Steelmaker Cleveland-Cliffs Explores US Sites for Rare Earths
Sites in Michigan, Minnesota Show Promise
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Shares of Cleveland-Cliffs Inc. jumped as much as 25% after the U.S. steelmaker posted stronger-than-expected earnings, disclosed a pact with another metal producer and said it’s evaluating whether rare earth minerals can be extracted from its mines.
The company said Oct. 20 that it conducted geological surveys at its U.S. mining operations and discovered two sites with potential to produce rare earth minerals. The locations, one in Michigan and another in Minnesota, show “key indicators of rare-earth mineralization,” the company said in its earnings release on Oct. 20.
Cleveland-Cliffs also said it signed a memorandum of understanding with an unnamed steel producer in the most recent quarter. The Ohio-based company did not offer further details on the agreement. The deal could potentially involve a joint-venture investment to help alleviate Cleveland-Cliffs’ “debt problem,” Citigroup Inc. analyst Alexander Hacking said in a note.
“Investors had been discussing such a possibility, with the focus on Korea,” Hacking said.
Shares of Cleveland-Cliffs rose to $16.70 in New York on Oct. 20. The steelmaker posted higher year-over-year revenue in the third quarter and adjusted earnings that beat analyst expectations. The company has largely benefited from President Donald Trump’s tariffs on foreign steel, with its domestic production enjoying reduced competition from cheaper imports.
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Cleveland-Cliffs is jumping into the race for critical minerals as rare earths, essential to consumer electronics and the transition to cleaner energy, become aflashpointin the trade war between the US and China. The Trump administration is on the hunt for alternative suppliers and has moved to expanddomestic productionwhile China, which dominates mining and processing of rare earths, curbs exports.
“The renewed importance of rare earths has driven us to re-focus on this potential opportunity at our upstream mining assets,” CEO Lourenco Goncalves said Oct. 20 in the earnings statement.
If the sites in Michigan and Minnesota are able to produce rare earths, they “would align Cleveland-Cliffs with the broader national strategy for critical material independence, similar to what we achieved in steel,” said Goncalves. “American manufacturing shouldn’t rely on China or any foreign nation for essential minerals, and Cliffs intends to be part of the solution.”
The company is meanwhile positioning itself to benefit from efforts to relocate automotive manufacturing and related industries to the U.S. from other countries, Bloomberg Intelligence analyst Richard Bourke wrote in a note.
“The company has renewed its emphasis on the automotive market, where increased volume and higher pricing could improve margins,” said Bourke. “However, a shift in U.S. trade policy remains a key risk, along with Cliffs’ reliance on integrated blast-furnace steelmaking, which leaves it less flexible than Nucor and Steel Dynamics.”
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