Steel Mills

Cliffs Closes Deal for FPT, Seeks to Boost Closed-Loop Model

Written by Michael Cowden

November 18, 2021

Cleveland-Cliffs Inc. has completed its $775 million acquisition of scrap recycler Ferrous Processing and Trading (FPT).

Cliffs Chairman, President and CEO Lourenco Goncalves said the deal could change the way the scrap business has traditionally worked by creating more “closed-loop” transactions.

cliffs natural resourcesSuch deals would mean more scrap – and especially prime scrap, FPT’s specialty – goes directly from manufacturers such as automakers back to steelmakers such as Cliffs. That could knock out the need for middlemen along the way.

“With our closing of the FPT acquisition today, we are now immediately focused on amplifying the value of what we believe is the next precious metal,” Goncalves said in a statement on Thursday, Nov. 18.

“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,” he said.

Detroit-based FPT processes roughly three million tons of scrap a year, half of which is prime scrap, Cliffs said.

Cliffs announced the deal in October after Goncalves said at SMU’s August Steel Summit conference in Atlanta that the company, traditionally a steelmaker and iron ore miner, would soon be entering the scrap business as well.

Demand for prime scrap is expected to increase sharply as new electric arc furnace (EAF) capacity is added. That trend is colliding with expectations of limited or no growth when it comes to prime scrap supplies.

By Michael Cowden, Michael@SteelMarketUpdate.com

Michael Cowden

Michael Cowden is managing editor for Steel Market Update. Cowden has covered the steel industry since 2007. He specializes in flat-rolled steel but has also reported on steel long products, steel pipe and tube, and aluminum. Before joining SMU, Cowden held reporting jobs at Fastmarkets AMM in Chicago, the Associated Press in Pittsburgh, and the Cambodia Daily in Phnom Penh. He has also worked as a copy editor and in marketing at the University of Chicago Press. Cowden has a BA in English from the University of Chicago and an MSJ journalism from Northwestern University’s Medill School of Journalism. Contact him at michael@steelmarketupdate.com or 724-759-7872.

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