Mine and concentrate taconite on site to<br />
produce iron feedstock for nugget plant(s)<br />
14<br />
14<br />
September 30, 2009
<strong>Mark</strong> <strong>Millett</strong><br />
President and Chief Operating Officer<br />
OmniSource Corporation<br />
Executive Vice President<br />
Metal Recycling and Ferrous Resources<br />
15<br />
September 30, 2009
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