Cliffs Natural Resources to Build Iron Ore Plant for U.S. EAF Market

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Researched by Industrial Info Resources (Sugar Land, Texas)--With its eye on U.S. electric arc furnace (EAF) steel producers, Cliffs Natural Resources Incorporated (NYSE:CLF) (Cleveland, Ohio) plans to build its first planned direct-reduced-iron, hot briquetted iron ore production plant. Cliffs announced on June 15 that it picked a brownfield site in Toledo, Ohio, for the $700 million project.

The company said in a press statement that it was in discussions with several passive financial partners for the project at the Toledo Ironville Terminal site, with plans to break ground in early 2018, and for commercial production to begin in mid-2020. Ohio and Toledo governmental entities have offered $30 million in grants and incentives for the project. Midrex Technologies, a wholly owned subsidiary of Kobe Steel, Limited, Japan, will design, engineer and procure equipment for the project.

The 1.6 million-ton-per-year plant will serve the EAF steel market in the Great Lakes region. For more information, see Industrial Info's project report.

Cliffs Natural Resources has long served blast-furnace integrated steel producers, but such is not the case with the EAF industry, Chief Executive Officer C. Lourenco Goncalves said during the company's first-quarter earnings presentation in late April.

"Looking at the domestic steel market as of now, we recognize that our primary customer base, the blast furnace integrated steel industry, makes up for less than half of the total steel output in United States. And while blast furnaces continue to be efficient and competitive in this market from a quality and specification standpoint, the larger portion of the domestic steel market, the EAFs, are still largely unserved by Cliffs," Goncalves said. "This evolution of the steel business has a lot of call-backs to Cliffs pioneering the pelletizing process 70 years ago, and it must continue to evolve."

He added: "This certainly is no reflection of a lesser commitment to our blast-furnace core customer base. One of our top priorities remains protecting and enhancing this core business. We'll continue to deliver high-quality, custom-made [iron ore] pellets that allow our customers to remain competitive in both quality and efficiency."

In May, Cliffs Natural Resources announced that production of its new Mustang superflux iron ore pellets had begun at its United Taconite mine in Minnesota. Cliffs said it invested $75 million to build a new storage facility, silos, a limestone crusher, conveyors and rail infrastructure to support the production of the Mustang pellet. The pellets will be delivered to ArcelorMittal, Cliffs Natural Resources' largest customer. For more information, see Industrial Info's project report.

In April, Goncalves said that the decision to fund the Mustang project was a "no brainer," adding: "Like we did with the Mustang project, we must evaluate all of these opportunities very seriously and apply high hurdles when it comes to return on investment."

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.