Louisiana Nucor plant shut down after equipment failure _lowres

Advocate staff file photo by PATRICK DENNIS -- Nucor has a direct iron reduction plant in Convent that produces iron ore pellets that are mixed with scrap metal to make steel.

The equipment failure that shut down Nucor Steel Louisiana’s plant in Convent won’t be remedied until late in the first quarter.

The company said production at the direct reduced iron plant stopped on Nov. 2, when the process gas heater failed. Repairs are underway, the company said. But there is a long lead time on the specialty steel pipes that must be replaced.

The plant update was part of Nucor’s guidance for the fourth quarter.

The shutdown will result in a fourth-quarter loss for Nucor Steel Louisiana of about $30 million, or 6 cents per share. Still, the company expects an overall profit in the range of 50 cents to 55 cents per share. A year ago, Nucor earned 53 cents per share.

The Louisiana plant burns natural gas to make high-purity pellets from iron ore. Nucor mixes those pellets with scrap metal to make steel.

The process gas heaters aren’t part of the DRI technology but are needed to operate the plant.

The heater also contributed to production outages in July and September. The July outage lasted three weeks.

When Nucor issued its last earnings report in October, the company said it expected the St. James Parish plant would turn a profit in the first quarter of 2015. But the November equipment failure caused the company to back off those projections, and no new profitability estimate was determined.

The company posted an operating loss of more than $45 million at the St. James Parish plant during the third quarter, according to a report issued on Oct. 23. Nucor said at the time that the impact of the current equipment failure was expected to be “somewhat less” than the third-quarter loss.

The St. James plant started production in late 2013 and had more than 140 employees on staff. The opening was delayed by the collapse of a storage dome, which chopped $14 million out of the Charlotte, North Carolina-based company’s 2013 earnings.

The reduced iron plant is the first of several phases in a proposed $3.4 billion complex that could employ 1,250 people and produce millions of tons of steel each year. A decision on the expansion is expected by the end of 2015.