United States Steel Corporation (NYSE:X) shares are up on the optimism for its $3 billion Mini-Mill steel mill in Osceola, Arkansas.

BMO Capital Markets upgraded U.S. Steel's stock from Market Perform to Outperform on Wednesday as it expects the $3 billion plant to forge greater profits for the Pittsburgh-based steel maker.

"In general, our view remains increased Mini-Mill production should translate to improved through-cycle profitability" and greater sheet forging, analyst Katja Jancic wrote in a note.

"While we recognize there are risks/potential delays/start-up costs associated with starting up new capacity, it is our view X should start benefiting from these investments in 2025, with the full run-rate EBITDA potential likely achieved in 2026."

Also Read: What's Happening With US Steel Shares On Monday?

U. S. Steel broke ground on the facility in 2022 and plans to complete construction this year. The plant, which was acquired as part of Big River Steel's 2020 acquisition, will feature two electric arc furnaces (EAFs) capable of producing 3 million tons of steel per year, according to the company.

So far, U.S. Steel finished building Mini-Mill's electrical steel line in last year's fourth quarter and expects to complete constructing the dual coating line in this year's second quarter. The company expects a total run-rate of $200 million in EBITDA from these installations by 2026, Jancic noted.

U.S. Steel also expects to finish construction on a larger BRS2 steel mill nearby that will double its steelmaking capacity to 6.3 million tons and have a run-rate of $1 billion in EBITDA.

Japan's Nippon Steel finalized a deal in December 2023 to buy U.S. Steel for $14.9bn.

X Price action: U.S. Steel shares were up 3.42% at $36.42 Wednesday at publication.

Photo: Courtesy U.S. Steel