"We decided today that we want to construct the first steelworks in Europe in 40 years," chief executive Wolfgang Eder told the Austria Press Agency.
The decision to invest €330-350 million ($390-410 million) in the high-tech site at Kapfenberg in "high-cost" Austria was "anything but simple", Eder added in a statement.
"The decisive factor was the people: in the end our employees, with their extensive expertise and their commitment, were a stronger argument than all the critical aspects," he said.
The plant, completely replacing an existing 100-year-old plant at the same site, will manufacture high-performance steels for the international aerospace, automotive, and oil and gas industries.
The investment will secure around 3,000 jobs in southern Austria and the plant will be 100-percent powered by renewable energy sources and open in 2021, the firm said.
In recent years the trend in the steel industry, struggling with overcapacity and cheap Chinese imports, has been to shut plants in Europe and produce elsewhere.
Last week, Germany's ThyssenKrupp and India's Tata announced plans to merge their European operations, raising fears of thousands of job losses.