Cleveland-Cliffs has finalized a $775 million deal that allows it to enter the scrap business and make more recycled steel.
The Cleveland-based steelmaker, one of Northwest Indiana's largest industrial employers, completed its purchase of Ferrous Processing and Trading Co., a Detroit-based distributor of prime ferrous scrap. The company processes about 3 million tons of scrap per year at 22 scrap processing facilities around the country.
It has about 15% of the domestic market with about 90% of revenues coming from the Midwest, mainly Michigan and Ohio. The company pulled in $100 million in EBITDA over the last 12 months.
“The way the scrap business historically worked has now changed for good," Cleveland-Cliffs Chairman, President and CEO Lourenco Goncalves said. "To drive this, we have already begun the dialogue with our steel customers with a focus on increasing our scrap offtake from them under a real closed-loop proposition.”
Ferrous Processing and Trading Co., which was just named Fastmarkets’ 2021 Scrap Company of the Year, is now a wholly owned subsidiary of Cleveland-Cliffs, the largest flat-rolled producer of steel in North America. Long a mine operator, it now employs more than 25,000 workers across the country.
Cleveland-Cliffs plans to use the new source of scrap to maximize production at its existing electric arc furnaces and basic oxygen furnaces.