Cleveland-Cliffs closes on acquisition of Stelco

The purchase adds to Cliffs’ portfolio with Stelco’s integrated steelmaking Lake Erie Works in Nanticoke, Ontario, and the downstream and cokemaking Hamilton Works.

“Today marks a transformative step forward for Cleveland-Cliffs,” said Lourenco Goncalves, chairman, president, and CEO of the Cleveland-based company. “By bringing Stelco into the Cliffs family, we are building on our commitment to integrated steelmaking and good-paying union jobs in North America.”

He said the merger lowers the company’s cost structure and further diversifies its customer base with the expanded geographical presence in Canada.

Goncalves has previously discussed synergies of the merger, and CRU Principal Analyst Josh Spoores also previously shared his thoughts on the deal’s synergies and risks.

Cliffs will report its third-quarter earnings results on Tuesday and discuss the deal in more detail at that time.

Continuing the Stelco legacy

Stelco will operate as a wholly owned subsidiary of Cliffs, maintaining its name and legacy, Cliffs said.

Goncalves thanked the Canadian government for welcoming Cliffs. “We take our permission to operate very seriously and aim to continue the Stelco legacy with dedication and purpose,” he noted.

Recall that Alan Kestenbaum’s Bedrock Industries acquired Stelco in 2017 for less than CA$500 million after a bankruptcy restructuring process. Prior to that, it had operated as U.S. Steel Canada after USS purchased a much larger Stelco for $1.1 billion in 2007.

In a separate statement on Friday, Kestenbaum reflected on his time as executive chairman and CEO of Stelco: “Over the past seven years, since the acquisition of the company, we have worked tirelessly with all of our stakeholders – our customers, our suppliers, the United Steelworkers, all of our valued employees and investors who believed in us – to restore Stelco as a North American leader in the steel industry and an iconic Canadian company.”

He cited improvements in operations and competitiveness as drivers that allowed the company to have industry-leading adjusted EBITDA margins.

Kestenbaum expressed his confidence in Cliffs’ taking over the Canadian company: “Cliffs, led by industry leader Lourenco Goncalves, has made it clear both in words and in practice, that they share many of the core values that have led to Stelco’s recent success, and I am confident that the strong legacy of Stelco, our partners and our employees are in very good and strong hands going forward.”