Lourenco Goncalves president, chairman and CEO of Cleveland-Cliffs opened the Steel Success Strategies 2021 (SSS 2021) conference on Monday November 8th.  
 
Goncalves' keynote presentation spoke about the company’s journey, the steel industry's sustainable future, and the need to unite as a United States steel industry in an ever-changing global environment. 
 
In this blog we will recap some of the highlights from this industry giant at SSS 2021. Goncalves became a major force within the US industry in a relatively short amount of time by transforming Cleveland-Cliffs from its five-iron ore mining and pelletizing facilities into a steel producing giant with acquisitions of AK Steel and ArcelorMittal. He took Cleveland-Cliffs from a revenue of $2 billion in 2019 to an estimated $21 billion in 2021 and this is what he had to say. 

How green is US steel compared with the rest of the world? 
 
The US is the locomotive that is leading the green steel movement in the world. We’re not getting pushed by anyone. We’re in the lead. The rest of the world is chasing us, but we need to hold other countries accountable for their CO2 emissions. 
 
Steel only accounts for 1% of total US emissions and the US steel industry is only responsible for 1% of the global share of steel emissions while China is 15%. More people need to know and understand that. Agriculture is 10% of US emissions, so until someone can figure out how to stop [gas coming out of] cows, that won’t change. 
 
The US steel industry needs to stand together going forward in the face of competition with European steel-producing countries aided by subsidies and Chinese companies basically run by the government. 
 
How can US steel producers stay competitive while keeping emissions under control? 
 
We don’t need to be blast furnace steelmakers against electric-arc furnace steelmakers, integrated mills against mini-mills. We don’t need to be one service center competing against another service center. We need to be one United States steel industry leading the world. It’s about leveling the playing field. 
 
For example, Cliffs now has four fully integrated steel mills, one standalone blast furnace, five electric-arc furnaces, one operational DRI plant, five high-end automotive finishing facilities and soon – with the recent $775 million acquisition of Ferrous Processing & Trading Co (FPT) – 22 scrap processing facilities.  
 
Cleveland-Cliffs recently added FPT to its successful acquisitions list.

Is the complete consolidation of the US steel industry the way forward? 
 
Our FTP acquisition basically provides the company with control over the entire life cycle of steel. With the purchase, expected to be completed later this year, Cleveland-Cliffs will control 15% of the prime scrap merchant market (1.5 million prime tons). 
 
It optimizes productivity in Cliffs’ BOFs and facilitates the endless life cycle between Cliffs and the [Original Equipment Manufacturer]. It comes at a time when supply for prime scrap is shrinking and demand is exploding. 
 
How will decarbonization issues impact demand and price for steelmaking raw material in the US moving forward? 

Current North American demand for prime scrap, pig iron, direct-reduced iron/hot-briquette iron (HBI) is 21 million gross tons for 2021. Demand is expected to grow to 23.3 million tons by 2022, 24.4 million tons by 2023, 26.3 million tons by 2024 and 29.6 million tons by 2025. 

 
 

See into the future:
find out what’s driving  price movement in the US steel market and where prices are heading next with our North American steel forecasts.
 

What is driving all of this demand? 
 
8.6 million gross tons of demand growth is expected over the next four years. The boom in capacity expected in the coming years adds up to a world fighting over prime scrap and he predicted there will be winners and losers. 
  • Steel Dynamics’ Sinton, Texas, plant with a startup this year and 1.6 million tons of estimated demand 
  • Bluescope Expansion in 2022 and 0.6 million tons of estimated demand
  • Gallatin Expansion in 2022 and 0.7 million tons of additional demand
  • Brandenburg in 2022 with 0.2 million tons of demand 
  • AM/NS Calvert in 2023 with 0.8 million tons of demand
  • US Steel in 2024 with 1.6 million tons of demand
  • Nucor in 2024 with 1.6 million tons of demand
  • Algoma in 2025 with 1.5 million tons of demand
 
How can US steel companies minimize exposure to risk and stay afloat?  
 
The competent companies with a plan will thrive and the incompetent companies will disappear.  
 
Plan like a pro: future proof your business and learn how the leading US steel companies plan strategically to secure the best possible pricing conditions.  
 
What is Cleveland-Cliffs doing differently to stay relevant and successful? 
 
We will reclaim our scrap from our own facilities and use our HBI in our blast furnaces. But we will not be supplying pig iron to the market. That’s not going to happen. 
 
Along those lines, Goncalves added that the 5 million tons of pig iron the US imports on average is not environmentally friendly. 
 
“Imported pig iron and transportation is significantly more CO2 intensive than US blast furnace steel.”, he said, while calling for upstream Scope 3 emissions (transportation and distribution tied to suppliers and customers, emissions from the use of a product or service sold) to be reported. “I have to report my Scope 1 emissions [direct sources owned and controlled by a company] and Scope 3 emissions aren’t reported. That needs to change.” 
 
Our environmentally friendly raw material portfolio with half of FPT’s output being prime scrap, the use of 27 million gross tons of pellets throughput from five mines [85% less CO2 intensive than sinter] and 1.9 million tons of annual HBI capacity with natural gas as the reductant and the “flexibility to use hydrogen when available.” 


Read more from our steel decarbonization series.