> Unfortunately, the baseline assumption isn't correct.

To quibble with that quibble, though the steel mills thing is in the title, I wouldn't call it a "baseline assumption" of the longer discussion in the post: the post talks about how power affects datacenter costs, with one sentence at the end mentioning steel mills.

He links the "steel mills" phrase to a page on a Microsoft datacenter in Quincy, WA. I don't know much about the history of that area, but I did read that another Microsoft datacenter was built in The Dalles, OR, which had very cheap power and historically was home to aluminum manufacturers that needed a lot of power for the electrolytic process involved:

http://www.nytimes.com/2006/06/14/technology/14search.html?e... mentions the datacenter and that aluminum smelters were once in the area

http://en.wikipedia.org/wiki/Aluminium_smelting talks more about the process and how it takes "prodigious amounts of electricity"

Quincy, like The Dalles, is located near the Columbia River, and is an hour drive to the Grand Coulee, Chief Joseph, Wanapum, Rock Island, and Rocky Reach hydroelectric dams. Electricity in central Washington is very inexpensive. Since that article was written, Dell, Yahoo, Vantage, and Sabey have all constructed data centers in the Quincy area.

Also note that a very large reason for constructing Rocky Reach Dam on the Columbia was to provide power for an Alcoa Aluminum plant that is still heavily dependent on cheap energy prices. Chelan, Douglas and Grant counties all have nearly the cheapest power rates the the country.

We still build steel mills near cheap sources of transportation, but it used to be that they tended to be near sources of coke and iron ore, such as in Le Creusot in Eastern France. Nowadays the big steel mills get their ore and coke through ships. There are also direct reduction mills that don't use coke and are often located near a source of natural gas.

One example of an instance were steelmaking and data centers meet is Facebook's Luleå operation, built in an iron ore port town: loads of hydroelectric power, good infrastructure, and cold.

A listen through the old Woody Guthrie Columbia River Collection [1] suggests that powering heavy industry was a key justification for building dams on the Columbia River.

[1]: http://en.wikipedia.org/wiki/The_Columbia_River_Collection

Beyond that, I'd say that low-latency abundant bandwidth availability is probably harder to find and bring into a site than power is these days. Not to mention effective cooling.

Then again, there's some very large banking institutions with data centers here in the Phoenix area, so what do I know.