Gary Works flooding caused $200 million hit to U.S. Steel's market cap, posed threat of 'catastrophic equipment damage'

Dec. 3--U.S. Steel's market capitalization plunged by about $200 million as a result of the flooding at Gary Works the day before Thanksgiving, but the steelmaker's stock price has been recovering as it cleans up and gets operations back online at its flagship mill at 1 N. Broadway.

The Pittsburgh-based steelmaker, one of Northwest Indiana's largest employers, saw its stock plummet by about 9% after the flooding, dropping from about $13.87 a share to as low as $12.57 a share Friday. After the company announced it hoped to have all its blast furnaces in Gary back online this week, its stock price rebounded, closing at around $13.67 a share Monday, restoring much of the lost market valuation.

U.S. Steel said last week it hoped to have a blast furnace back online over the weekend and to have all its blast furnaces back up and running this week at Gary Works, its largest mill with 7.5 million tons a year in raw steelmaking capacity.

The company continues to work toward restoring operations and determining exactly what happened to cause the severe flooding, with water entering employees' cars. Testing thus far has not shown any chemical discharges in excess of what the state permits.

"A 36-inch water line that supplies untreated Lake Michigan water for service throughout the facility developed a leak where the line exited the #1 pump house south valve house," Gary Works Environmental Control Director Joseph Hanning wrote in a letter to the Indiana Department of Environmental Management. "The leak was significant and caused flooding throughout the blast furnace and central utilities area. All blast furnace and steelmaking operations were shut down. The flooded service water impacted critical basements in the central utilities area, the railroad tracks beneath the casthouses on the south blast furnaces, and other areas that presented risk of catastrophic equipment damage and potential threat to human health."

U.S. Steel notified the state of the flooding and that it observed a sheen in its outfall into the Grand Calumet River, which flows into Lake Michigan, a source of drinking water for millions of people throughout the Midwest. The steelmaker captured the sheen with a boom and has not identified any signs of fish distress or other impacts to the environment.

The company told the state its testing has found that "no effluent limitations were exceeded."

"Additional sampling was started at Outfall 018, 019 and various areas of flooding for ammonia and cyanide to confirm that no process water commingled with the flooded service water," Hanning wrote in his letter to IDEM. "Once flooded areas were confirmed not to have mixed with process water and did not contain harmful levels of the parameters, pumping was initiated to remove the flooded service water."

IDEM spokeswoman Sarah Bonick said the state agency continues to investigate.

"U.S. Steel has been instructed by IDEM to increase monitoring at the Gary Works location until further notice, and to submit results to IDEM for evaluation," she said. "No drinking water intake locations have been affected and there have been no observed impacts to wildlife."

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