Sunoco to build $340M facility for 20-year, AK Steel deal

Sunoco, Inc. announced on March 25 that its board of directors has approved a 20-year contract under which Middletown Coke Company, its indirect wholly-owned subsidiary and an affiliate of SunCoke Energy, Inc., will supply metallurgical-grade coke and electrical power to AK Steel. The coke and power will be supplied from a new facility to be developed adjacent to AK Steel’s Middletown (OH) Works. This supply agreement has been approved by AK Steel’s board of directors.

The agreement is contingent upon, among other conditions, Middletown Coke Company receiving all necessary local, state and federal approvals and permits (including zoning approvals) to build and operate the facility, as well as available economic incentives.

The proposed state-of-the-art heat recovery coke facility will be capable of producing approximately 550,000 tons of coke and 50 megawatts of electrical power annually. Under the agreement, AK Steel will purchase all of the coke and electrical power generated from the new plant for at least 20 years.

“We’re pleased that this project with AK Steel is moving forward and that we can play a role in the economic expansion of this region,” said John G. Drosdick, chairman and chief executive officer of Sunoco, Inc. “Over the last several years, our SunCoke Energy subsidiary has made significant progress in its efforts to grow this business. This project would result in our sixth commercial-scale cokemaking facility and is expected to provide steady income and attractive returns to our shareholders.”

The project will cost approximately $340 million to build, excluding capitalized interest. It will result in hundreds of temporary construction jobs and about 75 permanent operating and maintenance jobs, and will support other businesses and services in the Middletown area. Construction will begin once all the necessary local, state and federal approvals and permits have been received.

SunCoke Energy’s cokemaking process uses a proprietary low-cost cokemaking technology that is environmentally superior to the chemical by-product recovery technology currently used by most other coke producers. This process is specifically referenced in the U.S. Clean Air Act as the “maximum achievable control technology” for coke production.

SunCoke Energy, through other project companies, currently operates metallurgical coke plants in Vansant, Virginia; East Chicago, Illinois; Haverhill, Ohio; and Vitória, Brazil. These facilities produce more than 4.2 million tons of coke each year. SunCoke Energy is also building a second 550,000 tons-per-year cokemaking facility and associated cogeneration power plant at its Haverhill site.

Sunoco, Inc., headquartered in Philadelphia, PA, is a leading manufacturer and marketer of petroleum and petrochemical products. With 910,000 barrels per day of refining capacity, nearly 4,700 retail sites selling gasoline and convenience items, approximately 5,500 miles of crude oil and refined product owned and operated pipelines and 38 product terminals, Sunoco is one of the largest independent refiner-marketers in the United States. Sunoco is a significant manufacturer of petrochemicals with annual sales of approximately five billion pounds, largely chemical intermediates used to make fibers, plastics, film and resins. Using a unique, patented technology, Sunoco's cokemaking facilities in the United States have the capacity to manufacture over 2.5 million tons annually of high-quality metallurgical-grade coke for use in the steel industry. Sunoco also is the operator of, and has an equity interest in, a 1.7 million tons-per-year cokemaking facility in Vitória, Brazil.