U.S. Steel Secures $240 Million Green Bond for Arkansas Facility

by | May 22, 2023

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Steel being made at a U.S. Steel facility

(Credit: U.S. Steel)

United States Steel Corporation has closed on $240 million of unsecured environmental improvement revenue bonds in Arkansas that the company will partially use to fund its steelmaking facility in the state.

The bond from the Arkansas Development Finance Authority will carry a green bond designation. U.S. Steel said it will use the financing in part to enhance new technology at its flat-rolled steelmaking plant called Big River 2 which is under construction near Osceola, Arkansas.

The $3 billion facility will produce between 70% and 80% fewer greenhouse gas emissions than traditional steel production, according to the company, with 3 million tons of steelmaking capacity. It is being built near an existing facility currently in use.

The new facility will feature two electric arc furnaces and advanced casting and rolling lines and finishing capabilities. It will recycle, refine, and process scrap steel into finished steel products.

The International Energy Agency has reported that in order for international net-zero goals to be reached, traditional steel-making processes need to be reduced by up to 15% through 2030, while uses of electric arc furnaces need to increase by 5%. That will happen through more availability of scrap materials, the IEA said.

Improving the sustainability of steel is a priority in reaching net-zero targets as the industry is reported to produce up to 8% of the world’s emissions. The U.S. has seen several projects aimed at reducing the industry’s impact, including a partnership by NuScale Power and Nucor to explore using small modular nuclear reactors to power electric arc furnaces.

The U.S. Steel environmental improvement revenue bonds carry a green bond designation. U.S. Steel also secured $290 million of green bonds in 2022. The bonds will have a rate of 5.7% with final maturity taking place in 2053. Through an agreement with the Arkansas Development Finance Authority, U.S. Steel will pay semiannual interest on the bond.

Bank of America Securities, Fifth Third Securities, Truist Securities, Wells Fargo Securities, Barclays, Citigroup, Crews & Associates, Goldman Sachs, J.P. Morgan Securities, and Morgan Stanley. acted as underwriters for the green bonds. Big River 2 is expected to be completed in 2024 and will make steel primarily for automobiles, construction, and appliances, U.S. Steel said when the project was announced.

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