$100 million investment

Cleveland-Cliffs Chairman, President and CEO Lourenco Goncalves address a comment to Congressman Pete Stauber and former Congressman Rick Nolan during Tuesday's official opening of a new $100 million DR-Grade processing plant at Northshore Mining in Silver Bay. The plant took 500,000 labor hours to build and puts the company in a strong position to provide the type of pellets electric arc furnace plants need.

Cleveland-Cliffs has acquired Ohio-based steelmaker AK Steel for $1.1 billion, securing both a long-term pellet customer and greater access to the automotive industry. The merger is expected to close in the first half of 2020.

As part of the deal, AK Steel will become a direct, wholly-owned subsidiary of Cleveland-Cliffs and led by Lourenco Goncalves, the chairman, president and CEO of Cliffs. AK Steel CEO Roger Newport is expected to retire when the closes, according to a joint press release from the companies.

“We are excited to be able to deliver real value to the shareholders of both Cliffs and AK Steel through a value enhancing and leverage-neutral transaction,” Goncalves said through a statement. “By combining the best-in-class quality of AK Steel’s assets and its enviable product mix with Cliffs’ debt profile and proven management team, we are creating a premier North American company, self-sufficient in iron ore pellets and geared toward high value-added steel products.”

The merger also provides Cliffs the potential to open a pig iron plant at the AK Steel plant in Ashland, Ken. On a call with investors Tuesday morning, Goncalves said the company will monitor customer interest and pricing before moving forward.

Converting Ashland to a pig iron plant would cost about $25 million to $30 million.

“We’ll see how things develop with HBI. If there’s interest and money, we’ll do it right away,” he said. “I would love to generate jobs there.”

This is a developing story, check back for updates.

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