Allegheny Technologies Inc. (ATI) announced today that its Board of Directors has approved a greenfield premium-grade titanium sponge facility to be built in Rowley, Utah with an annual capacity of 24 million pounds. The $325 million investment is aimed at increasing ATI's capacity to produce titanium alloys for aerospace and defense applications.
Premium-grade sponge is essential for many aerospace applications, including rotating quality titanium alloys used for new jet engines and spare parts. ATI expects initial production to begin in the third quarter 2008. This Phase IV titanium expansion brings ATI's projected total annual titanium sponge capacity to approximately 40 million pounds. ATI previously announced three titanium sponge capacity increases at its Albany, Ore. facility amounting to 16 million pounds per year."ATI's 40 million pounds of annual titanium sponge capacity provides opportunities for significant revenue and earnings growth and a stable low-cost supply of this vital raw material. Strategically securing a cost-competitive source of titanium sponge is critical to achieving our profitable growth potential. The expected return on this investment is very attractive," said Patrick Hassey, Chairman, President and Chief Executive Officer of Allegheny Technologies. "With this additional titanium sponge raw material supply, we can confidently meet the growing long-term mill product demand from our customers. We also plan to continue to purchase titanium units in the form of sponge and scrap from our long-term suppliers."
The Board's approval of the Phase IV expansion is contingent upon the satisfactory completion of appropriate arrangements relating to the acquisition of and use of property, incentives from the State of Utah and the County of Tooele, and the supply of raw materials and utilities.
"Looking to the later part of this decade, our customers' forecast demand for titanium mill products exceeds the titanium industry's current and announced production capacity," Hassey said. "ATI is investing to grow profitably and rapidly with this robust demand. ATI is uniquely positioned to grow in the global titanium market with our expanding titanium raw material supply and unequaled melt capabilities. In addition, we have an unparalleled combination of assets for finishing titanium products."
ATI previously announced a $150 million three-phase titanium products expansion that is expected to yield 16 million pounds of titanium sponge capacity and increase ATI's annual titanium melt capacity by approximately 25 million pounds.
