Donald Foster to lead Braidy Industries
By Michael Roh, Fastmarkets AMM
June 24, 2020
Braidy Industries is confident it can secure the funds to build its 300,000-tonne-per-year greenfield aluminium rolling mill in Ashland, Kentucky, newly appointed chief executive officer and steel industry veteran Donald Foster told Fastmarkets in an exclusive interview on Tuesday June 23.
Foster brings to Braidy more than 40 years of experience working in the steel industry, including various leadership roles at steel companies such as U.S. Steel Corp, where he was president of U.S. Steel International.
In addition to his new appointment at Braidy Industries, Foster is also CEO of BridgeConsulting LLC, a wholly owned subsidiary of MetalsBridge LLC.
Foster’s appointment as CEO of Braidy Industries marks a new era for the company, with him taking the helm following the departure of Craig Bouchard. Foster is now tasked with leading the company while it strives to secure the remaining funds to build the $1.8-billion Braidy Atlas aluminium rolling mill.
The company must still raise roughly $300-500 million in equity.
“From a financing standpoint, we’re looking at $1.8 billion total for the project, about $300-500 million in equity, depending on the final structure of the deal. And we’re talking to strategic investors and financially sound funds, typically larger and sophisticated investors that understand the business case and appreciate looking at a year two-return of $400 million in
Ebitda [earnings before interest, taxes, depreciation and amortization],” he said.
Foster declined to offer a timeline as to when the mill could begin operating, because the start date would be determined by how quickly the company could raise the funds.
“I wouldn’t be bold enough to put a stake in the ground on a date… But I’ve seen some momentum and I’m encouraged. I think once you see one or two of the smarter strategic and
financial houses declare their investments, you’ll build momentum. As people know the train’s leaving the station, they better get on board,” he said.
But Foster did reveal that construction is estimated to take approximately 30 months, suggesting the mill could begin operating as soon as 2023 if funds are raised by the end of this year.
He has already lined up meetings with investors, four of which are scheduled this week.
When asked how the company will be more successful in raising funds under his leadership, Foster pointed to his history spearheading massive projects, particularly during his career at LB Foster.
Foster is optimistic about the mill’s prospects, because US demand for aluminium sheet far exceeds domestic supply.
And despite the months-long automotive plant shutdowns in the United States plaguing the domestic aluminium market today, Foster noted the long-term trend of increased vehicle lightweighting while automakers increasingly substitute aluminium for steel.
Fastmarkets assessed the aluminium P1020A premium, ddp Midwest US at 8.5-9.5 cents per lb on June 23, tightening upward by a half cent from 8-9.5 cents per lb on June 19 after sentiment improved on strong expectations that Canada will be hit again with tariffs.
Industries are likely to favor American-produced material to limit their dependence on international supply chains, Foster added.
“The mill is located within 250 miles of 60% of the automotive market so we’ll have a regionally tight supply chain,” he said.
Foster also noted that demand for aluminium can sheet has strengthened after the Covid-19 pandemic jolted consumer demand for those products in the food and beverage sector.
“Demand for aluminium cans has spiked, so we find that to be an attractive market. We’re
designing our facility to better serve that market,” Foster said, adding that equipment particular to serving this market was added to the facility.
The mill also intends to sell to the construction and truck and trailer sectors, as well as to service centers.
The project had secured a $15-million equity investment from Kentucky in 2017. It also received a $200-million investment from United Co Rusal, which also has a supply agreement with the Braidy Atlas mill, under an agreement made in July 2019.
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