Cliffs talks DOE funding, blast furnace relining schedule

The smaller grant of up to $75 million was earmarked to help in production of electrical steels at the Butler Works in Western Pennsylvania.

The funding could be slashed as Elon Musk’s Department of Government Efficiency determines which grants to advance and which ones to terminate.

Chair, President, and CEO Lourenco Goncalves said the company is in talks with the DOE.

“President Trump’s administration clearly has different energy policy priorities than the Biden administration,” Goncalves said during the company’s first-quarter earnings call Thursday.

The scope of the larger Middletown project will likely shrink.

“We are working with the government to explore changes to the scope to better align with the administration’s energy priorities,” Goncalves said. “Such a change in scope would entail a substantially lower-cost project, one that does not assume availability of massive amounts of hydrogen, and would instead rely on readily available and more economical fossil fuels.”

“We will hopefully have more to share on this project in the near future, but it is fair to assume that the Middletown project, as announced in 2024, will be substantially altered,” he said.

Goncalves said the Butler mill is critical to supporting energy infrastructure.

“The induction and reheat furnace project is highly accretive, with a favorable payback,” Goncalves said of Butler. “At a $75-million DOE grant amount, it is not something we feel at risk.”

“Importantly, the Butler project directly supports the US energy dominance goals of President Trump’s administration,” Goncalves said. “As the only grain-oriented electrical steel producing mill in the United States, Butler Works is critical to energy security in our country. This project will expand the capacity and capabilities of Butler Works in response to the evolving demands of the transformer industry.”

“We are still big fans of this project for its economics, low capital burden, and enhancement of our most profitable business, the production of GOES, grain-oriented electrical steels,” he said.

Relining blast furnaces

The Cleveland-based steelmaker plans to cut 2025 capex guidance from $700 million to $625 million.

It expects to reline several blast furnaces over the coming years on an adjusted timetable.

The next one is the Burns Harbor reline, previously slated for 2026, is now going to be in 2027, the company said.

“We’re going to reline blast furnace,” Goncalves said Thursday. “The blast furnace of Middletown will be relined now that the project is changing scope. The blast furnace at Burns Harbor will be relined. We just relined one in Cleveland. So, we’ll continue to reline blast furnaces. This is not out of the question. It’s beyond consideration. It’s part of the ongoing business.”

Going forward, the company will continue to rely on blast furnaces, Goncalves said.

“Blast furnaces are here to stay, like they are there to stay in Japan, there to stay in Korea, there to stay in Europe, there to stay in Brazil,” he said. “We are going to continue to compete against the EAF.”

He said the cost reductions and idled facilities announced this week will help keep the company competitive with EAFs.

“We’re going to prove that going forward now that I got rid of the non-contributors,” he added.