Oregon Steel Mills, Inc. will permanently close its large-diameter line pipe mill located in Napa, Calif., and sell the pipe mill assets and real estate in separate transactions.
In the long term, the company will process large diameter pipe at a new spiral weld double-submerged arc-weld (DSAW) pipe making facility to be constructed at or near its Portland, Ore., rolling mill. The facility, approved earlier this year, would consist of two pipe mills with an annual capacity of approximately 150,000 tons, depending on product mix. The mills will be capable of producing API certified large-diameter line pipe from 24 to 60 inches in diameter, in wall thickness of 1/4 to 1 inch, and in lengths of up to 80 feet. The project is expected to be completed during the first quarter of 2006.
Until the new mill is completed, Oregon Steel will bid for and produce all of its large-diameter line pipe orders at its majority-owned subsidiary, Camrose Pipe Co. Camrose has two pipe manufacturing mills, including a large-diameter pipe mill, similar to the Napa Mill, which can produce 200,000 tons per year of DSAW pipe up to 42 inches in diameter. The second is an electric-resistance-welded (ERW) pipe mill with an annual capacity of 120,000 tons producing pipe up to 16 inches in diameter. Both mills are located in Camrose, Alta., Canada.
Oregon Steel expects Camrose to produce approximately 100,000 tons of large-diameter line pipe during the first six months of 2005, which compares to 2000 tons for all of 2004. The steel plate requirements for Camrose will be manufactured at the company's Portland, Ore., rolling mill, with plate production beginning in the second half of December 2004.
Jim Declusin, the Company's CEO, stated, "As part of our justification for the new pipe mill in Portland, Ore., we performed a market survey of our customers that indicates that between 2005 and 2008, there could be demand for as much as 2.5 million tons of large-diameter line pipe in North America. We believe that Oregon Steel is in a very good position with our current and future large-diameter pipe making capability, coupled with our Portland rolling mill, to participate in a significant way in these projects."
The company has contracted with Casey Equipment Corp. to market the pipe mill equipment, and with Cushman & Wakefield to market the real estate. The Napa Mill assets, which include 152 acres of real estate, have a net book value of approximately $31 million. The company expects to record a gain on the eventual disposition of the assets.
Oregon Steel Mills, Inc. is organized into two divisions. The Oregon Steel Division produces steel plate, coil, welded pipe and structural tubing from plants located in Portland, Ore., and Camrose, Alta., Canada. The Rocky Mountain Steel Mills Division, located in Pueblo, Colo., produces steel rail, rod, bar, and tubular products.