Nucor expects to break ground on the plant, at the Nucor-Yamato Steel Co.'s structural steel mill, early next year, company Vice Chairman and Chief Executive Dan DiMicco said Thursday during a conference call to discuss quarterly results. Production could start around mid-2007 and eventually have the capacity for around 500,00 tons, he said. Nucor has said the Castrip technology, which the Charlotte steelmaker helped to develop commercially through a joint venture, produce steels using fewer steps and requiring a smaller plant than conventional steel mills, or even the mini-mills that Nucor pioneered. Importantly, DiMicco said Thursday, Castrip plants use 95% less energy than an integrated steel mill and 92% less energy than a thin-slab minimill. At current energy costs, he estimated that equates to a savings of $25 to $30 per ton in production costs. Nucor estimates Castrip facilities typically cost around $110 million to $120 million, but executives wouldn't forecast construction costs for the Arkansas plant.

The company operates one Castrip plant in Crawfordsville, Indiana. Other Nucor divisions also sought the project, but markets, logistics and excess capacity gave the Nucor-Yamato plant the edge, DiMicco said. He said rising energy costs continue to be a " significant challenge " for Nucor, although the company has hedged a significant portion of its natural gas expenses into 2007. Electric and natural gas costs for the third quarter were about $40 a ton in the third quarter, up nearly $12 a ton from a year earlier and up about $6 a ton from the second quarter, executives said. Such costs have led Nucor to do some thinking about whether it might someday make sense to generate its own electricity, DiMicco said. "It's certainly something in this environment you have to take a look at, but there are no current plans to go forward with it," he said.

Earlier Thursday, Nucor said third-quarter earnings fell on a lower average sales price compared with a year ago. Earnings slipped to $291.9 million, or $1.86 a share, from $415.4 million, or $2.59 a share, a year ago. The Thomson First Call mean earnings estimate for Nucor's third quarter was $1.68 a share. Results included a $52 million credit to value inventories using the last-in, first-out method of accounting, compared with a LIFO charge of $124.1 million last year. Sales slipped to $3.03 billion from $3.24 billion a year ago as the average sales price per ton dropped 15% from the third quarter of 2004. Total tons shipped to outside customers rose 9% to a record 5,298,000 tons. Nucor said it expects fourth-quarter earnings of $1.70 to $1.90 a share, and it believes business conditions will remain strong through that period and into the first quarter of 2006. The biggest threats to this guidance are related to import levels, energy costs and availability, and a significant slowdown in the economy, Nucor said.