Magnetics Business & Technology - July/August 2020 - 24

INDUSTRY NEWS

Cleveland-Cliffs Acquires AK Steel and Pursues Change to U.S. Trade Policies on Laminations,
Transformer Cores & Electrical Steel

Having closed on his company's $3 billion acquisition of AK Steel,
Cleveland-Cliffs CEO Lourenco Goncalves is wasting no time
seeking change to U.S. trade policies that he says unfairly hurt the
steel maker's business as a last bastion of domestic production
of grain-oriented electrical steel (GOES) used to build motors and
transformers.
The acquisition was completed in March, integrating Cliffs as a
mine operator and North America's largest producer of iron ore pellets, downstream into the production of value-added steel and specialty manufactured parts for the automotive industry by AK Steel.

Lourenco
Goncalves, CEO
of ClevelandCliffs

"This is a new era for Cleveland-Cliffs as a producer of differentiated, high quality iron ore, metallics and steel in North America," said Goncalves.
The new Cliffs will begin from a unique position of
strength in our industry, with a dynamic combination of assets including two efficient integrated blast
furnace steel mills, two electric arc furnace plants,
a new state-of-the-art hot briquetted iron (HBI) plant
and several other highly technologically developed
facilities.

AK Steel, based in West Chester, OH and now
a wholly owned subsidiary of Cliffs, is a leading
producer of flat-rolled carbon stainless and electrical steel products
and automotive steel parts. It makes both grain-oriented and nonoriented electrical steel.
Its DI-MAX HF-10X, for example, is a fully processed, non-oriented
electrical steel used in high speed motors, traction motors, aircraft
generators and other rotating equipment operating at frequencies
above 60 Hz, making it particularly applicable for the manufacture

Magnetics Business & Technology * July/August 2020

of modern hybrid and electric vehicle motors. Its grain-oriented
electrical steels (GOES) are iron-silicon alloys developed to provide
the low core loss and high permeability required for efficient and
economical electrical transformers. GOES is considered the most
energy efficient electrical steel and used in transformers where
energy conservation is critical, making it a key element of electric
power grids.

Battle to change tariffs

The effort on changing trade policies began in March while the
acquisition was pending. Goncalves warned lawmakers that without
better protection against imports of electrical steel products into
the U.S., two of AK Steel's mills would be forced to close with the
loss of 1,600 jobs. Mills in Butler, PA and Zanesville, OH -- the last
producers of grain-oriented electrical steel in the U.S. -- are unprofitable because of a loophole in President Donald Trump's "Section
232" steel tariffs, said Goncalves.
He was one of several steel executives who told the Congressional Steel Caucus that import protections for the industry are still
inadequate amid a global steel glut fueled largely by excess capacity in China. He said that the 25% tariffs on steel imports aimed
at boosting U.S. national security failed to include electrical steel
laminations and cores used in transformers and motors. This has
caused a massive increase in imports of these partially processed
downstream products from China and other countries into the U.S.
through Mexico and Canada.
In April, a bipartisan group of lawmakers urged President Trump to
address the unfair trade practices that are threatening AK Steel's
electrical steel business. In the letter, the Representatives expressed concern that some bad actors are intentionally avoiding
national security tariffs imposed on imports of grain-oriented electriwww.MagneticsMag.com

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Magnetics Business & Technology - July/August 2020

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