Cleveland-Cliffs to shut down Indiana Harbor blast furnace
Like its Northshore Mining idling, the company said it's using more scrap and more electric-arc furnaces instead of traditional blast furnaces.
DULUTH — Cleveland-Cliffs will idle a blast furnace at Indiana Harbor, its latest production adjustment as it uses more electric-arc furnaces and more scrap metal to make steel.
Blast furnace 4 at Cliffs' East Chicago, Indiana, facility is set to "indefinitely idle" within the next two months, the iron ore mining and steelmaking company said in a news release Monday morning. The move leaves just one blast furnace at the facility — blast furnace 7. Indiana Harbor's Blast furnace 3 was already idled.
"By concentrating the operation and maximizing productivity at (Indiana Harbor's blast furnace 7) we are improving our carbon footprint and, at the same time, lowering our cost structure for the same level of steel production and shipments," Cliffs CEO Lourenco Goncalves said in the release.
Employees working on the blast furnace will move to other open positions at Indiana Harbor.
"The company will continue normal operations of the entire Indiana Harbor Works, including its two steel shops, the hot strip mill and all its finishing facilities, as well as the nearby Riverdale Works," the release said.
Under previous owner ArcelorMittal, Indiana Harbor's blast furnaces were supplied with pellets from Minorca Mine in Virginia, which was also owned by ArcelorMittal until Cliffs purchased ArcelorMittal USA in 2020.
In response to the News Tribune's questions on what the blast furnace idling would mean for the company's mines and pellet plants in Northeastern Minnesota, Cliffs spokesperson Patricia Persico said in an email that company "does not disclose the details of our raw material supply chain as it relates to which iron ore mines supply our blast furnaces."
Earlier this month, Cliffs announced it would be idling Northshore Mining in Silver Bay and Babbitt from May 1 until at least this fall for some of the same reasons.
The company said it was using more scrap in its electric-arc furnaces, lessening the need for traditional taconite pellets. It was also shifting production of its direct reduce iron pellets from Northshore to Minorca. Those pellets are turned into hot-briquetted iron, or HBI, at a new facility in Toledo, Ohio and that HBI is then mixed with scrap in electric-arc furnaces to produce steel.
Last year, Cliffs announced it was buying Detroit-based Ferrous Processing and Trading Company for $775 million. At the time, the company processes 3 million tons of scrap each year — automotive and industrial — and half of that is "prime grade."
Northshore was also idled because Cliffs believes it's paying too much in royalties to the Mesabi Trust, a publicly traded trust that collects royalties from Cliffs based on the volume of shipments from Northshore, the price of taconite and the amount of taconite that was mined from land owned by the trust — namely the Peter Mitchell Mine in Babbitt, which supplies Northshore with ore.
"Today’s announcement about (Indiana Harbor blast furnace 4) is not related to the temporary idling of Northshore Mining," Persico said. "As previously announced, the decision to temporarily idle Northshore was motivated by the structure of the royalty agreement put in place more than 30 years ago, which is now being exploited to gouge Cleveland-Cliffs."
In a filing with the U.S. Securities and Exchange Commission last week , the Mesabi Trust hit back at Cliffs
"Cliffs has not notified Mesabi Trust of any of the aforementioned operational changes," the Mesabi Trust said. "Further, Cliffs has not recently requested any changes to the royalty structure, which is governed by a 1989 royalty agreement, and Cliffs has historically failed to engage in meaningful negotiations requested by Mesabi Trust to address the interpretations of the royalty structure."