A bipartisan Senate letter that was sent to the U.S. Department of Energy Secretary Jennifer Granholm addresses “very relevant economic and national security concerns associated with this proposed efficiency standard,” said the president and CEO of Cleveland-Cliffs.
Late last week, U.S. Sen. Sherrod Brown (D-OH) and a group of 46 bipartisan colleagues sent a letter to Granholm expressing concerns that a new rule proposed by the DOE would place further stress on the electric power industry and supply chains.
The letter also was signed by Sen. J.D. Vance, a Middletown native.
The proposed Energy Conservation Program: Energy Conservation Standards for Distribution Transformers increases efficiency standards on distribution transformers that would require manufacturers to redesign their products for use of amorphous steel cores instead of continuing use of grain oriented electrical steel (GOES) cores, according to the lawmakers.
Cleveland-Cliffs is the last North American producer of GOES cores. Nearly 70% of the electrical steels that Cleveland-Cliffs produces are used in distribution transformer cores. The new DOE rule would eliminate the market for GOES, putting 1,500 jobs at Cleveland Cliffs’ Zanesville Works and Butler (Pa.) Works plants at risk, said Lourenco Gonclaves, president and CEO of Cleveland-Cliffs.
He said Cleveland-Cliffs has “completed a turnaround” of these two mills, investing approximately $50 million the past two years to increase production of electrical steel.
“This transformer efficiency standard proposed by the Department of Energy threatens to regulate GOES out of the distribution transformer market,” Gonclaves said. “Such an outcome would jeopardize the real progress that has been made at these mills in recent years and would fundamentally destroy the economics of continuing to produce GOES domestically.”
Cleveland-Cliffs Zanesville Works and Butler Works facilities also produce Non-Oriented Electrical Steel (NOES), which is used in highly efficient electric motors, including motors for electric vehicles, he said.
“Currently, the United States only has one domestic producer of amorphous steel. Moving to amorphous steel cores, as proposed by DOE, would require this sole domestic supplier to rapidly scale operations from its current market share of less than five percent to accommodate the entire distribution transformer market. Such a recalibration of the supply chain will further delay manufacturing production timelines — currently estimated to be a minimum of 18 months to two years,” wrote the lawmakers.
The Senators urged the DOE to refrain from promoting the final rule that could worsen transformer shortages to the detriment of grid reliability, national security, the clean energy transition, and the domestic supply chain and workforce, they wrote.
Cleveland-Cliffs purchased AK Steel in Middletown for $1.1 billion in 2020. After that the Cleveland-based company bought the U.S. assets of ArcelorMittal for $1.4 billion, making it the largest flat-rolled steel producer in North America, officials said.