From The Editor

Cliffs Bets Big on ArcelorMittal USA Assets

By on
MCN Editor Dan Markham

Over the course of just six months, Cleveland-Cliffs has become the largest integrated steelmaker in the United States. The steelmaking raw material supplier followed up its earlier acquisition of AK Steel with Monday’s blockbuster $1.4 billion purchase of ArcelorMittal USA’s assets.

The move pulls in six ArcelorMittal steel mills in the United States, eight finishing operations, two mining and pelletizing plants and three met coal/cakemaking operations. With the two moves, Cliffs is now the largest producer of flat-rolled steel in the United States, with 2019 shipments of 17 million tons. It is also America’s largest producer of iron ore, with 28 million long tons of annual capacity.

ArcelorMittal will not leave the North American market entirely. The company retained two of its best assets – the Dofasco facility in Hamilton, Ontario, and its joint venture with Nippon Steel in Calvert, Ala.

The move comes at a time when the industry seemed to be rapidly accelerating toward electric arc furnace technology and away from integrated steelmaking. That shift is evident in the ongoing capacity expansion projects taking place, including Steel Dynamics’ greenfield expansion near the Mexican border in Texas, Nucor’s investments in Kentucky, Florida and elsewhere and CMC’s proposed new micromill in Mesa, Ariz.

Furthermore, Cliffs’ major integrated competitor in the United States has also moved heavily into EAF production with its acquisition of 49.1 percent of Big River Steel. The steelmaker has an option to purchase the remaining majority shares in the coming years, and has given every indication it intends to exercise that.

The move surprised veteran steel analyst Chuck Bradford, who admitted he had never followed Cliffs terribly closely. “It seemed to me that domestic iron ore was not a business I wanted to be involved with, because it was pretty clear BOFs were going out of fashion in favor of electric arc furnaces. I don’t see any reason for that to change, especially with all of the EAF plants under construction at the moment,” he told MCN.

“I don’t know what Cliffs is seeing in the steel industry that I’m not seeing,” he said.

While the rest of the industry is zigging toward EAFs, Cleveland-Cliffs has zagged toward the traditional type of steelmaking. Time will tell how well this big bet pays off.

Current News