Cleveland-Cliffs Inc.

Cleveland-Cliffs, Inc., formerly Cliffs Natural Resources, is a Cleveland, Ohio-based company that specializes in the mining, beneficiation, and pelletizing of iron ore and steelmaking. The company is a public company. Cleveland-Cliffs' primary operations are organized and managed according to product category: Mining & Pelletizing, Metallics, and Steelmaking.

Cleveland-Cliffs, Inc.
TypePublic
NYSE: CLF
Russell 2000 Component
IndustryIron ore
Direct reduced iron
Steel
FoundedCleveland, Ohio, United States (1847)
as Cleveland Iron Company
FounderSamuel Mather and associates
Headquarters
200 Public Square, Cleveland
,
USA
Key people
  • Lourenco Goncalves (Chairman, Pres. & CEO)
  • Terry Fedor (EVP, Operations)
  • James Graham (VP, CLO & Sec.)
  • Maurice Harapiak (EVP, H.R.)
  • Terrence Mee (EVP, Global Comm.)
  • Clifford Smith (EVP, COO)
  • Keith Koci (EVP & CFO)
ProductsIron ore Pellets
HBI
Flat rolled steel
Stainless steel
RevenueUS$ 2.3 bil (FY 2018)[1]
Total assetsUS$ 3.5 bil (FY 2018)[1]
SubsidiariesAK Steel
Websitewww.clevelandcliffs.com

On August 15, 2017, the company announced it was dropping the Cliffs Natural Resources name and returning to its old brand name, Cleveland-Cliffs Inc.

Operations overview

Mining and Pelletizing

Cleveland-Cliffs manages and operates four iron ore mines located in Michigan and Minnesota. Cleveland-Cliffs also has a fifth mine in Michigan but it has been indefinitely idled. These mines produce various grades of iron ore pellets, including standard and fluxed, for use in blast furnaces as part of the steelmaking process. They also produce DR-grade pellets for use in Direct Reduced Iron applications. As the mines are located near the Great Lakes, the majority of the pellets are transported by rail to loading ports for shipments via vessel to steelmakers in North America.

Based on equity ownership in these mines, Cliffs' share of the annual rated production capacity is currently 21.2 million gross tons, representing 42 percent of total U.S. annual pellet capacity.[2]

During 2018, 2017, and 2016, Cleveland-Cliffs sold 20.6 million, 18.7 million and 18.2 million tons of iron ore pellets, respectively, from its share of the production from its mines.[2]

Metallics

In June 2017, Cleveland-Cliffs announced the construction of a Hot-Briquetted Iron (HBI) Facility in Toledo, Ohio. HBI is a form of direct reduced iron that can be used as an alternative to scrap iron. When used as a feedstock, HBI can enable an Electric Arc Furnace (EAF) to produce more valuable grades of steel. Cliffs expects its 1.9 million tons of HBI to partially replace the over 3 million metric tons of ore-based metallics that are imported into the Great Lakes region every year from Russia, Ukraine, Brazil and Venezuela, as well as nearly 20 million metric tons of scrap used in the Great Lakes area every year. The plant is expected to produce commercially by the end of 2020.

Steelmaking

With the acquisition of AK Steel Holding and the U.S. assets of ArcelorMittal in 2020, Cleveland-Cliffs entered the steelmaking market. It currently operates six fully-integrated steel mills in Burns Harbor, Indiana, East Chicago, Indiana (the former Inland Steel), Cleveland, Ohio, Middletown, Ohio, Dearborn, Michigan (the steelmaking side of the Ford River Rouge Complex), and in Riverdale, Illinois. Cleveland-Cliffs also operates two stainless steel mills in Butler, PA and Mansfield, Ohio, a rail mill in Steelton, PA, a plate mill in Coatesville, PA, and a number of finishing facilities nationwide. Cleveland-Cliffs also operates three cokemaking facilities in Monessen, PA, Warren, Ohio, and Follansbee, WV, as well as a coal mine in Princeton, WV.[3]

History

19th century

The firm's earliest predecessor was the Cleveland Iron Mining Company, founded in 1847 and chartered as a company by Michigan in 1850.[4] Samuel Mather and six Ohio-based associates had learned of rich iron-ore deposits recently discovered in the highlands of the Upper Peninsula of Michigan. Soon afterwards, the first Soo Locks opened in 1855, allowing iron ore to be shipped from Lake Superior to Lake Erie.

Technological improvements, such as the Bessemer furnace, made it possible for the North American Great Lakes to produce steel on an industrial scale. The south shore of Lake Erie was close to a supply of coal, making that region an efficient point for the construction of steel mills.

The final decades of the 19th century were a period of business consolidation from the partnership-sized businesses of an earlier generation to a new type of business firm, the stock-market-traded corporation intent on maximizing market share. The former Cleveland Iron Mining Co. was a survivor of this shakeout, purchasing many of its competitors. One key merger in 1890, with Jeptha Wade's Cliffs Iron Company led the combined firm to change its name to the Cleveland-Cliffs Iron Company.

The consolidated Cleveland-Cliffs invested substantial sums in operations to improve the logistics of iron-ore transport. In 1892, the firm built the Lake Superior and Ishpeming Railroad to carry iron ore from the mines directly to company-owned docks on Lake Superior.

20th century

William G. Mather, the son of Samuel, guided Cleveland-Cliffs as president and later as chairman of the board during the period of 1890–1947, participating in the transition from the hard-rock iron ore of Upper Michigan to the soft hematite of Minnesota's Mesabi Range and adjacent lodes.

Under Mather, Cleveland-Cliffs was a leader in the development of the classic-type lake freighter, a bulk-cargo vessel especially designed to carry Great Lakes commodities. The 618-foot-long (188 m) William G. Mather, launched in 1925, is a surviving example of this ship type. For almost a century, the black-hulled Cleveland-Cliffs ships were familiar sights on the upper lakes.

Demand for American iron ore hit peaks during World War I, World War II, and the post-WWII consumer boom. In 1933, Edward Greene (the son-in-law of Jeptha Homer Wade II) replaced William G. Mather as the head of the company. The Mather A Mine opened in the early 1940s and the Mather B shaft in the 1950s. As the Cold War continued, reserves of mineable hematite dwindled in northern Minnesota and Cleveland-Cliffs returned some of its focus to its traditional areas of interest around Marquette, Michigan, where new deposits of magnetite were opened. The first pellet plant was built at Eagle Mills in 1954, followed by the first grate/kiln plant at the Humboldt Mine in 1960. The Republic Mine was converted from a shaft mine to an open pit and concentrator in 1956 and a two-kiln pellet plant was added in 1962. The Empire Mine opened in 1963 and was expanded in the mid- and late-1970s; the Pioneer Pellet Plant was opened in 1965 to pelletize the underground ore from the Mather B Mine in Negaunee. In 1974 the Tilden Mine opened in Ishpeming. This mine was and is the only mine in the world with the ability to produce both hematite and magnetite pellets.

In 1970, a high-grade iron-ore mine was opened at Pannawonica in the Pilbara region of Western Australia, with a 200-kilometre (120 mi) rail line to processing facilities at Cape Lambert for which the residential township of Wickham was built. A pellet plant was built but ceased operation before 1980, following a sharp increase in the cost of diesel fuel.

During the 1970s, Cleveland-Cliffs had sizeable interests in uranium and shale oil fields, as well as the oil and gas drilling industries. It also had holdings in the forest products industry. This interests were disposed of in the 1980s when the company refocused its efforts on its core iron ore business.[5]

The periods following the recessions of 1974–75 and 1981–83 were harsh ones for the iron ore industry. Cleveland-Cliffs shrank its operations, closing the Mather B Mine and the Pioneer Pellet Plant and associated Ore Improvement Plant in 1979. The Humboldt Pellet Plant closed in 1981 and the Republic Mine was idled in 1981 and closed for good in 1996, when Cliffs began turning the associated tailings ponds into compensatory wetlands for its other properties. Over half of the Marquette Iron Range employees were laid off and, in 1984, Cliffs withdrew from the Great Lakes shipping industry.

21st century

In 2002, Ling-Temco-Vought (LTV) Steel, a partner in the Empire Mine managed by CCI, closed and the Empire was idled for six months. Cleveland-Cliffs stock plummeted. President George W. Bush enacted steel tariffs that helped domestically produced steel rebound.

In 2003 Cleveland-Cliffs, in a joint venture with Laiwu Steel Group of China, purchased the assets of bankrupt Eveleth Mines LLC and formed United Taconite.[6]

In the years following the introduction of steel tariffs, a sharp increase in steel production in China and other developing countries led to a significant upswing in the price of global iron ore. This trend benefited Cleveland-Cliffs after the two lean decades that had preceded it. To remain competitive, Cleveland-Cliffs decided to expand globally and to diversify into other minerals, leading to the acquisition of iron-ore properties in Brazil and Australia and coal properties in Australia and the US.[7]

In June 2007, Cleveland-Cliffs purchased its first domestic coal property. The coal company, called PinnOak, mines coal in Alabama and West Virginia and once belonged to U.S. Steel.[8] In line with its venture into coal, the company changed its name from Cleveland-Cliffs to Cliffs Natural Resources in October 2008.[9]

On January 11, 2011 it was reported that Consolidated Thompson Iron Mines Limited agreed to a US$4.9 billion takeover by Cliffs Natural Resources ($200 million of that was already owned, the cost includes debt (In September 2011 Thompson reported $230.56 million in long term with $566.07 million in total liabilities).[10] The deal saved both companies a combined US$75 million in operating expense (partly due to many of their facilities being adjacent to one another).[11] The deal gives Cliffs the large Bloom Lake iron ore mine in the province of Quebec, very close to Labrador.

On May 5, 2011, Cliffs Natural Resources was added to the Fortune 500 list of companies. Its ranking of 477 was based on the company's performance in 2010.[12]

The firm's CEO Joseph Carrabba announced in July 2013 that he would retire by December 31 of that year. Lead director James Kirsch was elected nonexecutive chairperson in his stead.[13] Gary Halverson, formerly interim chief operating officer of Barrick Gold Corporation Inc., was appointed president and chief operating officer in October 2013,[14] and president and chief executive officer in February 2014.[15]

2014 marked a significant shift in Cliffs' executive leadership and business strategy. Shareholders elected six new directors during its 2014 Annual Meeting of Shareholders, who appointed former Metals USA executive Lourenco Goncalves as chairman, president and CEO of Cliffs.[16] The reconstituted Board moved to shift the company's strategic objectives from global diversification to a renewed focus on strengthening its U.S. iron ore business.[2]

Cliffs announced plans in early 2016 to close one of its five U.S. iron ore mines, the Empire Mine near Marquette, Michigan. The closure, which will terminate the jobs of approximately 400 workers, was expected to take place before the end of the year.[17]

The company announced on August 15, 2017, it was dropping the Cliffs Natural Resources name and returning to its old brand name, Cleveland-Cliffs Inc.[18]

On March 13, 2020, the company acquired AK Steel Holding for $1.1 billion.[19][20][21]

On September 28, 2020, the company entered into a definitive agreement[22] to acquire the United States steel mill interests of a global firm, ArcelorMittal, for approximately $1.4 billion. With this acquisition and AK Steel, Cleveland-Cliffs will be the largest producer of flat-rolled steel and iron ore pellets in North America[23] with a capacity of 17 million tons of steel and 28 million long tons of pellets.[24] On November 25, 2020, Cleveland-Cliffs received approval from the Federal Trade Commission to proceed with the acqusition. The deal is expected to close in December 2020.[25]

Archives

Cleveland-Cliffs has deposited many of its pre-1981 papers in the Historical Collections of the Great Lakes at Bowling Green State University.[4] They have also deposited material at Central Upper Peninsula Archives at Northern Michigan University.

References
  1. "Cliffs Natural Resources Inc. Reports Fourth-Quarter and Full-Year 2014 Results" (Press release). Cliffs Natural Resources. February 2, 2015.
  2. http://d18rn0p25nwr6d.cloudfront.net/CIK-0000764065/79fb7c4c-83fd-4040-b5ca-d072f9b1833d.pdf
  3. "USA: Best in Class Performance in Steelmaking". www.clevelandcliffs.com. December 9, 2020. Retrieved December 9, 2020.
  4. "Cleveland Cliffs Iron Company: GLMS 62". Historical Collections of the Great Lakes. Bowling Green State University Library. Archived from the original on December 11, 2011.
  5. "Cleveland-Cliffs Inc". Encyclopedia of Cleveland History. Case Western Reserve University.
  6. "Jobs - Closed EVTAC Will Soon Reopen As United Taconite; ... 400 Jobs Regained". www.jobbankusa.com. Retrieved May 31, 2016.
  7. Reynolds, Terry S.; Dawson Virginia P. (2011). "Reinventing Cleveland-Cliffs, 2000–2006". Iron Will: Cleveland-Cliffs and the Mining of Iron Ore, 1847–2006. Detroit: Wayne State University Press. ISBN 0-8143-3511-X.
  8. "Cleveland-Cliffs Announces Acquisition of PinnOak Resources, Major Metallurgical Coal Producer" (Press release). Cleveland-Cliffs. June 14, 2007 – via PRNewswire.
  9. Baisden, Steve (October 18, 2008). "Cleveland-Cliffs Inc. Is Now Cliffs Natural Resources Inc" (PDF) (Press release). Cliffs Natural Resources.
  10. "Financial Statements for Consolidated Thompson Iron Mines Limited". Google Finance. Archived from the original on January 29, 2011.
  11. "Consolidated Thompson shares up sharply after Cliffs takeover deal". Stockhouse. January 12, 2010. Archived from the original on June 16, 2013.
  12. "Cliffs Natural Resources Joins Ranks of the Fortune 500" (Press release). Cliffs Natural Resources. May 6, 2011 – via PRNewswire.
  13. "Cliffs Natural CEO Joseph Carrabba to Retire by Year End". Mining Weekly. South Africa. July 9, 2013.
  14. "Cliffs Natural Resources Inc. Announces the Appointment of New President and Chief Operating Officer" (PDF) (Press release). Cliffs Natural Resources. October 25, 2013.
  15. Moran, Jessica & Persico, Patricia (February 13, 2014). "Cliffs Natural Resources Inc. Announces the Appointment of Gary B. Halverson as President and Chief Executive Officer" (PDF) (Press release). Cliffs Natural Resources.
  16. "Lourenco Goncalves Appointed Chairman, President and Chief Executive Officer of Cliffs Natural Resources Inc" (Press release). Cliffs Natural Resources. August 7, 2014 – via PRNewswire.
  17. "CEO: Empire Mine in Upper Peninsula will close". Detroit Free Press. Detroit. March 25, 2016.
  18. Suttell, Scott (August 15, 2017). "It's back to the future for Cliffs Natural Resources, which has returned to its old name: Cleveland-Cliffs Inc". Crain's Cleveland Business. Retrieved August 15, 2017.
  19. "Cleveland-Cliffs Completes Acquisition of AK Steel" (Press release). Business Wire. March 13, 2020.
  20. "Cleveland-Cliffs Completes Acquisition of AK Steel". IndustryWeek. March 13, 2020.
  21. "AK Steel now part of North America's largest steel producer: What the deal means". www.msn.com. Retrieved October 5, 2020.
  22. "Cleveland-Cliffs Announces Acquisition of ArcelorMittal USA". www.clevelandcliffs.com. September 28, 2020. Retrieved November 19, 2020.
  23. "Cleveland-Cliffs buys ArcelorMittal's US business for $1.4b". www.msn.com. Retrieved October 5, 2020.
  24. "Cleveland-Cliffs Inc. to Acquire ArcelorMittal USA". www.businesswire.com. September 28, 2020. Retrieved October 5, 2020.
  25. "Cleveland-Cliffs Receives Antitrust Clearance from US Department of Justice for the Acquisition of ArcelorMittal USA". www.clevelandcliffs.com. November 25, 2020. Retrieved December 4, 2020.
  • CCI in the Central Upper Peninsula Archives at Northern Michigan University
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