Cleveland-Cliffs, which owns several Minnesota and Michigan iron ore mines and taconite plants, will buy steelmaker AK Steel in a $1.1 billion stock deal, the companies announced Tuesday morning.
The move allows Cliffs to own AK Steel’s existing blast furnaces and electric arc furnaces, and supply the furnaces with its own iron ore pellets. Cliffs had long sold its pellets to other steelmakers.
That “vertically integrated steel company” model is used by U.S. Steel, which mines taconite and produces iron ore pellets at Keetac in Keewatin and Minntac in Mountain Iron that then supplies its blast furnaces throughout the U.S., and ArcelorMittal, which supplies its Indiana Harbor blast furnaces with pellets from its mines and plants at Hibtac in Hibbing and Minorca in Virginia.
“We’re going to basically replicate what Arcelormittal does out of Hibbing and Minorca and what U.S. Steel does out of Keetac and Minntac,” Cliffs President and CEO Lourenco Goncalves said in a conference call with investors Tuesday morning.
On Minnesota’s Iron Range, Cliffs mines taconite and produces iron ore pellets at Northshore Mining in Babbitt and Silver Bay and United Taconite in Eveleth and Forbes. Cliffs also owns and operates the Tilden mine in Michigan’s Upper Peninsula.
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