OHIO RIVER CORRIDOR
Sun Peeking Through
The $140-million first phase coke plant being constructed by Sunoco business unit Sun Coke in the Scioto County town of Haverhill, Ohio, is a case study in optimization and perseverance. It also illustrates the synergies available from a diversified parent company, a steel industry in flux and the timeless advantages of certain enduring geographies of commerce.
Haverhill first came into Sun's sights in 1995, when Dale N. Walker, senior vice president of operations, made his first trip to the location.
"We felt like there was an opportunity for a central coke plant to serve the Midwest," Walker tells Site Selection. "It was a nice big site, fairly close to the high-quality coal in Appalachia, with good rail movement and access out of there. The big fixed cost is coal handling, whether it's a big or small plant. Norfolk Southern had this coal-handling facility in Wheelersburg that still had excess capacity, and it was a short distance and low cost to get it."
A nearby chemical plant was purchased by Sunoco in 1999, and would prove key to the final location choice for the coke plant. Meanwhile, an initial look at Pittsburgh was turning sour because of public sentiment against a new coke plant.
Walker and his colleagues began to evaluate the 1.3-million ton-per-year East Chicago, Ind., operation as well as Haverhill, looking at how to best serve steel giant LTV. But then LTV decided to go a different route, and bought coke from its competitor, U.S. Steel, in Pittsburgh. LTV went bankrupt, ISG bought them out of liquidation in March 2002, and Sun Coke served the company with coke from its 700,000-ton-per-year Vansant, Va., operations. But the East Chicago vs. Haverhill discussion re-ignited.
"East Chicago had the advantage of no rail haul, just straight to the blast furnace," says Walker. "The other advantage was that the power byproduct there was more valuable than in southern Ohio. What it came down to in the end was the opportunity to sell steam out of Haverhill, and the permitting issue was a lot more clear-cut in Haverhill too."
One other night-and-day issue was property tax liability. With property taxes "really high" in East Chicago, there was only so much abatement available, says Walker. Whereas "a much better deal" was negotiated in Haverhill.
"We really worked hand in hand with ISG in all of this," he explains. "We work transparently with the customer — they see what our costs are, they know how much money we'll make on the project. It was really swung by the coal handling already in place and the steam sale to the chemical plant in phase one. That drastically reduced the amount of capital expenditure in phase one — at least 20 to 25 percent overall between those two items."
In addition to increasing Sun's total coke capacity by 27 percent, the new plant also is projected to bring in net annual income of $15 million.
Haverhill first came into Sun's sights in 1995, when Dale N. Walker, senior vice president of operations, made his first trip to the location.
"We felt like there was an opportunity for a central coke plant to serve the Midwest," Walker tells Site Selection. "It was a nice big site, fairly close to the high-quality coal in Appalachia, with good rail movement and access out of there. The big fixed cost is coal handling, whether it's a big or small plant. Norfolk Southern had this coal-handling facility in Wheelersburg that still had excess capacity, and it was a short distance and low cost to get it."
A nearby chemical plant was purchased by Sunoco in 1999, and would prove key to the final location choice for the coke plant. Meanwhile, an initial look at Pittsburgh was turning sour because of public sentiment against a new coke plant.
Walker and his colleagues began to evaluate the 1.3-million ton-per-year East Chicago, Ind., operation as well as Haverhill, looking at how to best serve steel giant LTV. But then LTV decided to go a different route, and bought coke from its competitor, U.S. Steel, in Pittsburgh. LTV went bankrupt, ISG bought them out of liquidation in March 2002, and Sun Coke served the company with coke from its 700,000-ton-per-year Vansant, Va., operations. But the East Chicago vs. Haverhill discussion re-ignited.
"East Chicago had the advantage of no rail haul, just straight to the blast furnace," says Walker. "The other advantage was that the power byproduct there was more valuable than in southern Ohio. What it came down to in the end was the opportunity to sell steam out of Haverhill, and the permitting issue was a lot more clear-cut in Haverhill too."
One other night-and-day issue was property tax liability. With property taxes "really high" in East Chicago, there was only so much abatement available, says Walker. Whereas "a much better deal" was negotiated in Haverhill.
"We really worked hand in hand with ISG in all of this," he explains. "We work transparently with the customer — they see what our costs are, they know how much money we'll make on the project. It was really swung by the coal handling already in place and the steam sale to the chemical plant in phase one. That drastically reduced the amount of capital expenditure in phase one — at least 20 to 25 percent overall between those two items."
In addition to increasing Sun's total coke capacity by 27 percent, the new plant also is projected to bring in net annual income of $15 million.
