Once more, Gates planned to get back into the steel industry. In 1903, he began buying shares of Republic Steel. Its two main competitors were in the US South-Tennessee Coal, Iron and Railroad Company, and the Sloss-Sheffield Iron and Steel Company in Alabama. All three were able to use inexpensive Southern iron ore to produce quality steel with the open hearth process, making the price of the steel produced with it cheaper. The minerals needed for the open hearth process were readily found in Alabama. Gates envisioned bringing Republic, Tennessee Coal and Iron and Sloss-Sheffield together into a steel trust to challenge J. P. Morgan's U. S. Steel. When August Belmont Jr. resigned his seat on Republic's board to concentrate on consolidating the New York transit system, Gates was elected to fill Belmont's seat.