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Gerdau Plans Capacity Boost at Texas Mill

8/4/2022 - Gerdau SA will invest approximately US$54.7 million to expand the capacity of its Midlothian, Texas, USA, bar mill, the company said in its second-quarter earnings release.

In announcing results on Wednesday, the company said it plans to take the mill’s capacity to approximately 2 million tons.

In May, Ellis County commissioners in Texas voted on a tax abatement plan related to the project. At the time, Daniel Rodrigues do Rego, vice president and general manager for Gerdau North America, told commissioners the plan included a number of projects along with a heat treat facility to be set up on-site.

“Looking at our growth plan, we are putting several projects together to increase the plant’s capacity and increase the participation we have in the market, making our company strong enough to compete with the material that comes from overseas and keep the employments here in Texas,” he said, according to The Waxahachie (Texas) Sun newspaper.

The Midlothian mill is part of Gerdau’s North American division, which recorded its best quarter ever. The company reported earnings before interest, taxes, depreciation and amortization equivalent to US$542 million. The North American division does not include Gerdau's special steel plants in the U.S. 

“We have been operating at full capacity to meet the demand from the industry and continue to expand our product lines for clients to improve the level of our service and our local competitiveness,” the company said.

It said earnings were driven in part by strength in non-residential construction, which should be supported in the time ahead by the national infrastructure plan.

In fact, executives said they believe they’ll begin to see new demand tied to the plan in the fourth quarter or early next year. They are anticipating up to 5 million metric tons in new annual demand over the next eight years, they said.

“In this context, we continue to invest in improving the productivity and profitability of our capabilities in North America, delivering even more value to our customers,” Gerdau chief executive Gustavo Werneck told investors.