UPDATE 2-Austria's Voestalpine picks Texas for $700 mln plant
* Voestalpine to invest 550 mln euros in new plant
* CEO says project would have been impossible in EU
* Shares down 2.4 percent (Adds details, background)
VIENNA, March 13 (Reuters) - Austrian steelmaker Voestalpine has picked Texas as the location for a new 550 million euro ($716 million) sponge iron plant, a sign that cheap U.S. energy prices are attracting industrial investment as Europe lags behind.
The plant, Voestalpine's biggest foreign investment to date, is due to begin operations in early 2016 and is part of the steelmaker's plan to boost its sales through aggressive expansion in the Americas and Asia.
"This is impressive evidence of the USA's efforts to rapidly and sustainably reindustrialise their economy," Chief Executive Wolfgang Eder said in a statement on Wednesday, adding that U.S. natural gas prices were about a quarter of those in Europe.
"It would have been impossible to build a comparable plant in the European Union, not least because of a lack of competitiveness in terms of operating costs," he said.
The United States is becoming a magnet for industry largely thanks to cheap shale gas, leading many economists to posit a return to industrialisation by the world's biggest economy after more than a decade of consumption-led growth.
Most European countries are resisting exploring for shale gas due to environmental concerns, while recession, a strong euro and more restrictive labour laws in many countries also reduce its attractiveness for industry.
Eder, who also heads the European steel industry association, has often painted a bleak picture of the sector in Europe. Overcapacity and regulation are crippling weaker competitors, which governments should not prop up, he has said.
Voestalpine shares were down 3.25 percent to 25.755 euros by 1117 GMT, underperforming the European basic resources index , which slipped 0.77 percent.
The plant, to be built in Texas's Corpus Christi Bay, will cover an area of almost 2 square kilometres (500 acres) and will employ around 150 people.
The company aims to send half of the plant's planned annual output of 2 million tonnes of hot briquetted iron (HBI), or sponge iron, back to its mills in Austria for crude steel production and use the rest as a strategic reserve.
Voestalpine said it had considered 17 sites before settling on the southern U.S. state.
"In the end, Texas was the most convincing in terms of all the key criteria, including logistics, energy supply, a well-educated workforce and the political environment," it said.
Voestalpine said the formal decision to implement the project should take place before the summer following detailed negotiations with local authorities. Getting an air quality permit from environmental authorities should take about 15 months. ($1 = 0.7680 euros) (Reporting by Georgina Prodhan; Editing by Michael Shields and Jane Baird)