Steel Mills

Cliffs Execs Quiet on Potential U.S. Steel Deal
Written by Laura Miller
October 24, 2023
Cleveland-Cliffs executives were careful not to disclose much about talks with U.S. Steel on a potential acquisition of the iconic Pittsburgh-based steelmaker.

But there were hints of progress being made and an announcement coming in the not-too-distant future on Cliffs’ third-quarter earnings call with analysts on Tuesday, Oct. 24.
Cliffs’ Chairman, President, and CEO Lourenco Goncalves noted there were restrictions on what the company could disclose. That’s why listeners would not be hearing anything about the “potential exciting and transformational opportunity” that was announced in August, he said.
Recall that Cliffs has signed a non-disclosure agreement (NDA) with U.S. Steel.
An analyst asked for more information about Cliffs’ right to bid on U.S. Steel. That bid was transferred to it by the United Steelworkers (USW) union. Goncalves declined to comment.
Another analyst inquired about Cliffs’ capital allocation plan, its strategy on big M&A opportunities, and whether it was prioritizing more growth.
Because the company has reduced its debt by a large amount, it is in “a position now to have the flexibility to go in other directions,” Cliffs’ CFO Celso Goncalves noted. This could also include accelerating share buybacks, introducing a cash dividend for investors, and continuing to pay down debt.
Additionally, from an “M&A standpoint, the flat rolled market remains fragmented,” Celso said, noting that “there are many avenues the company could pursue towards further consolidation.” Alluding to its 2020 acquisition of ArcelorMittal USA and AK Steel, he said the company has successfully executed M&A in the past. “That’s what we’re going to continue to do going forward,” he stated.
“We feel good where we are right now … being aggressive and opportunistic with M&A opportunities,” Celso added.
Lourenco made a point to thank the Biden Administration for its focus on projects and investments that promote middle-class, union jobs.
He noted that “regulatory authorities have been strict on fighting M&A deals that harm workers, and rightfully so.” But the administration “is aligned with us on the long-term collaborative approach with unions.” And it has “taken notes that Cliffs puts workers at the center of our strategic decisions and growth objectives.”
Lourenco, a self-proclaimed optimist, was in good spirits on the call.
“We’re going to have lots of things to discuss in February. Stay tuned,” he said. “And keep paying attention because we move fast, even though not everybody does.”
He ended the call noting that Cliffs’ next earnings call wouldn’t be until February. He then wished analysts and investors a ‘Happy Thanksgiving’ and a ‘Merry Christmas.’
SMU has heard from various sources that an announcement regarding U.S. Steel’s deal could come as early as Nov. 1. But some have also stressed that the widely circulated rumor might be just that – a rumor.

Laura Miller
Read more from Laura MillerLatest in Steel Mills

USW digs in on opposition to USS-Nippon deal
“We remain deeply concerned about the national and economic security implications of the subject transaction,” the union stated in the letter dated April 21.

SDI’s Q1 earnings slump on-year, but up sequentially
SDI earnings slip in first quarter year over year, but are up sequentially.

POSCO inks MoU with Hyundai on Louisiana EAF mill
POSCO has signed a Memorandum of Understanding (MoU) with Hyundai Motor Group that includes an equity investment in Hyundai’s previously announced EAF mill set to be built in Louisiana.

CRU: Tata Steel looks to shed 1,600 jobs in the Netherlands
The company said, “The challenging demand conditions in Europe driven by geopolitical developments, trade and supply chain disruptions and escalating energy costs have affected the operating costs and financial performance."

Reports: Federal funding for Cliffs’ project could be slashed
Elon Musk's DOGE is determining which Department of Energy grants to advance and which ones to terminate, according to several media outlets