Yeah, If you really want a steel mill, you will have to remove alot of existing buildings. Personally, Unless you've already bought the steel mill equipment, i'd abandon it altogether and find a different business to go in there. most of the buildings, and most of the steel mill specific equipment costs lots of money. It may be cheaper and more space effective to only model one aspect of the steel mill, and possibley have a hidden staging track behind some buildings that would serve as the rest of the plant.
For example, you might have the rolling mill out in the open, and you can have you cushioned coil cars out there, and then also have a track that goes back behind the rolling mill, where visitors can't really see. Back there, you will have the rest of the variety of out bound steel mill freight, and maybe a second track for inbound stuff. I just saw in a walthers catolog a background building that was a steel mill front. I know you can get paper back grounds depicting the big blast furnaces and such. If you do this, You can save space on your layout, and still get the desired effect.
A full steel mill complex is just to massive. Your entire layout space would have to be taken to get anything close to realistic looking. I would try to do only a part of the whole operation, and set the scenery so that the veiwer's imagination can fill in the rest.