The gas’ cost to produce the feed to European plants will be about a third as much as that in Europe.

European steel-maker The Voestalpine Group has broken ground for a feedstock plant in Corpus Christi that will leverage low-cost, U.S. natural gas in converting iron ore into “sponge iron” for its plants in Austria.

“We investigated 17 locations in eight countries for this project,” Wolfgang Eder, Voestalpine AG chief executive and head of its steel division, says in a press release. “In the end, Texas was the most promising on all key criteria, such as logistics, energy supply, well-trained employees and political environment.”

The plant, which is to commence production by year-end 2015, is expected to use 22 billion cubic feet of natural gas per year—or about 60 million cubic feet per day. The cost of the gas will be about a third as much as the cost would be in Europe, the company notes: The four-year-average, U.S. (Nymex) price has been about $3.70 per thousand cubic feet; in Europe, about $10.

Current U.S. gas production is some 66 billion cubic feet a day; the plant’s draw would contribute to taking 0.1% off the oversupplied market.

The company adds, “The use of natural gas instead of coke and coal in the reduction process makes a significant contribution to improvement of the CO2 balance and is an important step in achieving the (company’s) very demanding, internal energy and climate goals.”

The $740-million outlay, involving some 1,000 construction jobs, is Voestalpine’s largest U.S. investment. The facility, called a “direct-reduction plant,” is to have 150 full-time employees and produce 2 million tons a year of hot-briquetted iron (HBI) and direct-reduced iron (DRI). About half of this will be used in steel manufacturing in Voestalpine’s plants in Linz and Donawitz, Austria; the balance, sold to partners.

“In contrast to the coke- and coal-based, pure-blast-furnace route, only natural gas is used as a reduction agent in direct reduction, which is more environmentally friendly,” the company reports.

In addition to using lower-carbon-footprint natural gas in its process, the Corpus Christi operation is to use round-trip shipping via large “eco-ships.” Also, a cooling system using seawater eliminates draw from freshwater sources.

“The open and professional collaboration with all the participants on site is exemplary,” Eder says. “This impressively demonstrates the USA’s efforts at rapid and sustainable reindustrialization. The fact that we, as a future-oriented, industrial company, were welcomed with open arms was a factor in selecting this location.”

Globally, Voestalpine has more than 46,000 employees.

–Nissa Darbonne, Author, The American Shales; Editor-at-Large, Oil and Gas Investor,, Oil and Gas Investor This Week, A&D Watch,, Contact Nissa at