Publication date: 02-11-2025
Cleveland-Cliffs is the largest flat-rolled steel producer in North America. The company is also the biggest domestic supplier of iron-ore pellets, which are used to make steel. Its business model is unusual for the region because it is fully integrated: Cliffs owns the mines that produce iron ore, operates furnaces that turn ore into steel, and finishes the steel into products for end users. This vertical structure gives it greater control over costs and quality than competitors who depend on external suppliers.
Cliffs’ operations are organized mainly into two areas. Steelmaking generates almost 90 % of total sales and includes hot-rolled, cold-rolled, and coated steels used in cars, construction materials, and home appliances. Within this segment, automotive clients are the largest customers, accounting for roughly one-third of sales and an even higher share of profits, as these grades of steel carry better margins. The second area, Mining & Pelletizing, produces iron ore, scrap, and hot-briquetted iron (HBI) for internal use and limited external sales. While mining contributes less than 10 % of revenue, it is strategically important because it provides raw-materials security and reduces exposure to volatile ore markets.
Image: Cold-roiled steels
Recent years have been difficult for Cliffs and for the wider steel industry. Prices weakened from their pandemic-era highs, and energy and labor costs increased. After acquiring the Canadian producer Stelco in 2024 for $2,5 billion, Cliffs’ debt load rose sharply while market conditions softened, resulting in weak earnings during 2024 – 2025. Ratings agencies currently classify the company as sub-investment grade (Ba3 by Moody’s, BB- by S&P and Fitch) with a negative outlook, reflecting high leverage in 2025.
However, the earnings base is expected to recover from 2026 onward as several headwinds fade. The company is closing loss-making sites, targeting $300 million of annual savings, and plans to use $425 million of asset-sale proceeds to reduce debt. The expiry in December 2025 of an unfavorable slab-supply contract with ArcelorMittal should raise margins by roughly $500 million per year, while new long-term automotive contracts and higher utilization at the Stelco facilities could add a further $250 – 500 million. Taken together, these effects could lift annual EBITDA toward $1 billion, which would reduce the debt-to-EBITDA ratio from the current double-digit level to around 4 × in 2026 and below 3,5 × later, according to credit analysts.
Cliffs’ liquidity is adequate: it holds about $60 million in cash and over $2,5 billion of unused capacity under its $4,75 billion asset-based lending facility maturing in 2028. The next significant debt maturity occurs in 2027, so the company faces no immediate refinancing pressure. Management has emphasized that all available free cash flow will go toward debt reduction rather than dividends or buybacks.
From a strategic perspective, Cliffs has become an important player in the U.S. effort to strengthen domestic industrial supply chains. The company signed a multi-year offtake agreement with the U.S. Department of Defense to supply grain-oriented electrical steel used in transformers — materials considered critical for national energy and defense infrastructure. It also signed a Memorandum of Understanding (MOU) with a major global steel producer — a preliminary agreement that could lead to deeper cooperation or joint production in 2026. In addition, Cliffs is exploring rare-earth mineral deposits in Michigan and Minnesota, which, if commercially viable, could make the company part of the U.S. critical-materials ecosystem. These initiatives align Cliffs with long-term government programs favoring re-shoring and re-arming, which may support demand stability and access to financing.
The company’s production technology remains mostly based on blast-furnace steelmaking, which is more carbon-intensive than the electric-arc furnaces used by some competitors. While this process allows higher quality for automotive and electrical steels, it exposes Cliffs to future environmental-policy costs. Still, management is investing in hydrogen-ready furnaces and recycling to lower emissions over time.
In the medium term, industry analysts expect steel demand to improve gradually with U.S. auto-production recovery and infrastructure spending. Section 232 tariffs on imported steel (currently 50 %) protect domestic producers and help keep prices above global averages, though the company remains exposed to any future softening of trade protection.
The 7,5 % notes due September 2031 are senior unsecured and guaranteed by key subsidiaries. They rank behind the company’s asset-based lending facility but above subordinated debt. Based on current prices, the yield remains in the high-single-digit range. The bond offers exposure to a strategically important U.S. industrial group that combines scale, policy support, and improving efficiency, while still carrying cyclical and leverage-related risks typical of the steel sector.
as of 30-09-2025 USD bn
| Column 1 | Column 2 | Column 3 | Column 4 | Column 5 | Column 6 |
|---|---|---|---|---|---|
| Assets | 20,9 | EBITDA Margin | 0 % | CFO/Debt | (0,1) |
| Revenue LTM | 18,6 | Net debt | 7,7 | FCF | (0,6) |
| EBITDA LTM | -0,01 | Net Debt/EBITDA | neg | Equity | 6,9 |
| Net Profit LTM | -0,8 | EBITDA/Interest | neg | Debt/Equity | 1,1x |
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