Northshore Mining to Idle

[Guest]

Cleveland Cliffs is making some prudent moves. Instead of spending precious capital repairing and maintaining numerous facilites, they are identifying their best assets and investing in just them.

Which is why I don't see them buying a fleet. They can dictate terms and pick the low bidder as there aren't alot of other demands for lift.

Save the cash for the mines and mills.

[Guest]

Very interesting discussion here. Thank you to everyone who has posted - so much valuable information about the economic side of things that can be very difficult to understand from an outside perspective. I'd also like to extend my concern for everyone who had a job affected by the recent changes.

While reading through others' comments, I had a few questions:

1. It has been stated that EAF technology uses a mixture of scrap metal and HBI pellets to produce steel. From prior comments, it seems as if we cannot necessarily count on boats to be carrying more DR pellets and/or HBI in the future than they do right now. Where does scrap metal come from? From my understanding, and as one user previously alluded to, at least some of this scrap is tied to the blast furnaces. With scrap and/or ore needed for any kind of steelmaking process, blast furnace or EAF, wouldn't it figure that reserves in the Minnesota and Michigan mines will be needed in some capacity? Even though southern states are getting their fair share of new EAF opportunities, there are many of these minimills to be serviced around the Great Lakes region, as another user stated.

2. How much boat traffic did the tonnage needed by Indiana Harbor No. 4 represent? I know No. 7 was the bigger operation.

3. The idling of No. 4 certainly isn't good news, but with the CEO's talk about focusing solely on No. 7 to maximize its capabilities, might this be a really good sign for the long-term longevity of this furnace? I believe it received upgrades in the past decade as well.

4. The CEO also mentions "operational improvements that include adding hot-briquetted iron to the blast furnaces and maximizing the use of scrap in basic oxygen furnaces." Which furnace locations is he referring to? Great Lakes?

5. What is the outlook for cargoes like grain, cement, stone, salt, turbine parts, etc.? I never hear much long-term discussion about them.

6. Looking through rose-colored glasses, is there any reason to be optimistic about the Great Lakes steel industry as far as boats are concerned? I know the market has been decreasing for several decades, but some hope for sustainable traffic - even in smaller numbers - would certainly be a relief.

[Guest]

The HBI from Toledo was originally supposed to be sold to minimill operators as a "clean" iron feed stock for electric arc furnaces, but that was before Cliffs was itself a steel producer. I wonder if the customer base for Toledo's HBI has since turned their back on Cliffs somewhat as they are now in competition with them in the steel market, or if Cliffs has shut them out as they don't want to, again, make things easier for a competitor. That, or Toledo just produces more than Cliffs currently sells and they need to do something with the surplus iron.

Whatever the case may be, it seems like a very expensive thing to do with a clean iron product like HBI to feed it into a blast furnace. Oh well, if it keeps the boats coming to and from Toledo at least it's good for us Boatnerds. The HBI plant in Toledo is interesting to drive past, especially if a boat is unloading, the big ore stacker is right along the road.

DCN

It may be that Cliffs couldn't find an EAF operator who wanted to lock themselves in a contract for which their is a ready substitution in the form of scrap metal. If over the majority of the life of the contract, the price of scrap metal is lower than HBI, then they are at a competitive disadvantage compared to their peers.

But then again, it may be as you said, that Cliffs wanted to keep the iron for themselves. Either way they're not telling us.

[Guest]

This will probably mean the end for the Blough and the other lauded up boats. With fewer and fewer cargoes, no rational case for investing in additional tonnage or paying for an extensive reactivation.

[DCN]

The bit of information I found most interesting in regards to the planned shutdown of #4 blast furnace at Indiana Harbor is the mention that Cliffs is adding hot-briquetted iron, presumably from the plant in Toledo, to the burden they are charging #7 with.

The HBI from Toledo was originally supposed to be sold to minimill operators as a "clean" iron feed stock for electric arc furnaces, but that was before Cliffs was itself a steel producer. I wonder if the customer base for Toledo's HBI has since turned their back on Cliffs somewhat as they are now in competition with them in the steel market, or if Cliffs has shut them out as they don't want to, again, make things easier for a competitor. That, or Toledo just produces more than Cliffs currently sells and they need to do something with the surplus iron.

Whatever the case may be, it seems like a very expensive thing to do with a clean iron product like HBI to feed it into a blast furnace. Oh well, if it keeps the boats coming to and from Toledo at least it's good for us Boatnerds. The HBI plant in Toledo is interesting to drive past, especially if a boat is unloading, the big ore stacker is right along the road.

DCN

[Jared]

Cliffs Idling #4 Blast Furnace in Indiana Harbor

https://www.nwitimes.com/business/local ... e8599.html

A lot of mixed signals in that article. From hiding behind carbon footprints to ACM not interested in making the investments to update the furnaces or the facility.

[Guest]

Cliffs Idling #4 Blast Furnace in Indiana Harbor

https://www.nwitimes.com/business/local ... e8599.html

[Guest]

Cliffs is producing DRI at Minorca. The idling of Northshore Mining is due to a dispute between Cliffs and Mesabi Trust over the royalty fees Cliffs has to pay and believes to be too costly.

https://www.mprnews.org/story/2022/02/1 ... ntensifies

[Darryl]

Mustang sounds like Evtac, or United Tac, or what they may call it under Cliffs. Came out of Thunderbird Mine. Long ago owned by FORD.

[garbear]

Isn't the Mustang pellet that the Ironville HBI Plant uses made and shipped from Silver Bay?

It's a U-Tac pellet, shipped from Duluth.

[Guest]

I believe that Cliffs recently switched to another source because of costs. I forget which taconite plant is supplying the pellets for the HBI plant in Ironville, but it's no longer Silver Bay. That changeover occurred this past Fall.

- Brian

[hausen]

Isn't the Mustang pellet that the Ironville HBI Plant uses made and shipped from Silver Bay?

Mustang is a name for a pellet produced at United Taconite (ex- Eveleth Taconite) and loaded out through Duluth (and possibly sometimes Two Harbors) for a blast furnace at Indiana Harbor.

Not sure there was a name for the DRI-ready pellet that the Ironville HBI plant uses, but it was indeed being produced at Silver Bay. That is now changing, as it seems the DRI pellet for Toledo will be produced at Minorca instead. Minorca's production loads out on CN Rail, which means that Two Harbors or Duluth will likely be where the Ironville-bound ships load DRI pellets starting this season.

[Jon Paul]

Isn't the Mustang pellet that the Ironville HBI Plant uses made and shipped from Silver Bay?

[Guest]

Besides Cliffs’ HBI plant in Toledo (which I assume is considered a minimill because it uses EAF technology), are there any other minimills in the vicinity that could be serviced by the Great Lakes shipping industry? As blast furnaces in this region shut down, might more minimills be built in their place?

The Hot Briquetted Iron (HBI) plant in Toledo does not use electric arc furnace (EAF) technology and it does not produce steel, so I don't think it would be considered a mini mill. Instead it uses special pellets (Direct Reduction or DR grade pellets that have a slightly higher iron or FE content then Blast Furnace or BF grade pellets) and natural gas to produce direct reduced iron (DRI) which is typically in the 86-94% FE range. DRI is a process that reduces iron oxides to metallic iron at a temperature BELOW melting. However direct reduced iron or sponge iron is not a stable material and it can self-heat and even catch fire if not properly ventilated. So the plant in Toldeo goes a step further and compacts the DRI into briquettes at a high temperature, creating HBI, a more stable product.

DRI (including HBI) is one of three primary feedstocks used for making steel in an electric arc furnace. The others are scrap iron/steel and pig iron. Scrap steel is typically the cheapest of the three to use, as long as there is an adequate local supply. If not, then DRI or pig iron are substituted.

There are many electric arc furnaces around or near the Great Lakes and Seaway, but only a few have actual docks. Those include Arcelormittal Contrecoeur (which has EAF's but also its own DRI plant on site), three long term idled EAF's at Stelco Hamilton, Republic Lorain, and Cliff's Indiana Harbor, plus two integrated steel mills (Algoma Steel at Sault Ste. Marie and Arcelormittal Dofasco in Hamilton) that are planning on converting to 100% EAF operation in the next few years. Time will tell how much DRI, scrap or pig iron each will receive via boat. But I doubt that any of the other current EAF operations will suddenly convert to marine transportation since they already have their logistics worked out via rail or truck.

Here is a link to a 2018 Steel Mill Map in PDF format. The plant descriptions use EF to signify an electric arc furnace and integrated to signify blast furnaces. And note that the map only shows steel producers. Iron foundries (like Marinette WI) are not shown, but may also use electric arc furnaces to melt their iron.

[Guest]

With a steady trend of blast furnaces being replaced by steel minimills across the country, some obvious challenges are presented for the long-term sustainability of Great Lakes shipping. Besides Cliffs’ HBI plant in Toledo (which I assume is considered a minimill because it uses EAF technology), are there any other minimills in the vicinity that could be serviced by the Great Lakes shipping industry? As blast furnaces in this region shut down, might more minimills be built in their place?

What does this all mean for various cargoes on the Lakes? With iron ore pellets and limestone tied to blast furnaces, as one user stated, I’d imagine that demand for these commodities would decrease. What might lakers carry to service minimills? I know electric arc furnaces use a different type of steel, but I believe the Toledo plant is still supplied by pellets from Lake Superior, so I’m a little confused about how this all works. Even with significantly less blast furnaces, would the iron ranges of Minnesota still play a major role in the Great Lakes shipping industry and the minimills?

Sorry for the negative outlook these questions might bring, but being a young boatnerd, I’m genuinely curious as to what the future of the industry might bring.

You bring up some very interesting and pertinent questions concerning the future of both the North American steel industry and the Great Lakes shipping industry. What all this holds for the future of iron mining in Minnesota and Michigan remains to be seen. I personally feel that the export market through the Seaway will become an increasingly major player in ore movements from this region in the coming years. It is interesting to note that my uncle that sailed from the 1930s and into the 1970s claimed that during the 1950s there was much interest within the US fleet of moving ore into the lakes through the Seaway as the rich deposits of the Mesabi Range were becoming depleted. The introduction of taconite processing, however, breathed new life into the Lake Superior ore trade, and although many US ships used the Seaway to bring Labrador ore to US mills by the mid-1970s the vast majority of this trade had shifted to the Canadian fleet. As such, the US fleet concentrated on building or reconstructing vessels to dimensions that restricted their operations no further east than the Welland Canal. If the export of taconite from the upper lakes through the Seaway does increase, the smaller vessels currently in the US fleet will increase in value. If such a trend develops, it would seem that the vast majority of new US construction will follow a pattern of Seaway-sized vessels in addition to the so-called River Class types. It is hard to say what will happen in the US fleet in the no so distant future as annual cargo tonnages continue to recede even as the average age aof the fleet continues to increase. Despite the upgrades made to many older vessels in recent years, those built during the 1950s are likely within 20 years, or less, of retirement. With the exception of the Mark W. Barker, the next youngest self-propelled US flagged ships on the lakes are now over 40 years old. If this increasing obsolescence is not addressed in the near future there may not be much of a US fleet remaining by 2050.

[Guest]

With a steady trend of blast furnaces being replaced by steel minimills across the country, some obvious challenges are presented for the long-term sustainability of Great Lakes shipping. Besides Cliffs’ HBI plant in Toledo (which I assume is considered a minimill because it uses EAF technology), are there any other minimills in the vicinity that could be serviced by the Great Lakes shipping industry? As blast furnaces in this region shut down, might more minimills be built in their place?

What does this all mean for various cargoes on the Lakes? With iron ore pellets and limestone tied to blast furnaces, as one user stated, I’d imagine that demand for these commodities would decrease. What might lakers carry to service minimills? I know electric arc furnaces use a different type of steel, but I believe the Toledo plant is still supplied by pellets from Lake Superior, so I’m a little confused about how this all works. Even with significantly less blast furnaces, would the iron ranges of Minnesota still play a major role in the Great Lakes shipping industry and the minimills?

Sorry for the negative outlook these questions might bring, but being a young boatnerd, I’m genuinely curious as to what the future of the industry might bring.

[DCN]

Regarding how long current blast furnaces may last, there are a few relatively new blast furnaces in operation. C-Furnace at Cliffs Dearborn was built in 2007 (replacing an older furnace with the same name). #14 furnace at US Steel Gary Works was a complete rebuild/replacement of #13 furnace from the foundations up, I want to say ~2005 time frame. So at 15-20 years old these are young blast furnaces.

There is then a generation of middle aged blast furnaces. Cliffs Indiana Harbor (former Inland Steel) #7 furnace came online in 1980. C and D Furnaces at Cliffs Burns Harbor came online ~1970.

These five furnaces will probably be the last to be shut down, failing a major failure, if/as blast furnace capacity is reduced in the future.

Thee remaining furnaces are older and probably date back to the 1950s on the older end at this point. I think there are still active furnaces at US Steel Granite City, and Edgar Thomson Works, and at Cliffs Middletown, Indiana Harbor, and Cleveland Works. There are still blast furnaces of this era, as far as I know intact that could be restarted at the shuttered US Steel Great Lakes Works and Cliffs Ashland Works, but that is very unlikely to happen.

The big advantage that exists today in making steel via blast furnace and basic oxygen furnace is speed. A Basic oxygen furnace can churn out 200-300 tons of steel is about half an hour where as I believe it still takes many hours for a heat in an electric arc furnace. The quality of steel produced between the two methods is now more or less identical. Environmentally, the blast furnace method, and its associated support infrastructure is much dirtier. Mind you with electric arc furnaces the energy, a lot of it, still needs to come from someplace (still probably dirty as of 2022) and the vast majority of the scrap they use originally came as ore through a blast furnace at some point.

As long as they are well maintained and there are no catastrophic failures at those five newest blast furnaces, the basic oxygen furnaces they feed, or the coke works that fuel them, I could see them run another 20 years based on the lives of previous furnaces. Will politicians, shareholders, activists, and accountants let them run that long? They are, in all probability, the end of the line for blast furnaces in the steel industry of the United States.

DCN

[guest]

yes, there is only 1 steel mill left in cleveland at the end of navigation on the cayahoga river. in reality it should be at the start of the river near lake erie. when it is "finished" it wont be replaced, plain and simple

[Guest]

How many more years will the current blast furnaces last without major investment? I had heard some rumblings about a year ago about the mill at Cleveland was nearing the end of its useful life but who knows (other than the company's upper management) how accurate that assessment was. I believe that there is only one steel mill left in Cleveland at this time.

[Guest]

There was an article in Seeking Alpha a couple of weeks ago where the author mentioned that the economy was going into a recession and specifically how the steel industry would be impacted, especially Cliffs. The fact that auto production was declining, as were steel prices, lends credence to the possibility of a recession.

Remember, the steel industry is highly cyclical, and everytime there's a recession, more blast furnaces are permanently idled - and the fact that US minimills are adding capacity, while integrated steel producers haven't, doesn't bode well for some blast furnaces.