US steelmaker Cleveland-Cliffs agreed to buy scrap metal recycler Ferrous Processing and Trading (FPT) for $775mn to secure prime scrap supply.
Detroit, Michigan-based FPT operates 22 scrap processing facilities across Ohio, Michigan, Canada, Tennessee and Florida. About 90pc of its revenue originates from its Midwest locations, primarily in Michigan and Ohio, placing it in the same region as Cleveland-Cliffs' mills.
FPT is also one of the largest processors and distributors of prime scrap in the US, representing approximately 15pc of the domestic merchant prime scrap market, according to Cleveland-Cliffs. FPT processes approximately 3mn gross tons (gt) of scrap per year, approximately half of which is prime grade scrap.
Cleveland-Cliffs with the FPT deal joins EAF steelmakers Nucor and Steel Dynamics as flat-rolled mills that own their own recycling operations. The acquisition will send ripples throughout the Midwest market amid the increasingly competitive landscape for prime scrap supply as FPT is a major supplier to numerous large EAF mills in the region.
FPT's prime scrap market position increases Cleveland-Cliffs ability to source high-yielding prime grades, demand for which is poised to rise as US EAF-based sheet capacity grows.
FPT also operates five shredders across Michigan, Ohio and Miami, Florida. Cleveland-Cliffs expects to leverage long-standing flat-rolled automotive customer relationships into recycling partnerships.
The acquisition is expected to close in the fourth quarter of 2021.
The move by is one of the most significant scrap acquisitions for a US steelmaker since 2007-08 when SDI acquired OmniSource for $1bn and Nucor bought David J Joseph for $1.4bn amid a rapid rise in commodity prices.
Cleveland-Cliffs is the largest flat-rolled steelmaker in North America following the acquisitions of ArcelorMittal USA in 2020 and AK Steel in 2019.
Its flat-rolled carbon steel capacity is blast furnace based, but the steelmaker had hinted at potentially adding scrap-intensive EAF capacity.
