Cleveland-Cliffs Pulls Plug on Plan to Build West Virginia Transformer Plant
Cleveland-Cliffs Inc. executives will not build an electric transformer manufacturing plant at an idled West Virginia sheet steel plant, with the steel maker’s CEO saying the company’s partner in the plan is going in a slightly different direction.
Lourenco Goncalves, the chairman, president and CEO of Cleveland-Cliffs, said last July his team would invest $100 million and be supported by a $50 million forgivable loan from West Virginia to build a distribution transformers plant that would employ 600 people.
The factory would use grain-oriented electric steel from Cliffs’ plants in the region to help meet soaring demand for transformer equipment. Hitachi Energy CEO Andreas Schierenbeck recently told T&D World the average lead time for transformers is now 115 to 130 weeks, up from 24 to 36 before the COVID pandemic.
Speaking May 8 after Cliffs’ reported its first-quarter results, Goncalves said the company’s unnamed partner, which was to provide the intellectual property for the plant, is “having second thoughts” about the project’s location and size. The partner, he added, is planning to build its next plant alone.
“I will be supplying them and signing a long-term supply agreement because they can’t import anymore grain-oriented electrical steels from Japan or from Korea or from China,” Goncalves said on a conference call. “I will be right there to sell to them at market prices. And if they want to go to Weirton, the plant is still available and we’ll transact in a very friendly way with the partner and have them built in the plant there.”
The decision to abandon the Weirton project is one of a number of cutbacks Cleveland-Cliffs executives are making to respond to high costs and slipping demand. The company plans to lay off nearly 1,000 workers in the coming weeks as it fully idles two plants in Pennsylvania and one in Illinois as part of a plan to save $300 million annually. Fellow Endeavor Business Media brand IndustryWeek has more on that story.
