Integrated steelmaker Cleveland-Cliffs has added to its mining and steelmaking assets by purchasing the majority of ArcelorMittal's US assets.
The deal will give Cleveland-Cliffs, which until earlier this year was focused on iron ore mining and steel feedstocks, the largest flat-rolled sheet and plate steel footprint in North America with approximately 16.5mn short tons (st) of combined flat-rolled shipments in 2019. Electric arc furnace (EAF) steelmaker Nucor, the largest shipper of flat-rolled products in 2019, shipped 12.7mn st of sheet and plate products.
The purchase also expands Cleveland-Cliffs' iron ore assets and further integrates its iron ore and soon-to-be-operational hot-briquetted iron (HBI) plant with steelmaking assets in the US. The deal is expected to be completed by the end of 2020.
Cleveland-Cliffs expects the combined company to more than double its current exposure to the automotive market, from more than 3mn st/yr to over 7mn st/yr.
Most market participants seemed surprised by the acquisition, which takes place as the market climbs out of a deep pricing hole set back in mid-August, when hot-rolled coil (HRC) spot prices fell as low as $450/st. The Argus HRC assessment has since risen by 32pc to $595/st for the week ending 22 September.
One market participant was unsurprised by the merger, saying it fully integrates the raw material supplies with the steelmaking capacity of the combined company.
Cleveland-Cliffs' acquisition will include ArcelorMittal's blast furnace steelmaking operations at Indiana Harbor and Burns Harbor, Indiana, its blast furnace operations in Cleveland, Ohio, electric arc furnace (EAF) steelmaking facilities in Coatesville and Steelton, Pennsylvania, and its compact strip mill in Riverdale, Illinois.
In total the six facilities have an approximate steelmaking capacity of 19.2mn st/yr. Currently the 1.51 mn st/yr No 6 blast furnace in Cleveland — one of two at the mill — remains idled after it was closed because of demand loss related to the Covid-19 pandemic.
Cleveland-Cliffs will also buy eight finishing facilities, including the I/N Tek continuous cold-rolling plant with 2.6mn st/yr capacity, the Gary plate finishing facility, and the hot-dip galvanizing facilities in Columbus, Ohio and Jackson, Mississippi, which combined have an annual production rate of approximately 800,000t.
ArcelorMittal will also sell its 62.3pc stake in the Hibbing mine in Minnesota, growing Cleveland-Cliffs' stake in the mine to 85.3pc. Integrated steelmaker US Steel owns the remainder of the mine. ArcelorMittal will also sell its iron ore mine in Minorca, Minnesota, which supplies its iron ore to the No 7 blast furnace at Indiana Harbor, to Cleveland-Cliffs.
The company will also purchase all of ArcelorMittal's coking coal and coke plant operations, including the Monessen, Pennsylvania, coke plant, the met coal converter in Warren, Ohio, and the coking and pulverized coal injection coal mine in Princeton, West Virginia.
The deal is the second major acquisition this year for Cleveland-Cliffs, after it purchased automotive-focused integrated steelmaker AK Steel in February.
ArcelorMittal will retain its steelmaking facilities in Canada, Mexico, and its stake in the joint venture rolling mill in Calvert, Alabama, where it recently announced it would build an EAF to supply the mill. ArcelorMittal reiterated its intent to build the Alabama EAF.
The deal is valued at $3.3bn, which includes $1.4bn in cash and stock Cleveland-Cliffs will spend to purchase the assets, with the remainder being debt.
