Lourenco Goncalves said on CNBC about a year ago that CEOs are “cookie-cutter,” and that he’s “different.”
If that’s the case, that’s encouraging news for Ashland.
Here’s why: The Cleveland-Cliffs CEO specifically mentioned the “potential start-up” of Amanda — AK Steel Ashland Works’ blast furnace — as part of Cliffs’ grand plans upon acquiring AK Steel for $1.1 billion earlier this week.
Goncalves claims he’s different because he’s a straight shooter. He cuts through the mularkey, so to speak.
So what would Goncalves have to gain by mentioning Ashland if he didn’t sincerely mean it?
Would it have been a dealbreaker had it not been included in his plan? We don’t think so. A specific mention of Ashland producing pig iron is all the more reason to believe there’s a great chance for the furnace to fire up for the first time since idling in December 2015.
If Goncalves, who’s been the head of Cliffs since August 2014, is indeed a forthright person, he genuinely means it when he says, “I know the historic importance of what we are doing. We are enhancing the legacy of both Cleveland-Cliffs and AK Steel.”
Cliffs’ self-sufficiency and iron ore coupled with AK Steel’s established brand — and the automotive market’s dependency on AK — makes for a monster marriage.
The bulk of Cliffs’ facilities are located in Minnesota and Michigan. This acquisition adds Ohio, Pennsylvania and Indiana to the mix — Kentucky, too, if all comes to fruition. Also in Kentucky (Bowling Green) is a downstream steel products assets facility affiliated with AK. The same goes for Alabama (Sylacauga). Mountain State Carbon, also with AK, is in Follansbee, West Virginia.
With an HBI (hot briquetted iron) approach, the blast furnace will produce “greener” steel, according to Goncalves. An HBI plant will begin operating in Toledo, Ohio, in early 2020.
While HBI and blast furnaces aren’t a new pair, the Cliffs-AK merger figures to shine a brighter light on that concept.
Blast furnaces will likely never be as plentiful as they were 40 years ago — when there were nearly 300 operating in the United States.
Whatever the strategy, if the merger brings Amanda back into the fold, Cliffs will forever be viewed as Superman swooping into Ashland to save a freefalling entity. And it happened 28 days before the closing date.
But, be careful to envision the blue flame before it burns.
It’s OK to be optimistic. It’s possible to be both optimistic and realistic simultaneously.
The reality is, if this happens, it will take time. The transaction is set to close by the end of the first half of 2020.
If and when Ashland gets the go-ahead, there will be jobs immediately. But the furnace won’t fire up in the blink of an eye.
But — let’s squash these rumors now — Amanda can physically be fired up again. Anyone who indicates otherwise is misinformed.
Will it? That question remains to be answered.
