CLEVELAND, Ohio – Cleveland-Cliffs is wavering on whether to move forward with plans announced earlier this year to decarbonize its Middletown Works, a decision it said at the time would keep 2,500 jobs at the plant and produce substantial savings.
Cleveland-Cliffs said in March that the funding would largely come out of $6 billion that the Biden Administration earmarked for slashing emissions in the industrial sector. Cleveland-Cliffs said that Department of Energy selected it for award.
But Cleveland-Cliffs CEO Lourenco Goncalves told Politico in a story published late Friday that the company’s commitment is in jeopardy.
“I’m still trying to figure out if it even makes sense with the grants because the grant is $500 million, the entire project is $1.6 billion. I still have to pony up $1.1 billion,” Goncalves told the news outlet. “I’m not going to do it if the government and the general public are not really supportive of that.”
He said that even with the help of the federal grant, the steel produced would carry higher costs, a price buyers – mostly in the auto industry – he said are unwilling to pay.
“There are only two ways to fix that: One is they change their minds and pay. So far, not very successful. The other way is for me to go back to what I was before and emit more,” Goncalves said. “That’s a decision that I’m going to have to make very soon.”
The plan for the Middletown Works, located between Cincinnati and Dayton, calls for replacing the blast furnace, which the runs on a derivative of coal called coke, and converting Middletown into a Direct Reduced Iron Plant with two electric melting furnaces.
This change would remove coke from the process, and instead Cleveland-Cliffs would use natural gas, hydrogen or a mix of the two. Running on natural gas alone would slash carbon emissions by 50%. But if it ran on just hydrogen, emissions could be cut by more than 90%, the company said.
Cleveland-Cliffs’ earlier announcement said this pivot would keep 2,500 jobs at Middletown Works, and the plant would continue to produce 3 million tons of steel per year at an annual savings of $450 million.
The conversion was expected to be finished in 2029.
