Cleveland-Cliffs, which owns AK Steel and is involved in several other steel-related sectors, says its plans to build a hot briquetted iron (HBI) facility in Toledo, Ohio, were slightly delayed by the economic slowdown, but it still intends to invest in the project in the second half of 2020.
In comments accompanying the Cleveland-based firm’s second-quarter 2020 financial results, Cleveland-Cliffs Cliffs’ Chairman, President and CEO Lourenco Goncalves says, “As the market currently stands, we expect to see positive free cash flow in the second half of the year, which includes the capital spending necessary to complete the Toledo HBI project.”
A report released in early July by investment firm B. Riley FRB concluded that demand for the HBI produced at the Cleveland-Cliffs Toledo facility could be strong in the approaching decade, especially if prime grades of ferrous scrap are in short supply.
Regarding the outlook overall for Cleveland-Cliffs, Goncalves remarks, “Now that nearly all our facilities [that] were idled during the second quarter have resumed normal operations, during the second half of 2020 we will be able to demonstrate the potential of our new Cleveland-Cliffs footprint.”
Regarding the company’s integration of AK Steel into its existing operations, Goncalves says, “We have already implemented all the synergy initiatives we disclosed at the time of the acquisition, with the updated amount of $151 million coming in much higher than the original target of $120 million in synergies. In the second half of this year, we will finish the construction of our HBI plant, creating another highly profitable business for Cleveland-Cliffs in 2021 and beyond. At this time, based on our unique fully integrated and self-sufficient footprint, from iron ore pellets to highly sophisticated carbon and stainless steels and automotive parts, we are laser-focused on growing our business with our traditional automotive clients and on adding new ones from the roster of new manufacturers of electric vehicles, trucks and SUVs (sport utility vehicles).”