Cleveland-Cliffs' leader said the company closed down Blast Furnace #4 at Indiana Harbor Works in East Chicago early this year out of concerns over carbon emissions.

Chairman, President and CEO Lourenco Goncalves explained the decision in a conference call with investors Friday.

"First and foremost, the shutdown of Indiana Harbor No. 4 was driven by our commitment to reduce our carbon footprint," he said. "We can only do that because Indiana Harbor No. 7 is a massive consumer of hot briquetted iron."

Cleveland-Cliffs has been using more HBI in its blast furnaces, which reduces the amount of coking coal it has to burn.

"We use a much lower coke rate over there," Goncalves said. "We generate a lot less CO2 per ton of steel produced. And we are able to serve the entire Indiana Harbor complex, plus Riverdale, just operating the Indiana Harbor 7 furnace. That's also because we melt a lot of scrap in Indiana Harbor and Riverdale."

Cleveland-Cliffs will continue to operate in East Chicago with just Indiana Harbor No. 7, which is the largest blast furnace in North America.

"So that's basically adapting the hot end to the size of the market that has been there and we will be there in the future and doing that in the most environmentally friendly way," Goncalves said. "So I believe that we are pretty optimized at this point. We don't have any intentions to reduce our footprint or grow our footprint. That's the footprint to have."

After acquiring Indiana Harbor Works and other ArcelorMittal USA assets, Cleveland-Cliffs invested $100 million in Blast Furnace No. 7 to set it up for the future.

"When we acquired ArcelorMittal USA and based on our experience immediately after we acquired AK Steel, we knew we would have to spend significant money to bring in the assets to our own higher standards," Goncalves said. "That has been done and done very well. By now, we have all the equipment and technology in place to meet the needs of our most demanding customers in automotive and other sectors. Actually, our capital spending in 2023 should decline when compared to 2022."

The company said it's made most of the big capital investments needed for the foreseeable future.

"We acquired assets, particularly the set of assets that came from ArcelorMittal, that were not in great shape. We knew that coming in. That's why we paid a price that was much more than the actual value of the assets," he said to the investors. "So I'm sure you recognize that, though it's not like we did not know what was coming. So this being said, all these big costs are behind us."
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