Pacific Steel Group receives funding for EAF mill

A San Francisco-based financier, builder and operator of sustainable resource infrastructure intends to provide a $200 million loan to steel rebar fabricator Pacific Steel Group (PSG) so it can build a recycled-content electric arc furnace (EAF) steel mill.

Late last year, San Diego-based PSG won a judgment in its favor after it sued Irving, Texas-based EAF mill operator CMC of restraint of trade actions relative to PSG’s plan to build a mill in Mojave, California.

Generate Capital says it is proud to support the construction of an EAF micromill, which will significantly reduce the emissions of rebar used in California and nearby states.

The firm will provide a $200 million secured loan to PSG to convert locally sourced steel scrap into high-quality, custom-length steel rebar.

“At Generate, we are committed to supporting projects that empower communities while building the infrastructure for a more sustainable future,” Generate Capital President Bill Sonneborn says.

“PSG’s innovative approach demonstrates how we can significantly reduce emissions in the industrial sector while meeting the rising demand for greener building materials economically. We’re excited to partner with PSG on this transformative project.”

The California State Teachers’ Retirement System fund (CalSTRS) and the Australia-based HESTA fund are other co-investors in the PSG mill.

Generate Capital says the planned micromill could eliminate the need for the roundtrip hauling of scrap and finished steel in and out of California, providing a transportation cost advantage and carbon emissions savings.

“Leveraging on-site and nearby renewable energy, electrification, carbon capture and storage and a local supply chain, the new mill is expected to produce rebar with 85 percent fewer emissions compared to traditional methods, setting a new benchmark for sustainable steel production," the company adds.

The last steel mill to operate in California was an EAF mill in Rancho Cucamonga that CMC shut down in late 2019. CMC cited high operating costs and burdensome regulatory requirements when it shut down that 60-year-old mill and eventually sold the property in late 2022.

“This innovative project aligns with our objective to provide the highest quality materials while lowering our environmental footprint," Pacific Steel Group CEO Eric Benson says. "By eliminating unnecessary transport and utilizing cleaner production methods, we are creating rebar that not only meets our customers' high standards but also supports their sustainability goals.

“This financing from Generate enables us to take a bold step forward in building the only steel mill in California and one of the greenest steel mills in the country.”

Since 2014, Generate Capital has invested in and operated assets in six sectors: power, mobility, waste, green digital, water and agriculture and industrial decarbonization, and the firm has raised more than $10 billion since its inception.