US Steel announced Nov. 12 that it will build a new direct reduced iron (DRI) plant at its Big River Steel campus in Osceola, Arkansas. The company hasn’t shared many details yet, and an investor presentation from its parent company Nippon Steel shows that the project still needs final approval. But this move – building the company’s first DRI plant in Arkansas, which the state’s governor recently called the company’s “second home” – raises important questions about the future of US Steel’s original hometown and the union workers who have long powered the company.
If US Steel and Nippon are not investing in cleaner, modern iron- and steel-making in the Mon Valley, then what does the region’s future and its union steel jobs look like longer term? While a transition to green steel production is capital-intensive, so is continuing the status quo.
Source: Nippon Steel Q2 FY2025 investor presentation
What is DRI?
DRI, or direct reduction of iron, replaces the emissions-heavy blast furnace step of the ironmaking process which traditionally uses coal to reduce iron. And when green hydrogen is used in DRI production, it can provide a virtually emissions-free way to produce primary steel. As more companies respond to the global trend of modernizing and decarbonizing steelmaking, DRI-EAF is being used more.
Beyond the potential emissions reductions, research done by the Ohio River Valley Institute in 2023 found that a conversion from traditional coal-based processes to steelmaking powered by green hydrogen could be an economic driver for the Mon Valley through retaining steel jobs, creating new renewable energy jobs, and giving the state a first-mover advantage in global markets. But if investments into cleaner, modern iron and steelmaking don’t happen in historic steel regions like the Mon Valley, these communities and the workers at these facilities are at risk of falling further behind.
Follow the money
To anyone who has been paying attention to where US Steel has been investing its money in recent years, the decision to spend big on DRI in Arkansas may come as little surprise. US Steel first purchased a 49.9% stake in Osceola, Arkansas-based Big River Steel in October 2019. At the time, Big River, which began producing steel only three years earlier, had an annual production capacity of 1.5 million short tons, making it a relatively small player in terms of output compared with total US production of 97 million short tons of steel in 2019. But the big appeal of Big River was that it allowed US Steel to not only have a presence in the flat-rolled EAF market, but to do it through what was at the time, the newest, most advanced flat-rolled steel mill in North America. In contrast to US Steel’s century-plus-old, coal-based blast furnace operations in the Mon Valley, Big River was the first LEED-certified steel production mill in the US. It also has produced steel without union labor since its founding.
After its initial $700 million investment in Big River in 2019, US Steel bought the remaining equity in January 2021 for an additional $774 million. In the meantime, an expansion completed in 2020 doubled Big River’s annual hot-rolled steel production capacity to 3.3 million short tons.
But back in Pittsburgh, investment was slowing. In April 2021, amid the growth in Arkansas, US Steel canceled a more than $1 billion investment to upgrade the Mon Valley Works. The investment, meant to improve efficiency and reduce pollution, was announced just a few months after a major fire occurred at the Clairton Coke Works on Christmas Eve 2018, which knocked out pollution controls and subsequently led to 102 consecutive days of illegal emissions of sulfur dioxide and hydrogen sulfide.
In an open letter to “US Steel’s Pittsburgh family” announcing that the company was pulling the plug on the Mon Valley investment, CEO David Burritt said the company was “setting aside this project as we step forward to meet the needs of a rapidly changing world.” He also said the company would permanently idle three batteries at Clairton by early 2023, representing about 17% of the facility’s coke production.
Just four months later, US Steel announced a site selection process to build a new 3 million short ton mini-mill somewhere in the US that would combine two state-of-the-art EAFs with differentiated steelmaking and finishing capabilities. Ultimately, in January 2022, US Steel announced that it had selected a site adjacent to the existing Big River Plant in Arkansas for the $3 billion investment.
According to a recent study commissioned by the company, US Steel says its economic activity in Arkansas supported or sustained 4,725 total jobs in 2024, nearly three times more than in 2022. And while Pittsburgh is still known as the “Steel City,” Mississippi County in Northeast Arkansas, now dubbed the “Land of Steel” and home to Big River Steel, has become the top-producing steel county in the US.
Source: US Steel/Parker Strategy Group
The newly announced DRI project would mark another $3 billion in investment in Osceola, Burritt said on Nov. 18 at the 97th annual meeting of the Arkansas State Chamber of Commerce and Associated Industries of Arkansas. During his prepared remarks, Burritt noted that US Steel has already invested $7 billion in Arkansas in the Big River Steel Works complex. And with the Big River 2 expansion coming online and expected to reach full capacity in 2026, the company will have 6 million short tons of production capacity between the two plants.
“The story we’re writing here in Arkansas will be recognized around the world as a model for sustainable, profitable, purpose-driven manufacturing,” Burritt told the group, according to Arkansas-based Talk Business & Politics.
Nippon’s plans for the Mon Valley
As part of a national security agreement with the US government as a condition of the acquisition, Nippon has committed to invest $10.8 billion in US Steel’s facilities through 2028. This includes a commitment to spend $2.4 billion in the Mon Valley.
Providing more details on its investment plans in November, Nippon so far has announced that it will build a new hot strip mill at the Mon Valley’s Edgar Thomson Works in Braddock. (This would replace the current hot strip mill located at the Irvin Works in West Mifflin, which was installed in 1938.) The company also plans to spend $100 million in the Mon Valley to construct a slag recycler at Edgar Thomson.
The new hot strip mill is expected to boost the Mon Valley’s finishing capabilities and improve productivity, but the new slag recycler seems to be a way for the company to commercialize a steelmaking byproduct that is currently trucked to a landfill. And while the “granulated blast furnace slag” that results from recycling can help to reduce emissions in concrete and cement production, there are several types of systems used for the recycling process itself, and some can be more water-intensive and polluting than others.
So despite nearly $11 billion in planned investment, based on the current outlay of capital disclosed in filings with the US Securities and Exchange Commission, it does not indicate that the company has plans for any major investment into DRI-EAF or another transition to clean primary steel production in the Mon Valley at this time.
The future of steel in the Mon Valley
While a transition to green steel production is capital-intensive, so is continuing the status quo, as blast furnace relining costs run anywhere from an estimated $300 million to $1 billion per unit on a 15- to 25-year cycle. As a result, governments around the world have stepped in to offer financial support to steelmakers to help to bridge the gap in cost between a reline and clean steel transition. And in the case of US Steel, making the decision to reline a blast furnace rather than transitioning to green production, whether it happens at a facility in Pennsylvania or its blast furnaces in Gary, Indiana, would have a direct impact on the Mon Valley, as all of the company’s coke supply is produced in Clairton.
Despite recent political and policy upheaval in the United States, the majority of the world continues to move toward decarbonization of the steel industry, albeit perhaps not as fast as advocates had hoped several years ago. But what is clear is that the outlook for traditional, high-emissions primary steel production in the US remains economically dubious and is reliant on both what may turn out to be transient tariffs and Chinese government policy, more than variables that the domestic industry can directly control.
If the domestic primary steel industry struggles, and without investment aligned with the future, workers in places like the Mon Valley will continue to pay the price, through job loss, wage stagnation and, potentially, deteriorating safety as key infrastructure ages. And, if the domestic primary steel industry continues on its current path, damage to the environment may compound with the economic struggle.
But, as ORVI’s research shows, shifting away from coal-based steel production to virtually emission-free green steel is possible here, and can be an economic driver for the Mon Valley. It requires capital and political will, but the payoff is cleaner air, safer operations, and stronger competitiveness. With the right investment, we could lead this transition, powered by clean energy infrastructure that supports both steelmaking and downstream industries.
DRI in Arkansas does impact the Mon Valley, although just how much remains to be seen and will depend on whether the investments that come to this region are aligned with the future, or leave the Mon Valley stuck in the past.