CLEVELAND - Cleveland-Cliffs Inc. (NYSE: NYSE:CLF), a prominent North American steel producer, is in talks to secure up to $575 million in funding from the U.S. Department of Energy (DOE) for two major decarbonization projects at its facilities in Ohio and Pennsylvania.
The funding, part of the DOE's Industrial Demonstrations Program under the Infrastructure Investment and Jobs Act and the Inflation Reduction Act, aims to significantly reduce greenhouse gas (GHG) emissions and enhance operational efficiencies.
The company's Middletown Works in Ohio could receive up to $500 million to replace its current blast furnace with a 2.5 million tons per annum (mtpa) Hydrogen-Ready Direct Reduced Iron (DRI) plant and two 120 MW Electric Melting Furnaces (EMF).
This transition is expected to cut the site's ironmaking carbon intensity by over 50% when fueled by natural gas, and by over 90% if operated with clean hydrogen. The new facility would maintain the existing steel production capacity while saving approximately $450 million annually in production costs, not accounting for potential premium sales of low-carbon steel products.
The investment is projected to preserve 2,500 jobs at Middletown Works and create an additional 170 positions, with the construction phase generating around 1,200 building trades jobs. The project, leveraging the company's iron ore mining and pelletizing operations, will also avoid reliance on prime scrap metal, which is expected to become scarce and expensive.
The Butler Works in Pennsylvania is slated for a grant of up to $75 million to replace two natural-gas fired reheat furnaces with four Electrified Induction Slab Reheat Furnaces. This upgrade will improve energy efficiency, reduce carbon emissions, and enhance slab quality, potentially increasing production capacity by 25,000 tons. The initiative will maintain 1,300 jobs and require 220 construction jobs at its peak.
Lourenco Goncalves, Chairman, President, and CEO of Cleveland-Cliffs, expressed gratitude for the DOE's support and emphasized the company's leadership in steel decarbonization. The investments in Middletown and Butler Works are seen as pivotal for the company's future and the industrial strength of the United States, furthering union jobs and shareholder interests.
The net capital outlay for the Middletown project is estimated at $1.3 billion, spanning a 5-year period from 2025 to 2029, with no significant capital spending expected in 2024. The Butler Works project is projected to cost Cliffs $100 million over 4 years.
U.S. Senator Sherrod Brown lauded the partnership, highlighting its alignment with federal legislation aimed at bolstering Ohio's manufacturing and innovation leadership.
This announcement is based on a press release statement from Cleveland-Cliffs Inc.
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