Cleveland-Cliffs Announces Its New State-of-the-Art Electrical Transformer Production Plant in Weirton, West Virginia

Rhea-AI Summary

Cleveland-Cliffs Inc. (NYSE: CLF) has announced plans to establish a new electrical distribution transformer production plant in Weirton, West Virginia. The $150 million investment, including a $50 million forgivable loan from the state, aims to address the critical shortage of distribution transformers in the United States. The plant is expected to begin operations in the first half of 2026 and will create reemployment opportunities for 600 USW-represented workers from the idled Weirton tinplate mill.

The new facility will utilize American-made Grain Oriented Electrical Steel (GOES) produced by Cleveland-Cliffs at its Butler Works steel mill in Pennsylvania. This investment is expected to generate additional demand for GOES and potentially lead to employment expansion at the Butler Works. The plant will also consume stainless and carbon steel produced by Cliffs in other steel plants across Ohio, Michigan, and Indiana.

Positive

• Investment of $150 million in a new electrical distribution transformer production plant
• Creation of 600 reemployment opportunities for USW-represented workers
• $50 million forgivable loan from the state of West Virginia
• Potential increase in demand for American-made Grain Oriented Electrical Steel (GOES)
• Possible employment expansion at Butler Works steel mill in Pennsylvania

Negative

• None.

Insights

Financial Analyst

Cleveland-Cliffs' announcement of a new electrical transformer production plant in Weirton, West Virginia, represents a significant capital investment of $150 million. This move addresses a critical shortage in distribution transformers, important for the expansion of the U.S. electric grid and economic growth. The project's funding structure is noteworthy, with $50 million provided as a forgivable loan by West Virginia. This reduces financial risk and enhances the feasibility of the project.

The operational commencement in the first half of 2026 indicates a mid-to-long term impact. Furthermore, the expected increase in demand for Cleveland-Cliffs' Grain Oriented Electrical Steel (GOES) and other steel products could boost the company's revenue streams and production efficiency. This project could also positively influence the employment landscape, reemploying 600 workers from the Weirton tinplate mill and potentially expanding jobs at the Butler Works steel mill.

For retail investors, this news suggests a potential rise in Cleveland-Cliffs' share value as the company strengthens its position in the transformer manufacturing sector, diversifies its revenue streams and enhances its role in supporting U.S. infrastructure needs.

Tech Expert

The establishment of a state-of-the-art transformer production plant by Cleveland-Cliffs has technological implications that are pivotal for the power distribution industry. Distribution transformers are essential for maintaining and expanding electrical grids, especially with the increasing demand driven by the widespread adoption of Artificial Intelligence (AI) and other power-intensive technologies. The company's focus on producing highly-efficient, American-made transformers aligns well with the U.S. Department of Energy's efficiency standards, ensuring long-term viability and technological advancement in the sector.

For investors, this technological alignment with national efficiency standards not only positions Cleveland-Cliffs as a key player in the transformer market but also propels the company to the forefront of supporting AI and other emerging technologies. The plant's potential to become a center of excellence signifies a robust, tech-driven future for Cleveland-Cliffs.

Market Research Analyst

From a market perspective, Cleveland-Cliffs' investment in a new transformer production plant can be viewed as a strategic move to capture a growing market segment. The current shortage of distribution transformers is a bottleneck for economic expansion and Cleveland-Cliffs is positioning itself to be a critical supplier in this high-demand market. The strategic location of the plant in Weirton, with an existing skilled workforce and the infrastructure already in place, is a calculated move to optimize operational efficiency and reduce startup time.

Additionally, the synergistic use of steel products from Cleveland-Cliffs' other plants in Ohio, Michigan and Indiana demonstrates an integrated supply chain approach, likely reducing costs and improving margins. Retail investors should see this as a positive driver for the company's market share and profitability, potentially leading to an uptick in stock performance as the plant becomes operational and starts fulfilling market demand.

CLEVELAND--(BUSINESS WIRE)-- Cleveland-Cliffs Inc. (NYSE: CLF) announced today that it will establish a new electrical distribution transformer production plant in Weirton, West Virginia. This downstream direct investment by Cleveland-Cliffs in Weirton will address the critical shortage of distribution transformers that is stifling economic growth across the United States. Lourenco Goncalves, Cleveland-Cliffs' Chairman, President and Chief Executive Officer will host a press conference with West Virginia Governor Jim Justice and other elected officials in Weirton today, July 22. The announcement will highlight Cleveland-Cliffs’ investment to repurpose its Half Moon Warehouse in Weirton to commence production of three-phase distribution transformers used in electric power distribution systems. The total capital investment is $150 million, of which $50 million (or one third) will be granted by the state of West Virginia to Cliffs through a forgivable loan. Cliffs expects the new plant to come online in the first half of 2026. The efficiency standards for distribution transformers recently promulgated by the U.S. Department of Energy support the long-term utilization of highly-efficient American-made Grain Oriented Electrical Steel (GOES), ensuring the viability of this investment in Weirton.

This investment will result in reemployment opportunities for 600 USW-represented workers from the indefinitely idled Weirton tinplate mill. The new electrical transformer plant will also generate additional demand for American-made GOES, exclusively produced in the United States by Cleveland-Cliffs, at its Butler Works steel mill in Butler, Pennsylvania. Additional demand for GOES will ultimately result in additional production of GOES at Butler Works, generating the opportunity of employment expansion for the UAW-represented workforce in Butler, Pennsylvania. In addition to Cliffs’ GOES, the new transformer plant in West Virginia will also consume stainless and carbon steel produced by Cliffs in several other of its steel plants in Ohio, Michigan and Indiana.

Lourenco Goncalves, Cleveland-Cliffs' Chairman, President and Chief Executive Officer stated, “Distribution transformers are critical to the maintenance and expansion of America’s electric grid. These transformers are in short supply, and that shortage stifles economic growth across the country. The shortage will continue to be exacerbated by the widespread adoption of Artificial Intelligence in virtually all sectors of the economy, which will exponentially increase the consumption of electricity, in the United States and worldwide. Said another way, there will be no AI without electricity, and there will be no electricity without transformers. Our vision for Weirton is to develop a first-of-a-kind center of excellence for transformer manufacturing that will provide good paying, middle class jobs to skilled workers, and will service our country’s electrical infrastructure needs.”

Mr. Goncalves concluded: “The former Weirton site offers significant growth opportunity, with the needed infrastructure in place and a world class highly-trained workforce ready to be deployed. Very importantly, Weirton is located in West Virginia, a state where the legislative and the executive branches prove every day that things can happen really fast and efficiently. We thank Governor Justice for helping to advance this critical project and the Governor’s West Virginia Department of Economic Development for extending a forgivable loan of $50 million in support of our investment. I would also like to express appreciation to our Weirton host community and numerous elected officials from the region for their ongoing support of Cleveland-Cliffs.”

United Steelworkers Local 2911 President, Mark Glyptis, stated, “This investment by Cleveland-Cliffs will provide employment opportunity for the hard working, skilled Steelworkers of USW Local 2911. The new plant builds on Weirton’s proud legacy of steelmaking, and will establish our region as a hub for manufacturing of transformers needed to support the economic and national security of the United States. I thank Lourenco Goncalves for remaining dedicated to this community and Governor Justice for the strong support by the State of West Virginia. Finally, I reaffirm the commitment of USW Local 2911 to the success and future growth of transformer production in Weirton.”

Weirton Press Conference Featured Speakers

• Lourenco Goncalves, Cleveland-Cliffs' Chairman, President and Chief Executive Officer
• The Honorable Jim Justice, Governor of West Virginia
• West Virginia Delegate Pat McGeehan
• West Virginia State Treasurer Riley Moore
• United Steelworkers Local 2911 leadership

Livestream Details:
Cleveland-Cliffs Weirton Announcement Press Conference
Monday, July 22, 2024
Time: 2:00 PM EDT

The live broadcast is accessible via Cleveland-Cliffs’ YouTube channel:

https://youtube.com/live/lAuPMkpec8c?feature=share

A replay will be available after the event on Cleveland-Cliffs’ channel.

About Cleveland-Cliffs Inc.

Cleveland-Cliffs is a leading North America-based steel producer with focus on value-added sheet products, particularly for the automotive industry. The Company is vertically integrated from the mining of iron ore pellets, production of direct reduced iron, and processing of ferrous scrap through primary steelmaking and downstream finishing, stamping, tooling, and tubing. Headquartered in Cleveland, Ohio, Cleveland-Cliffs employs approximately 28,000 people across its operations in the United States and Canada.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240722617733/en/

MEDIA CONTACT:

Patricia Persico

Senior Director, Corporate Communications

(216) 694-5316

INVESTOR CONTACT:

James Kerr

Director, Investor Relations

(216) 694-7719

Source: Cleveland-Cliffs Inc.

FAQ

What is Cleveland-Cliffs (CLF) investing in Weirton, West Virginia?

Cleveland-Cliffs is investing $150 million to establish a new electrical distribution transformer production plant in Weirton, West Virginia.

When is the new Cleveland-Cliffs (CLF) transformer plant in Weirton expected to begin operations?

The new Cleveland-Cliffs transformer plant in Weirton is expected to come online in the first half of 2026.

How many jobs will the new Cleveland-Cliffs (CLF) plant in Weirton create?

The new Cleveland-Cliffs plant in Weirton will create reemployment opportunities for 600 USW-represented workers from the idled Weirton tinplate mill.

What financial support is Cleveland-Cliffs (CLF) receiving from West Virginia for the Weirton plant?

Cleveland-Cliffs is receiving a $50 million forgivable loan from the state of West Virginia to support the Weirton plant investment.

What type of steel will the new Cleveland-Cliffs (CLF) transformer plant in Weirton use?

The new Cleveland-Cliffs transformer plant in Weirton will use American-made Grain Oriented Electrical Steel (GOES) produced at its Butler Works steel mill in Pennsylvania, as well as stainless and carbon steel from other Cliffs plants.