Cleveland-Cliffs Announces $2.5 Billion Acquisition of Canadian Steel Producer

CLEVELAND, Ohio — Cleveland-Cliffs will once again expand through acquisition, announcing On Monday, it was announced that the company would buy Canadian steel producer Stelco for $2.5 billion.

The purchase expands Cliffs’ presence in the Great Lakes, allowing the Cleveland-based company to hire another 1,800 workers. Stelco has facilities in Hamilton and Nanticoke, Ont.

Cliffs said Monday it will pay C$70 per Stelco share, which includes C$60 in cash and C$10 worth of Cliffs shares. The total value of the deal is C$2.5 billion, or C$3.4 billion.

The combined company will produce 19 tonnes of steel a year, according to a Cliffs presentation, and employ more than 30,000 people. The sale is expected to close by the end of 2024, subject to regulatory approval.

Cliff CEO Lourenco Goncalves praised Stelco during a conference call with investors on Monday, saying he has long admired the work of Stelco CEO Alan Kestenbaum, who has turned the Canadian company into a low-cost steelmaker.

Goncalves also praised Stelco’s margins. Stelco’s cost of producing one ton of steel is $480, compared with the U.S. average of $645, according to Cliffs.

Goncalves said Stelco has a great relationship with the United Steelworkers union and that the company has significantly reduced its carbon footprint. Both of those things, Goncalves said, make Cliffs and Stelco similar.

USW President David McCall also praised the sale in a press release, saying Cliffs “has a proven track record of making sure the union always has a seat at the bargaining table, and this deal was no exception.”

Goncalves told investors Monday there would be no layoffs and that Stelco would retain its Canadian management team. The Stelco brand would continue to operate.

Cliffs is no stranger to acquisitions. The company was primarily in the iron ore business but transformed itself into a vertically integrated steelmaker by buying other companies.

Cliffs acquired AK Steel for $3 billion and ArcelorMittal USA for $3.3 billion, both companies formed in 2020.

Goncalves said Stelco “is a plug-and-play asset for Cleveland-Cliffs.” He said Cliffs had to make expensive investments in ArcelorMittal’s operations after buying them, but that Stelco would not need that level of investment.

Cliffs also tried to buy Pittsburgh-based U.S. Steel at any cost in 2023. However, Cliffs lost the bid to Japanese company Nippon Steel, which agreed to buy U.S. Steel for $14.1 billion.

The sale of US Steel to Nippon has been met with heavy criticism from both sides of the political spectrum and has yet to be finalized.

Sean McDonnell is a business reporter cleveland.com and Plain Dealer. You can contact him at [email protected].