Steel Mills

Cliffs said evaluating buy of NLMK USA assets: Bloomberg

Written by Ethan Bernard

Cleveland-Cliffs is eyeing a buy of NLMK USA’s Midwest assets, according to a report in Bloomberg.

The report, which cites people familiar with the matter, says Cliffs is in talks with NLMK about a potential deal. They also said the Cleveland-based steelmaker has signed a non-disclosure agreement (NDA).

NLMK USA operates an EAF steel mill in Portage, Ind. That facility, known as NLMK Indiana, makes hot-rolled coil and has capacity of 800,000 tons per year.

The company also runs a hot strip mill and cold reduction mill in Farrell, Pa., as well as a galvanizing facility in Sharon, Pa. Those facilities are known as NLMK Pennsylvania. Unlike the Portage mill, the Pennsylvania facilities do not have have onsite melt capacity.

The sources cited in the Bloomberg article said these assets could be valued at more than $500 million.

A spokesperson for Cliffs said that the company does not comment on M&A speculation. A spokesperson for NLMK said neither NLMK nor NLMK USA would comment on the matter.

100% melted and made in the USA?

NLMK USA has traditionally relied on imported slabs as well as material melted at the Portage EAF to meet its requirements. Section 232 tariffs resulted in the company shifting much of its slab supply away from Russia and toward Brazil, which is subject to quota rather than the 25% tariff.

The company has in the past taken legal actions against domestic mills over issues related to imported slabs and Section 232. A tie up with Cliffs would presumably mean that NLMK USA would no longer have issues sourcing slabs domestically. The Portage EAF would also provide Cliffs with an outlet for its scrap and direct-reduced iron (DRI).

Note that NLMK Indiana is located in between Cliffs’ Burns Harbor steel mill in Northwest Indiana as well as U.S. Steel’s Midwest Plant.

USS deal

Cliffs made an offer for U.S. Steel in August, which was rejected by the Pittsburgh-based steelmaker. A war of words has heated up between the two companies since USS accepted an offer valued at more than $14 billion from Japan’s Nippon Steel Corp. That deal still faces regulatory hurdles.

It was not clear whether or how a potential deal for NLMK USA might impact any deal for U.S. Steel.

Ethan Bernard

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