Two projects proposed by Cleveland-Cliffs have been selected for award negotiations for up to $575 million in total funding from the United States Department of Energy (DOE) to pursue two decarbonization investments at Middletown Works in Ohio and Butler Works in Pennsylvania. Following successful negotiations, these projects will allow for substantial reductions in greenhouse gas (GHG) emissions across the Cliffs’ footprint and will also create efficiencies that meaningfully drive down operating costs while securing and growing good-paying Union jobs. This federal funding is being made available through DOE’s Industrial Demonstrations Program funded through the Infrastructure Investment and Jobs Act and the Inflation Reduction Act.
Middletown Works
If awarded, the company would replace its existing blast furnace at its Middletown Works Facility in Middletown, Ohio, with a 2.5 mtpa hydrogen-ready direct reduced iron (DRI) plant and two 120 MW electric melting furnaces (EMF) to feed molten iron to the existing infrastructure already on site, including the BOF, caster, hot strip mill, and various finishing facilities.
Middletown will maintain its existing raw steel production capacity of 3 million net tons per year and will no longer use coke for iron production. The EMF technology is well established and, together with the injection of hydrogen in blast furnaces, is a preferred route for meaningful reduction in carbon emissions for integrated steelmakers worldwide.
The process will dramatically reduce carbon emissions intensity, and will consolidate Middletown Works as the most advanced, lowest GHG emitting integrated iron and steel facility in the world. The facility will have the flexibility to be fueled by natural gas, which would reduce current ironmaking carbon intensity by over 50 percent; a mix of natural gas and clean hydrogen; or clean hydrogen, which would reduce current ironmaking carbon intensity by over 90 percent.
Hydrogen demand from this “flex-fuel” DRI plant stands to support DOE’s “Hydrogen Earthshot” and DOE’s Hydrogen Hub initiatives.
The new facility is expected to reduce production costs by about $150 per net ton of liquid steel produced, or a $450 million annual savings relative to the existing configuration. These savings do not consider any of the premiums expected to be generated from sales of low-carbon steel, such as Cliffs H2 and Cliffs HMAX.
This investment will secure 2,500 jobs at Middletown Works, where the unionized workforce is represented by the International Association of Machinists (IAM). The flex-fuel DRI plant and EMFs will require 170 additional jobs.
As the DRI facility can be fed with standard, blast-furnace grade pellets, the project will take full advantage of the United Steelworkers-represented iron ore mining and pelletizing units that Cliffs operates.
The new configuration also avoids the use of significant amounts of prime scrap metal, which Cliffs anticipates will become shorter in supply and higher in cost throughout the rest of the decade. The process will also allow Cliffs to maintain the level of quality of the steel produced, which would otherwise be degraded with increased scrap usage, maintaining the company’s strong position in the automotive end market.
The net capital outlay for Cliffs is estimated at $1.3 billion, net of capital avoidance on the existing blast furnace and coke plants, over a five-year period from 2025 through 2029. Cliffs’ portion will be funded using liquidity on hand and its own free cash flow generation.
The Middletown steelworks offers sufficient space to construct the new facility without encumbering the existing processes, effectively eliminating interference risks during the construction and commissioning phase. Cliffs credits both Midrex and Hatch for their collaboration in developing the initial planning for this transformational project.
Butler Works
If awarded, Cliffs would also replace two of its existing natural-gas fired high-temperature slab reheat furnaces at Butler Works in Butler, Pennsylvania, with four electrified induction Slab reheat furnaces, to bring optimum efficiency to its production of electrical steels, a critical component of the electrification of America and the greening of the electrical grid.
The primary benefits of this project are lower carbon emissions, substantially reduced energy costs and improvements in slab quality, allowing for about 25,000 tons of additional production capacity from improved process yield. This investment will secure 1,300 jobs at Butler Works, where employees are represented by the United Auto Workers (UAW).
The company also expects to generate $80 million in annual cost savings and yield improvements following the installation of the new equipment. The net cost of this facility to Cliffs is expected to be $100 million spent over a four-year period.
Lourenco Goncalves, Cliffs’ chairman, president, and CEO, stated, “Completion of our $1 billion clean hydrogen-ready Toledo DR plant through the depths of COVID stood as strong evidence of Cliffs’ expertise and resolve to drive down emissions. We are grateful for the support of the Department of Energy and its recognition of Cleveland-Cliffs’ leadership in steel decarbonization. Through these selections, DOE recognized and rewarded Cleveland-Cliffs’ track record of successfully executing large capital projects that result in operational efficiencies and lower GHG emissions.”
The investment at Middletown Works, he claimed, "is confirmation that Cleveland-Cliffs is the benchmark for iron and steelmaking technology in the world, ahead of Japan, Korea, Europe and China. Our experience in using natural gas has seamlessly catalyzed our transition into using hydrogen.
