TL/DR –
Cleveland-Cliffs Middletown Works had planned to invest over $1.8 billion over five years to upgrade the Middletown plant, securing 2,500 jobs and creating an additional 1,370 jobs. This plan has been abandoned after significant cuts to the Department of Energy’s Regional Clean Hydrogen Hubs and the planned repeal of the Inflation Reduction Act, which was set to fund the Department of Energy’s $500 million grant to modernize the facility. The company had planned to introduce hydrogen-based ironmaking technology to reduce greenhouse gas emissions, but Cleveland-Cliffs CEO Lourenco Goncalves stated the company would not have the availability of hydrogen.
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Cleveland-Cliffs Terminates Project to Modernize Middletown Steel Plant
A previously announced plan to refurbish the Middletown Works plant, originally established as Armco Steel in 1900, has been abandoned. The steel manufacturer, Cleveland-Cliffs, had intended to spend over $1.3 billion of its own capital, supplemented by more than $500 million in federal grants, over a five-year span to modernize the facility.
Last year, when the project was first announced, Shawn Coffey, president of Local 1943 union, lauded the plan as “absolutely huge” for both the employees and the local community. Coffey also noted at the time that this move was a “bold statement by the company,” signifying that they were committed to steel production in the long term.
However, recent remarks by Cleveland-Cliffs CEO, Lourenco Goncalves, during a quarterly earnings call, indicated that the company had informed the Department of Energy that it had decided to discontinue the project. Goncalves stated that there would be no availability of hydrogen, which was a critical component for the project. “So, there is no point in pursuing something that we know for sure that’s not going to happen,” he declared.
Middletown, the location of the steel plant, also happens to be the birthplace of Vice President JD Vance. The setback for the city arose after Republicans moved to repeal the Inflation Reduction Act in May, leading to the potential withdrawal of the Department of Energy’s $500 million grant intended for the facility’s modernization.
The project was anticipated not only to secure 2,500 jobs at Middletown Works, but also to create 1,200 construction jobs and an additional 170 permanent positions at the site. The city’s communications manager, Clayton Castle, did not offer a comment on the recent developments.
Despite the withdrawal of the modernization plan, President of the Chamber serving Middletown, Monroe, and Trenton, Rick Pearce, remains optimistic. He expressed disappointment over the loss of the upgrade but was confident that Middletown Works will continue its steel production, as it has for the past 120 years. Echoing this sentiment, Mayor Elizabeth Slamka emphasized, “Steel is not going anywhere. Steel is still the lifeblood as it has been over the last century.”
In the initial plan, the Middletown plant was set to retire one blast furnace, install two electric melting furnaces, and incorporate hydrogen-based ironmaking technology. The objective was to reduce 1 million tons of greenhouse gas emissions each year from the country’s largest steel supplier to the automotive industry. The plan, however, was impacted by substantial cuts to the Department of Energy’s Regional Clean Hydrogen Hubs implemented by the Trump administration.
The Department of Energy slashed $3.7 billion in clean energy projects in May and commenced an audit on $15 billion in grants dispensed during the Biden administration. The grant earmarked for Cleveland-Cliffs was included in the audit. Despite the setbacks, Goncalves disclosed in the earnings call that the company is in discussions with the Department of Energy about revising the suspended project to enhance Middletown using various resources like coal, coke, natural gas, and American iron ore from Minnesota. He also highlighted the potential use of artificial intelligence to operate their blast furnace.
Cleveland-Cliffs had acquired AK for $3 billion in 2020 and also owns the Research and Innovation Center in Middletown.
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