SDI LaFarga LLC: Ushering in a New Era for American Copper Manufacturing

In May 2011 work began on SDI LaFarga LLC’s first copper rod manufacturing plant in New Haven, Ind., but the joint-venture facility has been years in the making. Barcelona, Spain-based LaFarga Group (LaFarga) is one of the largest producers of semi-finished copper products in the European market and one of the largest distributors of copper piping for industrial, mechanical and refrigeration purposes. Similarly, Fort Wayne, Ind.-based Steel Dynamics Inc. (SDI) has made a name for itself as the nation’s fifth largest producer of carbon steel products and one of the country’s largest scrap processors, with facilities throughout the Midwest and Mid-Atlantic.

“The new SDI LaFarga facility will bring together LaFarga’s unique technology with SDI’s local resources,” says Roy Perala, general manager of SDI LaFarga LLC. Perala carries 17 years of experience working for SDI, helping to construct, commission and operate two of its plants: the Structural and Rail mill and the Butler Flat Roll facility.

Combined Capabilities

The new 85,000-square foot facility is estimated to cost $39 million, and though it is not even close to being either partner’s largest plant, it marks LaFarga’s first entrance into the North American market and SDI’s first foray into red metals. LaFarga has previously done business with OmniSource, which SDI acquired in 2007. OmniSource is one of the country’s largest processors of ferrous and nonferrous metals.

OmniSource will be the joint venture’s primary supplier of scrap copper, while LaFarga is providing the plant with its most advanced technology for producing 8-millimeter copper wire rods from No. 2 scrap metal instead of copper cathode. The plant will produce 180 million pounds of copper rod annually when running at full capacity.

Prior to the joint venture, OmniSource regularly processed and sold most of its scrap copper to buyers in China, but the new plant produces a continuous, local demand for OmniSource’s scrap copper, which stabilizes the plant’s input costs in part.

Forging Ahead

SDI served as construction manager for the project, working with an extensive network of seasoned local contractors to construct the building, though as of late 2011 progress at the facility’s 76-acre site was somewhat delayed. A rainy September and windy end to the year prevented the roofing and siding crews from enclosing the space, which was compounded by a slight local labor shortage. The building has since been enclosed, crews began installing the facility’s equipment, and Perala hopes to build enough momentum for an on-time start-up date by mid-2012.

SDI LaFarga expects the plant, once fully operational, to provide 35 full-time positions by 2013. As a result, the project has received a mix of performance-based tax incentives, professional training grants and other incentives, representing over $3 million from Allen County, the Indiana Economic Development Corporation and WorkOne Northeast. The County has also been prompted to invest in extra drainage and roadway infrastructure for the SDI LaFarga plant, which is encouraging future development.

Demand for copper products, and copper wire especially, is expected to increase in the next few years, positioning SDI LaFarga to become a major competitor in red metals domestically and internationally. As construction nears completion and SDI LaFarga LLC settles in, the joint venture will prove that the traditional reasons for the decline of American manufacturing – mainly cheaper labor costs abroad, increased regulation domestically and rising commodity prices – are no match for innovative industry leaders.