Cliffs asset repositioning includes FPT sale

Cleveland-Cliffs Inc., which has experienced a series of financial losses in the past few financial quarters, is considering several changes pertaining to facilities it operates in the steelmaking and metals production raw materials markets.

One of those moves involves the sale of its Detroit-based Ferrous Processing & Trading (FPT) metals recycling business unit, according to CEO Lourenco Goncalves.

In a quarterly earnings-related conference call this week, Goncalves said Cliffs was preparing to close and had a signed contract on the sale of a portion of FPT.

“We’re very pleased that we had more than one party interested on that specific portion of FPT, including the Florida assets," he said.

Goncalves said Cliffs is under agreement with Orange, California-based SA Recycling for FPT's Florida assets.

Cliffs announced its purchase of multilocation recycler FPT in 2021. The company operates auto shredders and other scrap processing facilities, with more than 25 U.S locations in Michigan, Florida and Ohio, and one Canada location in Windsor, Ontario.

“We are very excited with the opportunity to continue to sell the remaining portions of FPT as we go," Goncalves said.

He also referred to the potential of harvesting rare earth elements at two of its mining sites in Michigan and Minnesota and said a hot briquetted iron (HBI) facility Cliffs operates in Toledo, Ohio, soon could be on the market.

“We are considering selling [our] direct reduction plant in Toledo, Ohio, because, as you might conclude on your own, but I will reiterate here, we have no interest in building a flat-rolled minimill ourselves," Goncalves said regarding the HBI plant in Toledo, which was commissioned the same year the company purchased FPT.

“I was keeping that HBI plant to supply [Arkansas-based Big River Steel] in case we had the opportunity to acquire U.S. Steel, which did not play out. So, as we did not acquire Big River through the acquisition of U.S. Steel, I don’t see any specific and strategic value of keeping a direct reduction plant producing HBI with a strict goal of supplying flat-rolled minimill[s] producing more of a high-end type of flat-rolled product. That’s not my problem anymore.”

The company also indicated it has lowered 2025 capital expenditure amounts at its Stelco facilities in Canada and potentially in Middletown, Ohio, where it is ascertaining the final amount of support it will receive from the U.S. Department of Energy on a project partially funded with DOE grant money.

Goncalves also referred to a memorandum of understanding (MoU) the firm has signed with “a major global steelmaker who wants to leverage our footprint in the United States.”

“During the third quarter, we entered into an MoU with this global steelmaker, and we expect to make a formal announcement in the next few months," Goncalves said.

No facilities tied to that MoU have been named, but speculation has centered in part on an idled blast furnace/basic oxygen furnace site in Riverdale, Illinois, and an electric arc furnace and downstream mill complex in Steelton, Pennsylvania.

Regarding Steelton, media outlets in Pennsylvania reported last week—citing a letter sent by Cliffs—that the company has notified employees there it will stop making steel rail and wind down other operations at the location.

In conference call comments this summer, Chief Financial Officer Celso Goncalves said the future value of the properties in Riverdale and Steelton might be tied to building data centers at those sites, but the MoU with the overseas steelmaker could have caused a shift in that strategy.

A Cleveland-Cliffs news release accompanying its third-quarter financial report this week did not mention FPT or another company acquired this decade that now is part of Cliffs—blast furnace steelmaker Stelco in Canada.

However, Lourenco Goncalves in conference call remarks in August and again this week, has urged the Canadian government to do more to protect its own nation’s steelmakers.

“The European Union has recently tightened its quota and tariff regime; Canada stands alone in doing nothing,” he said this week. “A bailout loan as the one given by the Canadian government and the province of Ontario to Algoma, one of our Canadian competitors, is not a fix for the problem. Trying to weaken Section 232 in the U.S. just to bring back Canadian steel into the American market is even worse. Stelco, under our ownership, does not want to and should not depend on selling steel into the U.S. for its survival.

“Stelco could thrive exclusively by selling steel in Canada. While I confess my inability to convince the several Canadian government officials I regularly speak with, I continue to expect Prime Minister [Mark] Carney to make a move in the right direction. Let’s see how long it takes, or if I will need to be more persuasive.”