Pacific Steel Group receives funding for EAF mill

A San Francisco-based company that describes itself as a financier, builder and operator of “sustainable resource infrastructure” says it will 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 Texas-based EAF mill operator Commercial Metals Co. (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 says it 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,” says Bill Sonneborn, president of the firm.

“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,” adds Sonneborn. “We’re excited to partner with PSG on this transformative project.”

Sonneborn lists the California State Teachers’ Retirement System fund (CalSTRS) and the Australia-based HESTA fund as 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.”

Continues the firm, “Leveraging onsite 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.”

States Eric Benson, CEO of Pacific Steel Group, “This innovative project aligns with our objective to provide the highest quality materials while lowering our environmental footprint. 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.”

Concludes Benson, “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.”

The last steel mill to operate in the Golden State was an EAF mill in Rancho Cucamonga, California, 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.

Regarding making a new investment in California, Generate Capital writes in part, “With a global market size estimated at $1.5 trillion in 2023, steel is the most widely used metal in the world. Decarbonizing the steel market, therefore, is vital to achieving the transition to net zero emissions. Generate’s investment in PSG enables steel production that is both sustainable and cost competitive.”

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

Pacific Steel Group describes itself as a reinforcing steel fabricator and installer with offices throughout the western United States.