CLEVELAND — Cleveland Cliffs, the largest flat-rolled steel producer in North America based in Cleveland, announced it has reached a definitive agreement to acquire Detroit-based Ferrous Processing and Trading Company (FPT), one of the largest processors and distributors of ferrous scrap in the United States.
Cleveland-Cliffs will acquire FPT for $775 million, on a cash-free, debt-free basis. Right now, FPT produces approximately 3 million tons of scrap per year.
“Cleveland-Cliffs is entering the scrap business as a major player through the acquisition of a large scrap company. Even more importantly, FPT has a very meaningful presence in prime scrap,” said Lourenco Goncalves, Cleveland-Cliffs’ president and CEO. “With all the new flat-rolled EAF (electric arc furnace) capacity coming online in our market over the next four years, prime scrap will only become more and more scarce. As the largest supplier of flat rolled steel in North America, Cleveland-Cliffs is the main source of the steel that generates prime scrap in manufacturing facilities. Furthermore, throughout our entire footprint, Cleveland-Cliffs also consumes a very significant amount of scrap in our EAFs and BOFs (basic oxygen furnace). The acquisition of FPT will enhance our ability to buy back prime scrap directly from our clients, cutting the middlemen and improving the margin contribution from scrap for both Cleveland-Cliffs and for the manufacturing and service center clients that will be able to sell scrap directly back to us.”
- Allows Cliffs to optimize productivity at its existing EAFs and BOFs as the Company has no current plans to add additional steelmaking capacity
- Expands portfolio of high-quality ferrous raw materials to include iron ore pellets, direct-reduced iron, and now prime scrap
- Immediately secures substantial access to prime scrap, where demand is expected to grow dramatically with limited to no growth in corresponding supply
- Creates a platform for Cliffs to leverage long-standing flat-rolled automotive and other customer relationships into recycling partnerships to grow prime scrap presence
- Furthers commitment to environmentally-friendly, low-carbon intensity steelmaking with cleaner materials mix
Founded in 1847, Cleveland-Cliffs employs around 25,000 people across its mining, steel and downstream manufacturing operations in the United States.
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