Nick Pope
Contributor
The Biden-Harris administration gave a major steel producer $500 million to go green in March, but the company may have to walk away from the handout, its CEO told Politico.
The Department of Energy (DOE) announced in March that Cleveland-Cliffs was selected for receipt of half a billion dollars to help the company produce “green,” low-carbon steel. However, CEO Lourenco Goncalves told Politico that his company may have to forego the funding because buyers are seemingly not interested in paying more to buy the company’s “green” steel and because Cleveland-Cliffs still has to front more than $1 billion to convert one of its coal-powered facilities to hydrogen-powered.
“There are only two ways to fix that: One is they change their minds and pay. So far, not very successful. The other way is for me to go back to what I was before and emit more,” Goncalves told Politico, referencing buyers’ unwillingness to pay a premium for more eco-friendly steel. “That’s a decision that I’m going to have to make very soon.” (RELATED: Biden Vowed To Protect American Steel — But Another Effort Of His Could Destroy It)
The DOE has also named Cleveland-Cliffs as the recipient of a different $75 million grant meant to help the company replace two of its natural gas-powered furnaces at its facility in Butler, Pennsylvania, according to Politico. The $500 million grant is intended to cover some of the costs of converting to hydrogen power at a plant in Middletown, Ohio.
However, even with the $500 million infusion from the government, the economics of the Middletown conversion still may not make sense for the company, Goncalves told Politico. Cleveland-Cliffs is one of the top suppliers of steel to the auto industry, which has also faced its own green troubles as automakers lose considerable sums of money on increased electric vehicle (EV) production that the Biden-Harris administration has effectively mandated with stringent regulations.
“I’m still trying to figure out if it even makes sense with the grants because the grant is $500 million, the entire project is $1.6 billion. I still have to pony up $1.1 billion,” Goncalves told the outlet. “I’m not going to do it if the government and the general public are not really supportive of that.”
Goncalves added that he is concerned that his company will lose market share to competitors in India and China, where production is comparatively inexpensive and environmental standards are not as rigorous, according to Politico. To date, purchasers have demonstrated that they would rather buy cheaper, less environmentally-friendly steel than pay a premium for a “green” product.
It is unclear exactly how much more the company’s “green” steel costs buyers, but one estimate from BloombergNEF pegs the premium at about 40%, according to Politico.
The company has already received a portion of the $75 million grant, and it is still negotiating with the DOE over the terms of the $500 million grant for the Middletown facility, Politico reported. If the company ultimately decides to walk away from the Middletown grant, it would be a major setback for the administration’s wider push to make the industrial sector of the U.S. economy more climate-friendly.
Neither Cleveland-Cliffs nor the DOE responded immediately to the Daily Caller News Foundation’s requests for comment.
All content created by the Daily Caller News Foundation, an independent and nonpartisan newswire service, is available without charge to any legitimate news publisher that can provide a large audience. All republished articles must include our logo, our reporter’s byline and their DCNF affiliation. For any questions about our guidelines or partnering with us, please contact licensing@dailycallernewsfoundation.org.
If I was buying steel smelted with hydrogen I sure as hell would not be paying a premium until it can be proven to be free of hydrogen inclusion (embrittlement)
In fact I would avoid it like the plague for a use where My company could be sued
The hydrogen is used to smelt iron ore. Steel is produced from pig iron using the Bessemer converter or the basic oxygen furnace. Steel contains small amounts of carbon which is obtained from coke by the pig iron in the blast furnace.
This proposed hydrogen process is crazy. How is the enormous amount of hydrogen required for this process to be produced?
Some imagination required.
From what I understand of green steel using hydrogen it’s only good at recycling, not producing from iron ore?
Correct, feedstock is not iron ore but scrap iron and steel which already has the carbon. Due to impurities and the effort needed to remove them you end up producing commodity steels as the easy route. Try to make auto grade steels or steel for submarine hulls and it becomes even more expensive,
An economy lacking high-carbon steel is doomed, or at least sentenced to a very impoverished lifestyle.
The electric furnace is used for recycling scrap iron and steel.
At the moment only small quantities of steel from iron ore produced by the hydrogen route have been used. In 2021, for example Volvo used 3 tonnes of ‘fossil free steel’ in an electric dumper.That steel came from SSAB in Sweden
SSAB now aims to be the first steel company in the world to deliver ‘fossil free steel’ to the market. But not until 2026.It will use hydrogen-reduced iron produced at HYBRIT’s pilot plant in Lulea, Sweden.
They make no mention of how much steel they expect to produce in 2026 but it is worth noting that the World Steel Organisation says worldwide production of steel in 2023 was 1892m tonnes.
Embrittlement has been investigated and not found to be a problem. Economics is another matter.
In Nature on this topic really
Yet again, it is concerning that the CEO of a major steel producing company was so technically naive, that he didn’t give the officials promoting this absurd boondoggle the bum’s rush in five minutes.
Math is hard; especially so for bureaucrats facing ignorant totalitarians. Just ask the oil industry.
He would have to do a proper feasibility study with oodles of reports. He has shareholders to answer to. A simple ‘no’ would not suffice.
And when you mean “shareholders” you really mean Blackrock, State Street and Vanguard, all who are running point on ESG/DEI unhuman policies.
He must have applied for the grant to be awarded it, now he has worked out the figures don’t stack up. Numpty but at least he worked that out before spending the $500m.
He’s not naive. He’s trying to keep the company alive and subsidized foreign steel is tough to compete with. It does show that the nitwits at DOE and in general the Xiden/Kamalama ding dong administration think they can ignore economic reality. And my money is on her finding even bigger idiots if she somehow becomes the world’s most famous example of the Peter Principle.
We had plenty of prior evidence that the Biden/Harris administration believe they can ignore economic reality. The only thing receiving first class maintenance for the past 4 years have been the printing presses at the Mint.
Printing money has brought the unemployment rate down from 6.4 percent when Pres. Trump left office to 4.2 percent currently.
Printing more money caused inflation to increase, but it has dropped back to below the long-term average of 3.28 percent to 2.5 percent currently.
And caused the average household’s net worth to decline by about $30,000. Yes, math is hard.
Not to mention a national debt that our great grandchildren will inherit.
But not to the target rate, has it?
Notorious example.
$500 million could make up a few good bonuses, however.
Emphasis on the word “few”.
Hydrogen is almost 100% formed from natural gas. So in the end steel producers are adding another step that raises costs but provides no benefits.
That’s the beauty of being unburdened by any understanding of economics.
Precisely. The real route to reduced emissions (and greater prosperity) is relentlessly improving the efficiency of every industrial process, and this nonsense is the exact opposite.
Carbon adds hardness to steel. Hydrogen adds brittleness. What could possibly go wrong.
Low carbon steel is essential for production of stainless steel precluding the need of Titanium or Niobium stabilization.
Of course carbon steel is alloyed with !8% Cr and 8% Ni which aren’t cheap in the first place.
Small quibble. Steel does not exist until you add carbon.
In a former life I used to order all kinds of different steels. Tool steels, O steels, Steels for rolling threads, etc.
Any hydrogen in the tool steels will stop their ability to cut other steel or the ability to harden to high Rockwell numbers.
Please comment on “electric steel” — aka, silicon electrical steel — a specialty of Cleveland-Cliffs Inc.
Iron with carbon added becomes steel. “Electric steel” seems to have come into volume use after I retired. But the use of the word steel would go against history.
Steel is an alloy of iron and carbonwith improved strength and fracture resistance compared to other forms of iron.
Somebody from the DoE needs to inform the CEO of Cleveland-Cliffs that is not how state funding works.
No one, that has been selected to receive the funding needs to ever consider its efficacy. The rules are clear,
You just take the money, then when it does not work/won’t work, from considered study and before you spend share holders money, you go back to the DoE and ask for three times what has already been offered.
When even that additional financial input fails to deliver any benefit, you can always go back for more.
He needs to talk to his Wind Energy CEO contacts to get the full rules of state granting options. They (the renewables industries) have been playing the tax payers as fools, or more accurately government agencies that spend tax payers money as fools for years.
They were right.
He knows a loss of a billion dollars on a boondoggle would kill his company. Lots of debt already.
The twit at the helm of CC has already finagled (insert your own synonym) his way into paying 50% of the Nippon Steel offer for US Steel. The Biden Regime deep-sixed the Nippon offer at CC CEO’s request because of ‘national security concerns’ (insert your preferred synonym here). In other words, the Regime gave CC well over a billion in that deal. And this will further destroy native steel production — itself somewhat of a real national security threat, not just a concern.
Quite predictable. These dolts at the DOE think tossing around taxpayer money will be the saving grace to push this green energy rubbish. Incompetence is beaming at the DOE. The stupidity is simply stunning. Get out of the way and stop spending taxpayer funds on projects you know nothing about. The USA is on the precipice of a fiscal cliff and these “clueless wonders” and this Biden administration are spending money we don’t have. Madness!
Meanwhile, TSA classifies peanut butter as a liquid.
You’re on a roll this morning! ^^^
Pent up frustration. I was in the Netherlands for a week and I’m still contemplating why they don’t have potholes.
Let me know what you conclude.
How dare you use the words Incompetence and DOE in the same sentence! That is just like using Intelligence and Military in the same sentence. Or worse, Efficiency and Government. Your mouth should be washed out and your brain reprogramed. We have ways of doing that!
“buyers are seemingly not interested in paying more to buy the company’s “green” steel”
Oh, shocking- like, they don’t want to help save the planet! 🙂
If only “green steel” were legally mandated for all wind turbine towers…I can dream.
“purchasers have demonstrated that they would rather buy cheaper, less environmentally-friendly steel than pay a premium for a “green” product”
When green dreams meet green reality.
Bronze.
Why don’t we go back to using bronze for all our metal needs?
Our forebears did it for centuries.
Sheesh, we’re celebrating going back to using windmills like our forebears did, why can’t we do bronze too?
(/sarc, if I really need to)
Stone would be even better. Better aligned with the DOE mindset.
Yes, we can make synthetic jadeite using uh uh. Well, forget making engineering stone using water wheels and wood fires.
No company should be given our money so they can keep the government or anyone else happy.
This sounds like a rerun of Dumb and Dumber. Quit pissing our tax dollars away on this kind of idiocy.
Sometimes I think they are having a competition.