Steel / Materials · Deep dive

Cleveland-Cliffs

The 178-year-old iron-ore miner that Lourenco Goncalves turned into North America's largest flat-rolled steelmaker through $5B of debt-funded acquisitions — and that then posted a $708M loss in 2024 and a $1.4B loss in 2025 as its carbon-heavy blast-furnace model met soft auto demand, idled mills, and a leverage problem.

at risk

Cleveland-Cliffs is a scale leader carrying two straight years of billion-dollar-range losses, $7B+ of acquisition debt, and the most carbon-intensive production route in the industry into a market being reshaped by low-cost EAF rivals, decarbonization pressure, and a green-iron transition it must spend heavily to survive.

My take ★★ Very interesting ★ Interesting − Maybe ✗ Not interesting

Snapshot

Cleveland-Cliffs is the largest flat-rolled steel producer in North America, the largest maker of iron-ore pellets, and the biggest supplier of automotive-grade steel in the United States — a vertically integrated operation of roughly 28,000 people running from Minnesota and Michigan iron mines through blast furnaces to finished coated steel. It is also, right now, losing money at scale: a GAAP net loss of about $708M in 2024 and roughly $1.4B in 2025, on revenue that slid from a ~$22.0B peak in 2023 to $18.6B in 2025. The company that CEO Lourenco Goncalves built through more than $5B of debt-funded acquisitions between 2020 and 2024 now carries ~$7.3B of debt into a market defined by soft auto demand, low-cost electric-arc competitors, and mounting pressure to decarbonize the most carbon-intensive production route in the industry. It matters because it is the incumbent — the blast-furnace, integrated-mill model that a generation of green-iron challengers is explicitly trying to displace.

Founding story

The corporate skeleton is old: the Cleveland Iron Mining Company was formed in 1847 to work Michigan’s Marquette range, and for more than 160 years the firm — later Cleveland-Cliffs Iron Company, then Cliffs Natural Resources — was an upstream raw-materials supplier, mining and pelletizing iron ore that other companies turned into steel. The modern company is really Goncalves’s creation. He arrived in August 2014 after activist Casablanca Capital ran a 2014 proxy fight, arguing the board had destroyed roughly 85% of shareholder value on a failed diversification into coal and overseas ore.

His first job was survival. When iron-ore prices collapsed to around $40 a ton in late 2015, Cliffs’s bonds traded near 15 cents on the dollar and Deutsche Bank publicly flagged solvency risk in February 2016. Goncalves — who had come out of retirement to take the job — bought back distressed debt, swapped unsecured notes into secured paper, raised equity, sold the coal mines and exited the costly Ontario “Ring of Fire.” By late 2016 net debt was down to about $2.0B and bankruptcy talk faded. Then came the pivot that defines the company: rather than remain a merchant ore supplier, Cliffs bought its own customers. It acquired AK Steel in March 2020 ($1.1B) and ArcelorMittal USA in December 2020 ($1.4B), vertically integrating from mine to finished steel and becoming, overnight, the continent’s largest flat-rolled producer.

How it works

Cliffs is one of the few remaining fully integrated steelmakers in North America, and the physical chain is the whole point. It mines iron ore at operations in Minnesota (Hibbing, Minorca near Virginia, Northshore) and Michigan (Tilden), then pelletizes that ore — Cliffs is the largest pellet producer on the continent. Those pellets feed blast furnaces, where coke (made from metallurgical coal) reduces iron ore into molten iron; a basic oxygen furnace then blows oxygen through it to make raw steel, which is cast, hot-rolled, cold-rolled, and coated into the flat sheet that becomes car bodies, appliances, and construction products.

This route is the source of both Cliffs’s advantage and its problem. Integration means it controls its own iron units and can make the high-purity, exposed-surface steel automakers demand — hard for scrap-based mills to match. But blast-furnace ironmaking is carbon-intensive and capital-heavy, with high fixed costs that punish the company when volumes fall. Cliffs has hedged partly: its ~$1B Toledo, Ohio direct-reduction plant makes hot-briquetted iron (HBI), a cleaner metallic that can feed furnaces and electric-arc mills. And it won up to $575M in U.S. Department of Energy funding (announced March 2024) to replace the blast furnace at Middletown, Ohio with a hydrogen-ready DRI plant plus two electric melting furnaces — a project it says could cut ironmaking carbon intensity by more than 50% on natural gas (over 90% on clean hydrogen) and save roughly $150 per net ton.

Product and business overview

The product line is flat-rolled carbon and stainless steel plus downstream conversion. Named components: hot-rolled, cold-rolled, and coated (galvanized/aluminized) flat steel; electrical steel for transformers and EV motors (Butler Works); stainless and electrical grades; plate and tubular products; and upstream iron-ore pellets and HBI. Cliffs also runs downstream finishing, stamping, tooling, and tubing operations, letting it sell closer to the part than a raw-coil producer would. End markets, in order of importance: automotive (its single largest and highest-value exposure, where it is the top U.S. supplier), then construction and infrastructure, appliances, and industrial/machinery. The 2024 Stelco acquisition added Canadian flat-rolled capacity and, notably, more spot-market exposure.

Business model and pricing

Cliffs sells steel two ways: fixed-price annual contracts (heavily weighted to automotive, which prizes supply security) and spot sales tied to the hot-rolled coil (HRC) index. That mix is the core of the investment story. Contract business smooths revenue but resets on an annual lag; spot business swings directly with HRC prices, which are volatile and were weak through much of 2024-2025. Cliffs publishes no list pricing — steel is negotiated per ton by grade, coating, and volume — but the economics track a per-ton “metal margin” between input costs (ore, coal, scrap, energy) and selling price, minus the fixed costs of running blast furnaces. Because those fixed costs are high, the model is brutally operationally leveraged: small moves in HRC prices or shipment volumes swing the company between profit and large loss, which is exactly what 2024-2025 demonstrated.

Traction over time

The arc is clear: a 2023 profit peak, then two consecutive years of losses as steel prices fell and auto/appliance customers destocked. Cliffs pushed volumes to a record 4.3M-ton quarter in Q2 2025 and cut unit costs, but even record shipments could not offset weak pricing and idled-asset drag. Long-term debt sat near $7.3B in 2025 against thin cash; liquidity was about $2.7B at mid-2025, and the company issued fresh 7.625% notes in October 2025 to repay revolver borrowings.

Market analysis

The U.S. steel market is large, mature, and cyclical, driven by autos, construction, and capital goods. The dominant structural force in 2025 was trade policy: Section 232 tariffs raised to 50% in mid-2025 pushed U.S. steel imports to their lowest levels since 2008 — a genuine tailwind for domestic producers and one Cliffs lobbies for aggressively. The second force is decarbonization. Steelmaking is one of the hardest-to-abate industries, and the blast-furnace route Cliffs relies on is its most carbon-intensive form. Green steel is still small — IDTechEx projects hydrogen-based output reaching only ~46 million tonnes globally by 2035 — but the direction is fixed, and buyers (Microsoft, Meta) began signing low-carbon iron and steel deals in 2025. The uncomfortable read for an integrated incumbent: its cost tailwind (tariffs) is politically contingent, while its cost headwind (carbon, high fixed cost) is structural.

Competitive intel

Cliffs is squeezed from two directions. Above it in cost efficiency sit the EAF minimills. Nucor (~18% share, ~$31.9B FY2025 revenue) and Steel Dynamics (~10% share) run scrap-based electric-arc furnaces that are lower-carbon, lower-fixed-cost, and stayed profitable through the 2025 downturn — the opposite of Cliffs’s loss-making, leveraged blast-furnace base. Beside it sits U.S. Steel, the integrated peer Cliffs tried to buy for ~$7B in 2023 and lost to Nippon Steel, whose ~$14.9B acquisition closed in 2025; U.S. Steel now competes with a deep-pocketed parent behind it. ArcelorMittal, which sold Cliffs its U.S. business, remains a global giant developing its own lower-carbon ironmaking. Imports are the swing factor tariffs currently suppress. And on a longer horizon, the green-iron challengers — Electra, Boston Metal, Stegra — attack the feedstock itself with electrochemical and hydrogen routes; they are pre-commercial, but they target precisely the coke-and-blast-furnace step that is Cliffs’s cost and carbon anchor. Cliffs beats them all on one axis today: integrated auto-grade quality at continental scale. It loses on cost, carbon, and balance sheet.

History and evolution

• 1847 — Cleveland Iron Mining Company founded to work Michigan’s iron range; becomes a long-lived ore and pellet supplier.
• January-August 2014 — Casablanca Capital wages a proxy fight; Lourenco Goncalves installed as chairman, president, and CEO in August.
• 2015-2016 — Iron-ore collapse to ~$40/ton; bonds near 15 cents; Deutsche Bank flags solvency risk (Feb 2016); Goncalves restructures debt, sells coal, exits the Ring of Fire.
• March 2020 — Acquires AK Steel (~$1.1B), entering steelmaking.
• December 2020 — Acquires ArcelorMittal USA (~$1.4B), becoming North America’s largest flat-rolled producer.
• 2023 — Peak revenue (~$22.0B) and profit; makes a ~$7B bid for U.S. Steel, which is rejected in favor of Nippon Steel.
• March 2024 — Selected for up to $575M in DOE decarbonization funding for Middletown and Butler Works.
• November 2024 — Closes the ~C$3.4B Stelco acquisition, funded partly with ~$1.8B of new notes; deepens leverage just as pricing weakens.
• 2024 — Full-year GAAP net loss ~$708M; revenue falls to ~$19.2B.
• May-September 2025 — Idles or closes six operations (Dearborn blast furnace/BOF/casting; Steelton, Conshohocken, Riverdale permanently); ~559 jobs cut at Steelton, 305 at Riverdale, 115 at Conshohocken, hundreds of Minnesota miners idled; Weirton transformer-plant plan halted. Nippon-U.S. Steel deal closes; related litigation dismissed in September.
• February 2026 — Reports a ~$1.4B FY2025 net loss; guides to a 2026 rebound on cost cuts and tariffs.

What people say

The case for. Bulls point to scale and irreplaceable position: Cliffs is the largest flat-rolled and auto-grade supplier in North America, vertically integrated from ore to coil in a way no EAF rival can copy, and the biggest beneficiary of 50% Section 232 tariffs that pushed imports to 2008 lows. Trade press and some sell-side notes frame it as a “tariff supercycle” play whose order book filled and whose unit costs fell through 2025 as management idled the weakest assets. Employees on Glassdoor (about 3.4/5 across ~680 reviews, 57% recommending) consistently praise strong union pay, benefits, and experienced coworkers — a workforce that, for all its friction, knows how to run these mills. The Middletown DOE project offers a credible, funded path to cut both carbon and ~$150/ton of cost if it is completed.

The complaints. The criticism is serious and largely financial. Analysts hammer the leverage — roughly $7.8B of total debt against tens of millions of cash by one 2025 estimate — arguing it warrants a discount to peers and limits flexibility through the cycle. The company posted losses in 2024 ($708M) and 2025 ($1.4B), and its blast-furnace model is both the most carbon-intensive route and the highest-fixed-cost one, so it bleeds in downturns while Nucor and Steel Dynamics stay profitable. A legacy Brazilian-slab supply contract became a liability once tariffs on those slabs hit 50% in 2025. The tariff tailwind itself is a dependency, not a moat — it hostages earnings to Washington. On the ground, 2025 brought idlings and layoffs across at least four states, halted investment in Weirton, and a UAW/USW workforce watching plants close; employee reviews cite new plant management “changing rules as they go,” forced overtime, and safety concerns. And Goncalves’s combative public style — feuding with rivals, unions’ adversaries, and the press — reads to some investors as a governance and key-man risk.

Outlook: well positioned or at risk?

At-risk. Cleveland-Cliffs entered 2026 with the scars of a company that grew through acquisition faster than it could digest the cost and carbon liabilities it bought. Two straight years of losses — roughly $708M in 2024 and $1.4B in 2025 — are not a one-quarter stumble; they reflect a structurally high-fixed-cost, high-carbon production base colliding with soft auto demand and volatile HRC prices. The ~$7.3B debt load, much of it taken on to buy AK Steel, ArcelorMittal USA, and Stelco, magnifies every downswing and forces note issuance just to manage the revolver. Against low-cost EAF operators that stayed profitable through the same downturn, Cliffs is the marginal-cost producer wearing the heaviest balance sheet, and the green-iron transition — the very thesis behind challengers like Electra, Boston Metal, and Stegra — aims squarely at the coke-and-blast-furnace step that anchors its cost structure.

The bull case is real: Cliffs has genuine scale, an auto-grade franchise that is hard to replicate, and a large, politically durable tariff tailwind that has crushed imports to multi-decade lows. Record Q2 2025 shipments and falling unit costs show the operating engine works when priced and utilized, and if HRC prices recover and the Middletown DRI project delivers its promised cost and carbon cuts, this cyclical could re-rate sharply. But “at-risk” is the right call because the downside is structural and the upside contingent. The cost tailwind depends on tariff policy that can change; the cost headwind — carbon intensity, fixed costs, and debt — does not. Cliffs must service $7B of debt, fund multi-year decarbonization capex, and out-compete lower-cost rivals, all as its core auto market shifts toward electrification and lower-carbon sourcing. It can survive — it survived worse in 2016 — but it is defending a position under pressure from every side, not compounding one.

How a challenger would attack it

Attack the one franchise the losses are subsidizing: auto-grade sheet. Cliffs’s defensible position is exposed-surface automotive steel that scrap-based mills historically couldn’t match — everything else it sells competes head-on with Nucor and Steel Dynamics at a structural cost and carbon disadvantage, on a balance sheet paying 7.625% coupons. A challenger closes the quality gap from the EAF side: feed a modern electric-arc mill with clean metallics — DRI/HBI or the electrochemical iron Electra is already selling under a Meta EAC deal — and the “only blast furnaces can make auto-grade” argument collapses, taking Cliffs’s pricing anchor with it. The commercial wedge is the automakers themselves, who are signing low-carbon sourcing deals (Microsoft and Meta started in 2025) and would rather not hang EV supply chains on the most carbon-intensive route in the industry run by a CEO who feuds publicly with counterparties. The second vector is timing: Cliffs cannot respond with price — operational leverage means every dollar of HRC weakness produces nine-figure quarterly losses — and cannot respond with capex beyond the DOE-funded Middletown project without stressing $7.3B of debt. Its tariff shield is political, not structural; a challenger builds for the day the 50% Section 232 wall moves, while Cliffs’s whole 2026 guidance depends on it standing.

Same playbook, new buyer

The Goncalves playbook — buy distressed integrated assets cheap, consolidate, and ride policy protection — is finished in US flat-rolled, but its components are reusable elsewhere. The most promising shift is upstream: Cliffs’s original 173-year business, merchant iron units, is becoming valuable again in a form Cliffs can’t afford to lead — green metallics. A pure-play producer of DRI/HBI and low-carbon pellets, sited on cheap power and selling to every EAF operator, serves the buyers (Nucor, SDI, eventually Nippon-backed U.S. Steel) who collectively need clean iron and would rather not buy it from a competitor. Cliffs’s Toledo HBI plant proves the product works; its debt load and its need to feed its own furnaces prevent it from scaling merchant supply. The second shift is geographic and segmental: Stelco’s old niche — lean, spot-exposed, non-auto flat-rolled for construction and service centers — shows a cost-focused regional model can work without the auto-contract overhead; Mexico’s nearshoring boom is the obvious place to run it. The incumbent won’t follow either path: every spare dollar through 2028 is committed to debt service and Middletown, and Goncalves’s identity is consolidation, not carve-out.

Sources and further reading

• Cleveland-Cliffs Reports Full-Year and Fourth-Quarter 2024 Results — Cleveland-Cliffs / Business Wire, February 2025. 2024 revenue $19.2B, ~$708M net loss, adjusted EBITDA $780M.
• Cleveland-Cliffs Reports Fourth-Quarter and Full-Year 2025 Results — Cleveland-Cliffs / Nasdaq, February 2026. FY2025 revenue $18.6B and ~$1.4B net loss.
• Cleveland-Cliffs announces mill and mine closures, impacting over 2,000 workers across 4 states — World Socialist Web Site, May 2025. 2025 idlings and layoff detail (Steelton, Conshohocken, Riverdale, Minnesota mines).
• Lourenco Goncalves: CEO transforms Cleveland-Cliffs into a steelmaker — Crain’s Cleveland Business, 2020. Goncalves background and the steelmaking pivot.
• Savior CEO: How Lourenco Goncalves brought Cliffs back from the brink — Debtwire, 2016-2017. The 2015-2016 near-distress and restructuring.
• Cleveland-Cliffs Announces the Acquisition of Stelco — Cleveland-Cliffs, July 2024. C$70/share, ~C$3.4B enterprise value.
• Acquisition of U.S. Steel by Nippon Steel — Wikipedia, 2025. The rejected Cliffs bid and the ~$14.9B Nippon deal.
• Cleveland-Cliffs Selected to Receive $575 Million in DOE Investments for Decarbonization — Cleveland-Cliffs, March 2024. Middletown hydrogen-DRI project terms and savings.
• Cleveland-Cliffs: Tariff Tailwind, Debt Headwind — LongYield, 2025-2026. Leverage, tariff dependence, and the Brazilian-slab liability.
• SMM Global Steel Company Special: Nucor — 100% EAF, high profits and vertical integration — Metal.com / SMM, 2025. Nucor and Steel Dynamics scale, share, and EAF cost advantage.
• Green Steel: How Hydrogen and Electric Ironmaking Drive Innovation — IDTechEx, 2025. Electra, Boston Metal, Stegra and green-steel market forecasts.
• Cleveland-Cliffs Reviews — Glassdoor, 2024-2025. ~3.4/5 rating; pay/benefits praise and management/overtime/safety complaints.