Sunoco Inc reported in a November 5th 2009 Form 10-Q filing that its SunCoke Energy unit has placed into service a new coal consuming coke plant at a United States Steel Corporation facility in Illinois.
SunCoke entered into an agreement with US Steel in February 2008 to build, own and operate a 650,000 tonnes per year coke making facility adjacent to US Steel's steelmaking facility in Granite City.
Sunoco said in the Form 10-Q that "Construction of this facility is complete and production has commenced in the fourth quarter of 2009. Expenditures through September 30th 2009 totaled USD 300 million. In connection with this agreement, US Steel has agreed to purchase on a take or pay basis, over a 15 year period, all coke production as well as the steam generated from the heat recovery coke making process at this facility."
SunCoke had a similar deal in place with two affiliates of international steelmaker OAO Severstal. Under that February 2007 agreement, SunCoke agreed to build, own and operate an expansion of the Haverhill plant in Ohio that would double the facility's coke making capacity to 1.1 million tonnes of coke per year and locate a cogeneration power plant at the site. Operations from the coke facility commenced in July 2008, with the expansion essentially completed in the second quarter of 2009.
The company said that "In connection with this agreement, two affiliates of OAO Severstal agreed to purchase on a take or pay basis, over a 15 year period, 550,000 tonnes per year of coke from the coke making facility. In August 2009, SunCoke Energy entered into a 12 year coke purchase agreement with AK Steel, which replaces the take or pay contract with the affiliates of OAO Severstal effective January 1st 2010. Under the new agreement, AK Steel will be required to purchase all 550,000 tonnes of coke per year from this facility. In addition, AK Steel is obligated to purchase 50% of the electricity produced at the associated cogeneration power plant. These contracts are subject to early termination after November 2014 provided AK Steel has given at least two years notice of its intention to terminate. The affiliates of OAO Severstal and AK Steel will each take approximately one half of this coke production in the fourth quarter."
SunCoke is also operating under a separate March 2008 agreement with AK Steel under which it will build, own and operate a coke making facility and associated cogeneration power plant adjacent to AK Steel's Middletown, Ohio, steelmaking facility, subject to resolution of all contingencies, including necessary permits.
The Middletown plant is expected to produce about 550,000 tonnes of coke per year and provide, on average, 46 MW of power to the regional power market. In connection with that agreement, AK Steel has agreed to purchase, over a 20 year period, all of the coke and available electrical power from those facilities. Project expenditures through September 30th 2009 totaled USD 74 million.
In its November 3rd 2009 Form 10-Q filing, AK Steel Holding Corporation reported on the status of litigation against the Middletown coke project. On January 28th 2009, the city of Monroe, Ohio, filed an action in the US District Court for the Southern District of Ohio against Middletown Coke Co Inc and SunCoke that purported to be filed under the Clean Air Act and sought injunctive relief, civil penalties, attorneys' fees and other relief to prevent the construction of the new coke making facility. The complaint alleged that the new facility will be a stationary source of air pollution without a permit issued under the New Source Review program of the CAA, including its Prevention of Significant Deterioration and Nonattainment New Source Review requirements.
(Sourced from www.snl.com)
