Cliffs buys AK Steel-Nucor-Stelco

HIGH-GRADE NI-CU-PT-PD-ZN-CR-AU-V-TI DISCOVERIES IN THE "RING OF FIRE"

NI 43-101 Update (September 2012): 11.1 Mt @ 1.68% Ni, 0.87% Cu, 0.89 gpt Pt and 3.09 gpt Pd and 0.18 gpt Au (Proven & Probable Reserves) / 8.9 Mt @ 1.10% Ni, 1.14% Cu, 1.16 gpt Pt and 3.49 gpt Pd and 0.30 gpt Au (Inferred Resource)

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Babjak1

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Cliffs buys AK Steel-Nucor-Stelco

posted on Dec 03, 2019 10:47AM

Looks like things are gearing up to be busier.

Cliffs buys AK Steel today and wants to take AK's Kentucky location and make pig iron.

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On the Canadian side 2 weeks ago, there was this announcement.

Nov. 15, 2019, "Canadian steelmaker Stelco plans to construct a new pig iron facility that will begin shipments by the third quarter of 2020.

The plant will be built alongside its integrated steel mill at Lake Erie Works near Hamilton, Ontario, and have an estimated 1mn t/yr capacity, Stelco said on 13 November. The Canadian steelmaker expects to begin shipments to customers following the relining of its Lake Erie blast furnacein the second quarter.........

Although there are no merchant pig iron producers in the US, Cleveland-Cliffs plans to kick off production of its 2mn t/yr hot briquetted iron (HBI) plant in Toledo, Ohio, by mid-2020 to meet growing demand for scrap substitutes from US EAF-based steelmakers."

Stelco said it signed a letter of intent to sell a "meaningful" portion of the new pig iron plant's first two years of production.

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Before, continuing to the Cliffs-AK Steel article, it was interesting that this purchase happened after the Nucor announcement,

Nucor announced that they want to build a new state of the art steel plate mill in Kentucky. It makes sense. Essar steel Algoma makes military plate for the USA defense, and I always found it weird that there was no American location for this. Nucor will need lots of chrome. (notice the 2022 date? The ROF better get moving.)

Looks like Cliffs wants to sell pig iron to this facility eventually, based on the comments about Ak's Kentucky site.

https://www.prnewswire.com/news-releases/nucor-to-build-new-plate-mill-in-kentucky-300819673.html

The plate mill will employ more than 400 full-time teammates at an average annual salary of $72,000, and is expected to be fully operational in 2022, pending permit and regulatory approvals.

https://www.cnn.com/2019/12/03/business/ak-steel-cleveland-cliff-deal/index.html

New York (CNN Business)Despite President Donald Trump's promise to revive the domestic steel industry through tariffs, AK Steel has decided its time to sell.

The Ohio steelmaker agreed to be purchased by mining company Cleveland-Cliffs (CLF) in a roughly $1 billion stock deal. Although it's a premium from AK Steel's recent valuation, that's less than half the stock's value from early 2018 after President Trump first announced he would place tariffs on steel and aluminum imports in an effort to help those industries. It's roughly a third of the price of the stock the day he took office.

The deal came the day after Trump threatened a new round of tariffs on steel and aluminum imports from Brazil and Argentina.

The Trump administration's original round of steel tariffs briefly led to a jump in domestic prices and increased American steel production. But prices have retreated since then as the increased production and decrease in demand put downward pressure on prices. Steel industry profits and stock prices have fallen along with the decline in prices. AK Steel recently reported a 96% drop in net income in the third quarter. In January it announced it would close a mill in Ashland, Kentucky, by the end of this year, cutting 230 jobs.

But the deal offers new hope to AK Steel and its workers according to Cleveland-Cliffs CEO Lourenco Goncalves. During a call with investors Tuesday he said the deal could allow the Ashland plant to reopen to produce pig iron, a steel component, at its blast furnaces. But he wouldn't give any firm date for restarting the mill, saying it would depend on discussions with possible customers.

"It all depends on the clients," he said. "We'd love to generate jobs there. But the clients need to understand that we don't work for free, and we have to earn our cost of capital."

Beyond the question of the Ashland mill's future, Goncalves vowed that the deal will make AK Steel far more profitable than it has been, both through refinancing its higher cost debt, cutting costs and having a supply of the iron ore pellets that Cleveland-Cliff produces. He noted that other steelmakers may continue to struggle, but the deal would give AK a competitive advantage in a troubled industry.