During the first decades of its existence, Ilseder Hütte concentrated solely on producing pig iron. As the economic advantages of processing the iron locally to make steel and rolled products became increasingly clearer, the necessary steelworks and rolling mills were established by an initially independent company in the neighboring town of Peine. The Aktien-Gesellschaft Peiner Walzwerk was set up in 1872, albeit primarily in the ownership of the shareholders in Ilseder Hütte; from the very beginning there were close contractual ties between the two companies. When by 1880 the Peiner Walzwerk had increased its capacity to the point at which it was able to process the bulk of Ilseder’s production and increasing consumption appeared likely, the business was acquired by Ilseder Hütte.
In the years that followed, the economic success of Ilseder Hütte went largely hand in hand with technical progress. With the decision made in 1881 to build a steelworks in Peine using the Thomas method of reducing phosphorus, the Group became one of the pioneers in the introduction of this new process in Germany. The significant advantage for Ilseder Hütte was that the local high-phosphorus ore could at last be processed to manufacture high-quality and therefore more profitable grades of steel.
Countless improvements to the plant and transport facilities were subsequently made both in Ilsede and in Peine, including the commissioning of a Siemens-Martin steelworks in Peine in 1912 and the conversion of the pig iron transport system between Ilsede and Peine in 1911 to carry molten iron. These developments not only helped to reduce costs, but also increased both output and quality.
As a result of the continuous expansion of both the rolling mills and the range of rolled products in Peine with an emphasis on sections and beams, by 1914 the plant became the first to successfully roll a broad-flanged beam with parallel flanges. The special skills of the Peine mill made “Peine beams” (in German "Peiner Träger") internationally famous - the company has ever since been synonymous with sectional products of the highest quality.
In its financial year 1920/21 Ilseder Hütte began to develop its own supply of coal in order to reduce its dependence on third-party suppliers. The company acquired the Friedrich der Große coal mine in Herne, Westphalia, as well as a smaller mine in Minden. The business ultimately developed into a vertically structured coal and steel group which – like its competitors in the Ruhr area – combined every stage from input material through to processing within its grasp.
In 1932 Ilseder Hütte moved its head office from Ilsede to Peine.