Coke oven at Middletown Works idle and may be torn down; company buys scrap business for $775M

The coke oven at Cleveland-Cliffs in Middletown has been idled and may be demolished, according to union president Neil Douglas. He said the 90 employees at the oven are being transferred to different departments. NICK GRAHAM/STAFF
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The coke oven at Cleveland-Cliffs in Middletown has been idled and may be demolished, according to union president Neil Douglas. He said the 90 employees at the oven are being transferred to different departments. NICK GRAHAM/STAFF

Union president says 90 workers at coke oven being transferred in the plant.

Cleveland-Cliffs has idled the coke oven at Middletown Works and spent $775 million buying a scrap business, according to the company and union officials.

Neil Douglas, president of the International Association of Machinists and Aerospace Workers Local Lodge 1943, said the idle coke oven may be torn down because of its age and cost to repair.

The coke oven, which turns coal into metallurgical coke through extreme heat, is nearly 70 years old and the company figured it was cheaper to tear down and possibly replace then make the needed repairs, Douglas said.

Idling the oven was “a business decision,” he said.

He said the 90 union employees who work at the coke oven are being transferred throughout the steel mill. He said no layoffs are planned. In fact, the company is trying to hire 200 hourly employees, he said.

Douglas said there are about 1,750 union workers and that number changes almost daily with new hires, retires and those who quit.

Cleveland-Cliffs, which purchased AK Steel for $1.1 billion in 2020, is adjusting its wages and health care trying to attract more employees, according to Douglas.

Through the use of significant amounts of hot briquetted iron in its blast furnaces and the adoption of natural gas injection, Cleveland-Cliffs has “consistently reduced our reliance on coke,” said Patricia Persico, director of corporate communications

She said the oven is idling “pending further evaluation.”

The company bought the U.S. assets of ArcelorMittal for $1.4 billion last year, making it the largest flat-rolled steel producer in North America, officials said.

On Monday, Cleveland-Cliffs announced that it had entered into a definitive agreement to acquire Ferrous Processing and Trading (FPT), for a total enterprise value of approximately $775 million.

Based in Detroit, FPT is among the largest processors and distributors of prime ferrous scrap in the United States, representing approximately 15% of the domestic merchant prime scrap market, according to Cliffs. FPT processes approximately three million tons of scrap per year, approximately half of which is prime grade.

FPT operates 22 scrap processing facilities, with approximately 90% of revenues originating from its Midwest locations, primarily in Michigan and Ohio.

“Cleveland-Cliffs is entering the scrap business as a major player through the acquisition of a large scrap company,” said Lourenco Goncalves, president and CEO of Cliffs. “Even more importantly, FPT has a very meaningful presence in prime scrap.”

The acquisition has been approved by the board of directors of Cleveland-Cliffs and is expected to close in the fourth quarter of 2021, subject to the receipt of regulatory approval and the satisfaction of other customary closing conditions, the company said.

The company will discuss the acquisition in further detail on its third-quarter 2021 earnings conference call at 10 a.m. Oct. 22.