Cleveland-Cliffs, AK Steel merger could mean new life for idle Ashland plant
ASHLAND, Ky. (WSAZ/AP) — UPDATE 12/3/19 @ 1 p.m.
A merger agreement between Cleveland-Cliffs Inc. and AK Steel means Cliffs has acquired all of the issued and outstanding shares of AK Steel common stock.
The company announced Tuesday that they bought out AK for a little more than $1 billion.
AK says the merger will combine with Cliffs to create a vertically integrated producer of value-added iron ore and steel products.
Cliffs is North America’s largest producer of iron ore pellets, and AK says with the companies combined, they will be “ideally positioned to provide high-value iron ore and steel solutions to customers primarily across North America.”
According to a release, one of the strategic and financial benefits of the merger could bring new life to AK’s now idle Ashland location.
“The combined company will ensure pellet volume commitments to AK Steel’s blast furnaces along with Cliffs’ Toledo hot briquetted iron facility, to complement its existing long-term minimum volume pellet offtake agreements with other key integrated steel producers. Further, the potential startup of pig iron manufacturing at AK Steel’s facility in Ashland, Kentucky would create future opportunities for pellet demand and more metallics products without significant additional capital expenditures,” the release says.
The transaction is expected to close in the first half of 2020.
State and local leaders say they’re overjoyed by the announcement.
“We look forward to receiving more details about today’s news. We will work to create and restore good-paying jobs in the Ashland area every day of my administration,” Gov.-elect Andy Beshear said.
“Our goal was to ensure the AK Steel property didn’t sit idle rusting as a reminder of our past. While the loss of Armco/AK Steel will always be deeply felt and grieved in this community, we need to continue to move toward the future and this announcement provides hope and positive energy,” said state Rep. Terri Branham Clark (D).
Ashland City Commissioner Matt Perkins said, “I’m thrilled with the proposed merger and excited that the Ashland furnace was highlighted for potentially reopening. We always knew the site was viable and our people are ready to work. We as a city will support them any way we can.”