NEW YORK ( TheStreet) -- Keith Busse, the CEO and one of the founders of Steel Dynamics (STLD - Get Report), owns the world's second largest collection of Corvettes. In fact, Busse set up his Corvette garage, which contains 60 of the classic Chevrolet sports cars, as a museum, and situated it directly across the street from Steel Dynamics HQ -- the better, perhaps, to jump into a Stingray and put it through its paces should the desire ever overtake him while sitting behind his desk.
As it happens, the former Nucor executive has another kind of hot rod in development, and, if it succeeds, Busse will once again have upended the steel industry and, investors and analysts say, very likely have added to the value of Steel Dynamics' stock.
It's called the Mesabi Nugget Project, it's a factory right smack in the middle of the Iron Range in northern Minnesota, and it makes a substitute for pig iron. If that doesn't sound like the sexiest thing in the world, maybe you need to think like a steeler.Consider, first of all, that the manufacturing process used by Mesabi is an ultra-high-tech innovation developed with Japan's Kobe Steel and that the plant will be the first of its kind anywhere in the world. Consider, as well, that Steel Dynamics must now buy pig iron on the spot market, where the price for the raw material has become notoriously volatile, swinging as high as $1,400 a ton and as low as $400 within the last year and a half. Consider that the Mesabi project stands to make Steel Dynamics the only 100% vertically integrated steelmaker in the country other than that Big Steel blast-furnace icon U.S. Steel. (That is, if all goes according to plan, Steel Dynamics hopes it won't need to go to outside sources to buy any of its raw materials, thus controlling its costs). And, finally, consider that, by some estimates, the Mesabi project could end up adding more than $50 million to the company's annual bottom line. That's a lot of dough -- and enough to cause investors to recalibrate the company's share value higher. "It's a differentiatable technology for them," Mark Parr, the metals analyst at KeyBanc Capital Markets in Cleveland, has said. "It has the potential to be differentiatable on valuation basis in the next few years. Steel Dynamics has been a pioneer." Steel Dynamics -- based in Fort Wayne, Indiana, and founded after Busse and his mates defected from Nucor in 1993 -- can be considered the best in its class on a number of counts. Its management team, led by Busse (pronounced like "fussy") and his partners, Mark Millett and Richard Teets, who serve as presidents of the scrap metal and steelmaking arms of the company, respectively, is considered the most adept in the industry. They got their start, after all, building the first electric-arc mill in the world to fabricate sheet steel while at Nucor in the late 1980s, a process memorably chronicled by Richard Preston in The New Yorker and in the book American Steel.