Cleveland-Cliffs to idle 3 lines at former Rouge Steel plant

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Less than two months after acquiring AK Steel in a $1.1 billion deal, Cleveland-Cliffs Inc. is permanently shuttering three operations at the famed Dearborn Works plant near Detroit.

The Ohio-based steelmaker plans to begin terminating 343 employees on July 5, the company said in a Worker Adjustment and Retraining Notification Act of 1988 notice sent to the state of Michigan.

“Due to rapidly deteriorating business conditions, Cleveland-Cliffs has made the difficult decision to permanently shut down the hot strip mill, annealing, and tempering operation,” the May 1 WARN notice to the state said.

The former Rouge Steel plant, once part of the world’s largest manufacturing complex in Dearborn, fell on hard times after Ford Motor Co. spun it off in 1989 into an independent steel company.

Russian steelmaker OAO Severstal acquired the assets of the bankrupt steel mill for $285 million in 2004. The company made several acquisitions of U.S. steel plants totaling $2.7 billion in transactions over the next few years, increasing production capacity from 2.5 million tons in Dearborn to 11.4 million tons of capacity across the U.S.

But the Great Recession collapsed steelmakers across the U.S. and Severstal North American revenue plummeted to $3.4 billion in 2011 from $8.2 billion in 2008.

To make upgrades at its Dearborn mill, Severstal sought a $730 million loan from the U.S. Department of Energy loan to modernize operations to make advanced high-strength steel. The DOE approved the loan in 2011.

But Republican U.S. senators from Indiana and Pennsylvania questioned whether public financing should be used to subsidize the operations of a foreign-owned subsidiary. Indiana and Pennsylvania are home to domestic steelmaker U.S. Steel.

The DOE rescinded the loan offer in January 2012.

Severstal shifted to divesting, shedding the now-bankrupt Sparrows Point plant in Maryland, along with plants in West Virginia, Ohio and New York. The $1.2 billion divestiture reduced the steelmaker’s overhead — dropping from 8,000 employees to 2,000 — and allowed it to shed 7.3 million tons of capacity in 2014.

AK Steel acquired the Dearborn Works plant as part of part of Severstal’s divesting of its entire U.S. operations for $2.3 billion in September 2014.

Cleveland-Cliffs, the largest iron ore pellet producer in North America, acquired the plant from AK Steel in December 2019 for $1.1 billion with plans to create a vertically-integrated company that paired Cleveland-Cliff’s pellet production with AK Steel’s rolled and stainless steel operations.

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Saurabh Shukla

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