ArcelorMittal, Strategic Resources, Cleveland-Cliffs – Billions for the Steel of the Future

ArcelorMittal: Steel Giant Boosts Efficiency

ArcelorMittal continues to drive forward the transformation of its European steel production. At the end of September, a new top gas recovery turbine was officially commissioned at the Gent site in Belgium. The plant utilizes the pressure of the gas generated during the blast furnace process and converts previously unused energy into electricity. The electrical output is approximately 6 MW. This enables the site to reduce its external energy needs and improve the efficiency of existing production.

In addition, the company announced another development. The modernized Galva 5 galvanizing line was officially reopened in Flémalle. ArcelorMittal is continuing to invest in its European sites and striving to improve energy efficiency, product quality, and competitiveness at the same time.

Behind this lies a far greater challenge. The steel industry must drastically reduce its CO₂ emissions in the long term without losing its production base. In addition to more efficient conventional blast furnaces, direct reduction plants and electric arc furnaces are therefore taking centre stage. Natural gas, and, in the future, hydrogen, can be used in direct reduction, while electric arc furnaces can process an increasing proportion of scrap and directly reduced iron.

However, these processes also change the requirements for raw materials. Direct reduction requires high-quality iron ore pellets with a high iron content and as few impurities as possible. These DR pellets could therefore become a strategic raw material for the new steel industry.

ArcelorMittal demonstrates just how comprehensive this transformation will be. Existing plants must become more efficient, while new production processes are simultaneously being prepared. The more direct reduction and electric arc furnaces gain traction, the more valuable a reliable supply of high-quality pellet material could become.

Strategic Resources: 4 Million Metric Tonnes for the New Steel World

This is where Strategic Resources comes in. The Canadian company is developing a multi-stage project in Québec with BlackRock focused on iron, vanadium and titanium. However, the first major step is not to develop its own mine, but to build a pellet plant at Port Saguenay. The plan calls for an annual capacity of 4 million metric tonnes of high-quality DR iron ore pellets.

The timing could prove interesting given the Mekdung project mentioned above. Mesabi Metallics is investing billions in an integrated American steel supply chain in which DR pellets play a central role. At the same time, other steel producers are gradually converting their production processes. This is driving up demand for the exact raw material Strategic intends to produce in the future.

The location offers several advantages. Québec has abundant hydropower, natural gas is available at Port Saguenay, and the year-round deep-water port provides access to the Great Lakes and the Atlantic Ocean. The pellet plant is initially intended to process purchased iron ore concentrate. This would allow Strategic to begin production even before its own BlackRock mine is developed.

The 2024 preliminary study estimated investment costs of approximately USD 470 million for the pelletizer. Assuming a DR pellet premium of USD 70 per metric tonne, the study calculated an annual EBITDA of USD 173 million and a post-tax return of 25%. These figures are study assumptions and not earnings forecasts, but they illustrate the potential economic scale.

The next important step is obtaining approval. Strategic already holds a permit for the BlackRock project, including a metallurgical plant at Port Saguenay. This permit originally provided for a pellet capacity of 1.5 million metric tonnes. The company therefore applied for an increase to 4 million metric tonnes per year and submitted all responses to the Québec Ministry of the Environment's questions in May.

In the long term, the vision extends even further. The pellet plant could be followed by DRI (directly reduced iron) or HBI (hot briquetted iron) production, and later by the integration of BlackRock's own raw materials. This could gradually transform Strategic into an integrated supplier for the North American steel industry.

Cleveland-Cliffs: USD 1 Billion for Domestic Steel

Cleveland-Cliffs demonstrates that even the established US steel industry is investing billions in its domestic facilities. The company plans to invest a total of USD 1 billion in the modernization of its Middletown Works in Ohio. Cleveland-Cliffs will finance half of this amount itself, while the US Department of Energy has provided a funding package for the remaining USD 500 million.

The investments are to be spread over four years. Plans include improvements to the blast furnace, a new combined heat and power plant, additional boilers, and new material-handling and cooling systems. The plant currently produces approximately 3 million metric tonnes of crude steel per year. With this project, Cleveland-Cliffs aims to maintain production capacity while improving reliability, energy efficiency, and cost competitiveness.

Of particular interest is the company's vertical integration. Cleveland-Cliffs controls large parts of its supply chain itself, from iron ore mining through pellets and direct-reduced iron to steel production and further processing. As a result, the company already has structures that are becoming strategically more valuable amid growing political demand for secure North American supply chains.

The group also operates an HBI plant in Toledo. Hot Briquetted Iron can be used in electric arc furnaces, where it helps produce high-quality steel grades even as scrap use increases. This, in turn, requires high-quality iron ore products.

Cleveland-Cliffs thus exemplifies a trend that has now swept the entire North American steel industry. Mesabi is investing USD 18 billion in a new mine-to-mill structure, Cleveland-Cliffs is pouring USD 1 billion into existing capacity, and demand for high-quality raw materials for modern production processes is growing.

While Cleveland-Cliffs already has an integrated supply chain, Strategic aims to create a new component of this North American supply chain through Port Saguenay. As billions flow into new DRI, HBI, and electric arc furnace capacities, access to high-quality DR pellets could increasingly become a strategic factor.