No 'mega investments' for Cliffs: Goncalves

The chief executive of Cleveland-Cliffs, one of the largest steelmakers in the US, is bucking the trend of his competitors by declaring he will not make "mega investments."

Integrated steelmaker Cleveland-Cliffs chief executive Lourenco Goncalves said unlike his peers and their billions of dollars in planned spending on new mills, his company is done with big investments for years.

"Cleveland-Cliffs did not and will not announce any of these mega investments," Goncalves said on a quarterly earnings call today. "Our last big capital project was our Cleveland Works revamp and we will not have any other capital projects of this magnitude until at least 2025."

The No. 5 Cleveland Works blast furnace has been down since the first quarter for a reline that will give it 20 years of additional service. It is expected to ramp back up to full production in August.

The announcement comes after Goncalves said in April that an electric arc furnace (EAF) could at some point be built at the company's Middletown, Ohio, integrated steel mill to supply electric steels to the automotive industry. At the time, he said the investment was contingent on automakers sticking to their electric vehicle plans. For now, the EAF seems to have been shelved.

Since taking over the steelmaking assets of integrated steelmakers AK Steel and ArcelorMittal USA and transforming the company from an iron ore miner to a major player in the US steel market, Goncalves has invested heavily in his newly acquired assets, something he says he knew would have to be done.

"When we acquired ArcelorMittal USA and ... immediately after that we acquired AK Steel, we knew we would have to spend significant money to bring them up to our own higher standards," Goncalves said. "That has been done, and done very well. By now we have all the equipment and technology in place to meet the needs of our most demanding customers in automotive and in other sectors."

Cleveland-Cliffs will focus on what Goncalves called "low dollar, high impact" projects such as the $30mn investment at his Zanesville, Ohio, mill to restart an idled facility and double production of nonoriented electrical steels with an additional 70,000 short tons (st)/yr.

Other steelmakers like Nucor, Steel Dynamics (SDI) and US Steel have announced a combined $7.9bn in new projects. Earlier this year electric arc furnace (EAF) steelmaker Nucor and integrated steelmaker US Steel both announced their own 3mn short tons (st)/yr flat-rolled EAF steel mills in West Virginia and Arkansas, respectively.

EAF steelmaker SDI announced this week that it would spend $2.2bn to build a 650,000 metric tonnes (t)/yr flat-rolled aluminum sheet mill and associated raw material hubs.

By Rye Druzin