Cleveland-Cliffs squeaks out a profit

Cleveland-Cliffs, an operator of steel mills, iron mines and metal recycling facilities, has reported net income of $9 million for this year’s second quarter, representing an improvement from its $53 million net loss in the first quarter of 2024.

The narrow profit was not enough to claim a positive earnings per share (EPS) figure for the Cleveland-based company, which has instead reported its second quarter EPS as $0 per diluted share.

Cliffs points to the indefinite idle of the Weirton, West Virginia, tinplate facility and loss on extinguishment of debt as contributing to charges and losses totaling $47 million during the quarter.

“Despite a less-than-ideal steel demand and weak pricing throughout the quarter, Cliffs operated very well,” Cliffs President and CEO Lourenco Goncalves says. “We met our cost reduction target and shipped the tonnage we had planned for. With that, we were able to pay down over $200 million in debt and also return approximately $125 million to our shareholders via share buybacks.

“We also took action on several matters that will lead to further long-term success. We are excited about the acquisition of Stelco that we announced last week. We have long admired Stelco and are eager to incorporate one of the lowest cost flat-rolled steelmaking assets in North America into our footprint.”

The CEO says Cliffs is engaging with Stelco stakeholders including the United Steelworkers (USW) and government officials.

“It is clear that they recognize the net benefit we will provide to Canada, Ontario, and the local communities where Stelco operates, particularly on the environmental and social fronts,” Goncalves says.

He points to the firm’s latest scores from the Maryland-based International Shareholder Services Inc. (ISS) as confirmation.

“In July, we achieved a 1 rating on both environmental and social, the best possible score and well ahead of our industry peers,” he says.

Regarding the Weirton location, which idled its tinplating operations, Goncalves says, “We are repurposing our Weirton tinplate plant to produce transformers. The transformers we will produce in Weirton will be sold directly to end users and other players in the electrical sector, supplying a market that desperately needs more transformers, even before artificial intelligence (AI) takes off in the near future and demand for electricity in our country starts to grow exponentially.”

The project will take advantage of the company's current under-utilized capacity to produce 30 percent to 40 percent more tonnage of U.S.-made grain-oriented electrical steels (GOES) produced exclusively by Cleveland-Cliffs in Butler, Pennsylvania, where the company has an electric arc furnace (EAF) mill.

“We are thrilled to bring back to work almost the entire workforce unjustly displaced by foreign produced tinplate dumped into the United States by countries like China, Japan, South Korea and the Netherlands," Goncalves says.

In a look at the financial quarter now underway, Goncalves says, “We expect to benefit in Q3 from another major step down in costs. Our largest end market—the automotive sector—remains in good shape, and orders from service center customers are expected to increase as seaborne steel imports dry up.

“Our recent growth announcements, both through M&A and downstream expansion, are clear examples that we are still in the early stages of the new Cleveland-Cliffs that was born in 2020 when we became a steel company. We are clearly not finished yet, and the best is yet to come.”