IPSCO Inc. Announces 200,000 Ton Per Annum Coil Processing Facility

2 September 1998

IPSCO Inc. Announces 200,000 Ton Per Annum Coil Processing Facility in Philadephia

    REGINA, Saskatchewan--Sept. 2, 1998-- IPSCO(TSE:IPS.) (Alberta Stock Exchange:IPS.) IPSCO Inc. announced today that its U.S. holding company, IPSCO Enterprises Inc., had agreed to arrangements with a United States subsidiary of Novamerican Steel Inc. of Dorval, Quebec to establish, on a fifty-fifty ownership basis, a 200,000 ton per annum coil processing facility in Philadelphia, Pennsylvania.
    The facility is expected to be in operation by mid-1999 and will produce cut-to-length steel in thicknesses up to 1/2 inch, widths up to 96 inches, and yield strengths up to 100,000 pounds per square inch. Capital cost of the facility is expected to be U.S. $8 million. Allowance has also been made for the possible addition of an in-line temper mill sometime in the future.
    This investment is the last step designed to ensure IPSCO's presence as a major coil processor producing wide cut-to-length steel in plate and near-plate thicknesses on three North American coasts - the west, east and gulf coasts - and in six major steel consuming areas - the eastern U.S., Canada's "golden horseshoe", the U.S. Midwest, the Sunbelt, the industrial northwest U.S. and British Columbia, and Canada's oil patch. The IPSCO coil processing facilities, other than Philadelphia, comprise Toronto, Ontario, which is scheduled for startup in the fourth quarter 1998; Houston, Texas, which is scheduled for a mid 1999 startup; Surrey, British Columbia, which is just north of the state of Washington; Regina, Saskatchewan; and Paper Cal Steel Co. in St. Paul, Minnesota.
    Combined capacity of the coil processing facilities, including Philadelphia, will be 1,300,000 tons per annum. All locations can handle up to 96 inch wide product and two, Houston and Toronto, will boast temper mills. Their broad product ranges include high strength steels up to 100,000 psi.
    IPSCO said that each facility was designed to be viable on a stand-alone basis and that they would process either IPSCO produced hot-rolled coil from one of the Montpelier, Iowa or Regina, Saskatchewan steelworks or purchased material, depending on current economics. "IPSCO's strategy is to operate on a "steel short" basis overall, that is we endeavour to maintain total sales of steel mill products and further processed steel in excess of our own manufacturing capability, currently 2,250,000 tons per annum of flat- rolled sheet and plate. We use an optimum mix of purchased steel and our own production that is designed to maximize total profit. When demand falls we can maintain our own steelmaking capacity while cutting back on purchases from others," said David Sutherland Vice President and General Manager, Raw Materials and Coil Processing. Apart from the coil processing capacity of 1,300,000 tons, IPSCO operates or has under construction tubular products facilities with an annual capacity of 1,900,000 tons.
    "As a domestic North American producer of steel ourselves, we favour purchasing North American domestic steel. Indeed, our latest pipe mill at Blytheville, Arkansas is just on the property line with Nucor's Hickman steel plant. But except for our Regina and St. Paul facilities, our coil processing operations are at or near docks served by ocean vessels. If the Canadian and U.S. governments tolerate high levels of imported hot rolled coil, the ocean vessel accessible facilities are strategically located to take advantage. Also, our lines are all equipped to flatten any stubborn lower quality imported material either through enhanced levelling capability or with our two temper mills. The latter have the ability to enhance surface finish as well," Sutherland said. "We call this our win-win strategy. Our shareholders should benefit from our coil processing investments regardless of whether steel imports are a major factor or domestic products dominate. In each case we expect to profit by using the cheapest input material and have the luxury of filling our own steel mills most of the time."
    A map outlining IPSCO's market coverage for coil processing can be obtained from IPSCO's website at www.ipsco.com in the "IPSCO in the News" news releases section.
    This news release contains forward looking information with respect to IPSCO's operations and beliefs. Actual results may differ from these forward looking statements due to numerous factors, including those discussed in IPSCO's 1997 Annual Report for its fiscal year ended December 31, 1997.