Cleveland-Cliffs Inc. remains fully committed toward the transformational project underway at its Middletown Works integrated facility in Middletown, Ohio. Cliffs was selected for award negotiations for up to $500 million in total funding from the Department of Energy toward the replacement of its Middletown blast furnace with a direct reduced iron (DRI) plant and two electric melting furnaces (EMF). The company continues to be in active negotiations with the Department of Energy related to the award-specifc terms and conditions. Cliffs remains optimistic about receiving final approvals and proceeding with this carbon-friendly and high-return project.
Lourenco Goncalves, Cliffs’ chairman, president and CEO, said: “We continue to move forward with award negotiations and project execution on the transformational Middletown project. The project confirms Cleveland-Cliffs as a world-class technological leader in steelmaking. Following our recent real-life trials with hydrogen reduction at Indiana Harbor and Middletown, and our well recognized success in Direct Reduction in Toledo, OH, this project is a natural next step. As we have done so well in working in partnership with our UAW-represented and USW-represented workforce throughout the entire Midwest from Minnesota to Pennsylvania, we are excited to be working in partnership with our IAM-represented steel workers in Middletown. Cleveland-Cliffs is honored to have the support of the Department of Energy on this transformational project, benefiting our workforce and the communities in which they live for decades to come."
Project Overview
If awarded, the Company would replace its existing blast furnace at its Middletown Works Facility in Middletown, Ohio with a 2.5mtpa Hydrogen-Ready Direct Reduced Iron (DRI) Plant and two 120 MW Electric Melting Furnaces (EMF) to feed molten iron to the existing infrastructure already on site, including the BOF, Caster, Hot Strip Mill, and various finishing facilities. Middletown will maintain its existing raw steel production capacity of approximately 3 million net tons per year and will no longer use coke for iron production. The EMF technology is well established and, together with the injection of hydrogen in blast furnaces, is a preferred route for meaningful reduction in carbon emissions for integrated steelmakers worldwide.
The process will dramatically reduce carbon emissions intensity, and will consolidate Middletown Works as the most advanced, lowest GHG emitting integrated iron and steel facility in the world. The facility will have the flexibility to be fueled by natural gas, which would reduce current ironmaking carbon intensity by over 50%; a mix of natural gas and clean Hydrogen; or clean Hydrogen, which would reduce current ironmaking carbon intensity by over 90%.
The new facility is expected to reduce production costs by approximately $150 per net ton of liquid steel produced, or a $450 million annual savings relative to the existing configuration. These savings do not consider any of the premiums expected to be generated from sales of low-carbon steel, such as Cliffs H2™ and Cliffs HMAX™.
This investment will secure 2,500 jobs at Middletown Works, where the unionized workforce is represented by the International Association of Machinists (IAM). The flex-fuel DRI plant and EMFs will require 170 additional jobs. The project will result in 1,200 building trades jobs during peak construction.
As the DRI facility can be fed with standard, blast-furnace grade pellets, the project will take full advantage of the Company’s United Steelworkers (USW) represented iron ore mining and pelletizing units. The new configuration also avoids the use of significant amounts of prime scrap metal, which Cliffs anticipates will become shorter in supply and higher in cost throughout the rest of the decade. The process will also allow Cliffs to maintain the level of quality of the steel produced, which would otherwise be degraded with increased scrap usage, maintaining the Company’s leading position in the automotive end market.
The net capital outlay for Cliffs will be approximately $1.3 billion, net of capital avoidance on the existing blast furnace and coke plants, over a 5-year period primarily starting in 2025 and expected to conclude by 2029. Cliffs’ portion will be funded using liquidity on hand and its own free cash flow generation. The Middletown site offers enough available space to construct the new facility without encumbering the existing processes, effectively eliminating interference risks during the construction and commissioning phase.
