Exclusive Interview with Dave Stickler

Online publishing of an interview with Dave Stickler on April 11, 2017.

Why did Big River Steel install its Flex Mill™ in Arkansas?

When we decided where to invest 1.3 billion dollars, obviously we had to take a lot of steps to make sure the site was appropriate because this mill will be here for 40-50 years. We looked all through the southern United States; Mississippi, Texas, Alabama, Arkansas, and ultimately it came down to access to raw materials, access to the market, and access to low cost power.

With regard to access to the raw materials, we are right on the Mississippi River. We can draw scrap by barge from the Midwest or we can draw off-shore scrap up through New Orleans and all through the southern automotive corridor by rail and truck.

With regard to access to the market, we are really at the heart and center of the automotive corridor. There are automotive plants in Tennessee, Georgia, Alabama, Mississippi, Texas, Kentucky, South Carolina. We can reach all of those markets easily.

But the real tie breaker was the availability of low cost electrical power. When we double the capacity of this facility, we will use 450 MW of power, which is the same consumption as the city of Nashville. We were able to work with Energy Arkansas to achieve a very attractive long-term power contract.

Big River was designed for expansion. How does the water treatment and other facilities fit into that?

When we permit these type of facilities, we usually plan that we will expand and double our future capacity. We don’t spend money on all the infrastructure to double the capacity, but certain things we do tackle, such as the environmental permits and certain foundations that would otherwise require us to be down 4-6 weeks when we do ultimately double the capacity.

With regard to the water treatment facility, there will be some expansions of course in the water treatment facility itself. We do have access to deep well water, where essentially we pump water out of the ground 1500-1600 feet deep. We use that in our production process, put it through the Russula water treatment facility, clean it up and then discharge it in the Mississippi River.

When we discharge it after using it in our production process, believe it or not, it’s cleaner than when we took it out of the ground 1500 or 1600 feet below. But we do have space to add additional Russula water treatment capacity.

Is it cleaner that the water that is already in the Mississippi?

Yes! Because the Mississippi River starts way up in Minnesota and all during the path down, ultimately to the Gulf of Mexico, it is picking up industrial and agricultural impurities. Our water is adding to the overall cleanliness of the Mississippi water quality. Now our volumes are not great enough to change the Mississippi noticeably but it’s something we are very proud of.

How is Big River set up for environmental protection and conserving resources?

At Big River Steel we take environmental stewardship very seriously. We are the only steel production facility in the nation that has been LEED certified. LEED certification is a third party independent group that has recognized us for being leaders in environmental and energy design.

Now why is that important? Many of the automotive companies are interested in sourcing from LEED certified companies. They won’t pay more for our steel, but if your steel is selling for $1200 a ton and another steel producer that is not LEED certified, their steel is selling for $1200 a ton, we’re getting the order. And I’ll take the tie breaker anytime.

Also, we relied on European banks for our financing who required us not only to meet US EPA standards but EU EPA standards as well. For the most part, the EU standards are stricter than the US EPA standards. There are exceptions in parts of the law, but because our financing came from Europe, we were required to comply. It was the right thing to do.

Did the water treatment technology help Big River become LEED certified?

Absolutely. Number one, the Russula water treatment facility is highly energy efficient which uses less power than other alternatives to treat the water. Number two, as I stated before, the fact that we are taking water out of the ground, using it, cleaning it and discharging it back once it’s cleaner. That was certainly an eye opener for the LEED certification teams that came to visit. So yes, it helped immensely.

How did Russula do on the project?

Russula certainly came in very aggressively and very eager to make this project a showcase for their company. We were extremely pleased with the craftsmanship and the attitude of the Russula teams that were on the ground.

But, like any project, you have challenges. One of the issues that we faced was something that we kept reminding the Russula team. Even though we are in the southern part of the US, it does get cold here. And we were a little worried that some of our lines are a little narrow and they may have a tendency to freeze up. The first day that it was 18F, well below 32F which is the freezing temperature, what happened? Lines froze up.

To Russula’s credit, they acknowledged that they may they had miscalculated on that one small component of their facility and quickly took actions to resolve it. There are other companies that wouldn’t have reacted as quickly. Even in facing that challenge, they did the right thing and remedied it at their cost.

Big River opened the theme was ‘Rebels Wanted.’ How are the rebels doing?

The ‘Rebels Wanted’ was a slogan that we came up to show the rest of the world, the steel industry and more importantly steel consumers around the world, that we’re a little different. We want to think outside the box, explore new ways of doing things, new ways of buying our raw materials, new ways of motivating our employees, new ways of selling our steel to the customers with the ultimate goal of really trying to figure out how we can help them conduct their business.

“Rebels Wanted” set the tone for a historically strong startup. The first full month of production we set a world record for an SMS-equipped mill of 63,000 tons. We were profitable on an EBITDA perspective the second month of operation. We are very, very pleased. And we think that the “Rebels Wanted” theme and slogan is very appropriate for BRS.

Big River Steel is a smart mill, what does that mean?

Big River Steel is a technology company that just happens to make steel. We already operate the company in the cloud. We don’t have big server infrastructures and save millions of dollars by taking advantage of cloud technology.

We are heavily involved in artificial intelligence (AI). The next step is to have this mill operate similar to the way the Google and Apple cars learn to drive autonomously. The more they drive, the more they learn. The more this mill runs, the more it will learn.

We ultimately will be able to self-correct. If there’s a production deficiency in one part of the mill, rather than having to slow the mill down or even stop the mill and manually tell the equipment what to do, the mill will automatically do it without having to slow down or stop. And it will do that by learning over time. The more we produce, the more we learn. Hence our positioning of Big River as the world’s first smart mill.

Will the WTP technology also have AI?

It will ultimately. Right now, it does not. But as we roll out AI, we’ll put in the sensors. One of the big things with the water treatment facility is the cost of the chemical treatments. What we’ll do over time is be able to hopefully dial back some of those chemical treatments and get what we need from a regulatory and permit perspective but not overspend on chemicals. So absolutely yes, ultimately the Russula water facility will be part of the overall AI brand and statement that we have here.

How can AI learning benefit bottom-line performance?

That’s why we are doing it. Number one, we think the mill will operate in a safer, more environmentally compliant manner. Number two, the product quality will improve because we will be eliminating the potential for manual inputting error. Number three, we think we’ll get more through-put out of the mill because we won’t have to slow or stop the mill when we do the manual inputs. And to a lesser extent, although an important extent, we likely will be able to reduce our overall headcount by using technology that’s available.