Cleveland-Cliffs Announces New Greenhouse Gas Emissions Reduction Goals

Rhea-AI Summary

Cleveland-Cliffs (NYSE: CLF) has announced new greenhouse gas (GHG) emissions reduction targets.

The company, having already achieved its prior goal of a 25% reduction in Scope 1 and Scope 2 GHG emissions by 2030 relative to 2017 levels, now aims to reduce emissions further by 2035 and 2050.

Specifically, Cleveland-Cliffs plans to reduce Scope 1 and Scope 2 GHG emissions intensity per metric ton of crude steel by 30% and Scope 3 emissions by 20% by 2035, with a long-term goal of near net-zero emissions by 2050.

These reductions will be driven by projects in Middletown, OH, and Butler, PA, conducted in cooperation with the U.S. Department of Energy (DOE), along with other operational initiatives.

Capital expenditure plans remain unchanged despite these new targets.

Positive

• Achieved 25% reduction in Scope 1 and 2 GHG emissions ahead of the 2030 target.
• New target to reduce Scope 1 and 2 GHG emissions intensity by 30% per metric ton of crude steel by 2035.
• New target to reduce Scope 3 GHG emissions intensity by 20% per metric ton of crude steel by 2035.
• Long-term goal to achieve near net-zero emissions by 2050.
• Projects in Middletown, OH, and Butler, PA, supported by the DOE, to drive emissions reductions.
• Capital expenditure plans remain unchanged despite these new targets.

Negative

• New targets may require substantial investment in technology and infrastructure.
• Reliance on DOE collaboration could pose risks if governmental support changes.
• Achieving near net-zero emissions by 2050 is a long-term, ambitious goal with potential for unforeseen challenges.
• Focus on GHG emissions may divert resources from other business areas.

Environmental Analyst

Cleveland-Cliffs' announcement of new greenhouse gas (GHG) emissions reduction targets indicates a progressive move towards sustainability, aiming to cut Scope 1 and 2 emissions intensity by 30% and Scope 3 emissions intensity by 20% per ton of crude steel by 2035. The firm has already surpassed its previous goal ahead of schedule, reflecting robust execution capacity. These ambitious targets align with the Paris Agreement’s objectives, positioning Cleveland-Cliffs as a leader in sustainable steel production.

The prioritization of emission reductions at its Middletown, OH and Butler, PA facilities, with support from the U.S. Department of Energy, underscores a firm commitment to innovative, energy-efficient practices. Understanding Scope 1 (direct emissions), Scope 2 (indirect emissions from energy) and Scope 3 (upstream emissions) is important for evaluating these targets. Achieving near net-zero emissions by 2050 highlights long-term sustainability, yet it will require continuous advancements in technology and industry cooperation.

From an environmental perspective, these initiatives are commendable as they address climate risk and foster corporate responsibility. Investors looking at companies with robust ESG (Environmental, Social, Governance) practices may view this positively, recognizing potential benefits in regulatory compliance and enhanced brand equity. However, it's important to monitor actual implementation and progress towards these goals to ensure they are not merely aspirational.

Financial Analyst

Cleveland-Cliffs’ announcement of new GHG emissions reduction targets is aligned with industry trends towards increased sustainability. It is important to consider the financial implications of such an initiative. The announcement states that the capital expenditure (capex) outlook remains unchanged, suggesting that the firm has already budgeted for these sustainability projects. This is important as it implies that the new environmental initiatives won’t strain financial resources or affect profitability projections.

Given the successful achievement of previous targets, this demonstrates operational efficiency and effective resource allocation. Investors should note the potential for long-term cost savings through improved energy efficiency and reduced regulatory risks associated with GHG emissions. Additionally, the association with the U.S. Department of Energy could bring potential grants or subsidies, further enhancing financial viability.

However, the long-term goal of reaching near net-zero emissions by 2050, while ambitious, will likely demand sustained investment in innovative technologies. This could be a double-edged sword: ensuring future competitiveness and compliance, but also posing risks if technological advancements do not keep pace or if additional funding is required. Investors should keep an eye on any updates to capex plans and potential impacts on the financial performance.

CLEVELAND--(BUSINESS WIRE)-- Cleveland-Cliffs Inc. (NYSE: CLF) announced today that it has set new greenhouse gas (GHG) emissions reduction targets. The Company’s prior commitment to reduce absolute Scope 1 (direct) and Scope 2 (indirect) GHG emissions by 25% by 2030, relative to 2017 levels, has already been successfully achieved well ahead of schedule.

Cleveland-Cliffs’ new goals set forth below, relative to 2023 levels, are all supported by ongoing and planned technological developments to its ironmaking and steelmaking practices:

• A target to reduce Scope 1 and 2 GHG emissions intensity per metric ton of crude steel by 30% by 2035;
• A target to reduce material upstream Scope 3 GHG emissions intensity per metric ton of crude steel by 20% by 2035; and
• A long-term target aligned with the Paris Agreement’s 1.5 degrees Celsius scenario to reduce Scope 1, 2 and material upstream 3 emissions intensity per metric ton of crude steel to near net zero by 2050.

The GHG emissions reduction from 2023 to 2035 will be driven primarily by the Middletown, OH and Butler, PA projects – both to be developed in cooperation with the U.S. Department of Energy, as previously announced – as well as by other operational initiatives and energy efficiency enhancement projects, all included in Cliffs’ previously announced capital expenditure plans. As a result, Cliffs’ capex outlook remains unchanged.

Lourenco Goncalves, Cleveland-Cliffs’ Chairman, President, and Chief Executive Officer said:

“Through the deployment of meaningful investments and our unwavering commitment to our employees and to the communities in which we operate, Cleveland-Cliffs has achieved unquestionable success in reducing GHG emissions, by more than we anticipated and way ahead of our original 2030 target date. Our outperformance has given us the ability to further pursue more ambitious and very relevant new challenges. As a manufacturing leader in America providing good paying middle-class jobs in sustainable ironmaking and steelmaking, Cleveland-Cliffs will, one more time, prove that GHG emissions reduction can and will be done preserving employment, enhancing middle-class and benefiting communities. That is our ultimate goal: to demonstrate to others in our business – in the United States and abroad – that we can be simultaneously a technological and a social leader, with goals driven by our people and for the people. Once it is done, Cliffs’ shareholders and all other stakeholders will have won together.”

About Cleveland-Cliffs Inc.

Cleveland-Cliffs is the largest flat-rolled steel producer in North America. Founded in 1847 as a mine operator, Cliffs also is the largest manufacturer of iron ore pellets in North America. The Company is vertically integrated from mined raw materials, direct reduced iron, and ferrous scrap to primary steelmaking and downstream finishing, stamping, tooling, and tubing. Cleveland-Cliffs is the largest supplier of steel to the automotive industry in North America and serves a diverse range of other markets due to its comprehensive offering of flat-rolled steel products. Headquartered in Cleveland, Ohio, Cleveland-Cliffs employs approximately 28,000 people across its operations in the United States and Canada.

Forward-Looking Statements

This release contains statements that constitute "forward-looking statements" within the meaning of the federal securities laws. All statements other than historical facts, including, without limitation, statements regarding our goals to reduce our greenhouse gas emissions, are forward-looking statements. We caution investors that any forward-looking statements are subject to risks and uncertainties that may cause actual results and future trends to differ materially from those matters expressed in or implied by such forward-looking statements. Investors are cautioned not to place undue reliance on forward-looking statements. Among the risks and uncertainties that could cause actual results, including our ability to meet our greenhouse gas emissions reduction goals in the expected timeframes or at all, to differ from those described in forward-looking statements are the following: impacts of existing and increasing governmental regulation, including potential environmental regulations relating to climate change and carbon emissions, and related costs and liabilities, including failure to receive or maintain required operating and environmental permits, approvals, modifications or other authorizations of, or from, any governmental or regulatory authority and costs related to implementing improvements to ensure compliance with regulatory changes, including potential financial assurance requirements, and reclamation and remediation obligations; potential impacts to the environment or exposure to hazardous substances resulting from our operations; the risk that the cost or time to implement any strategic or sustaining capital project, including any project intended to reduce our greenhouse gas emissions, may prove to be greater than originally anticipated; uncertainties associated with our ability to meet customers' and suppliers' decarbonization goals and reduce our greenhouse gas emissions in alignment with our own announced targets, including those announced in this release; and challenges to maintaining our social license to operate with our stakeholders, including the impacts of our operations on local communities, reputational impacts of operating in a carbon-intensive industry that produces greenhouse gas emissions, and our ability to foster a consistent operational and safety track record. Forward-looking and other statements in this release regarding our greenhouse gas reduction plans and goals are not an indication that these statements are necessarily material to investors or required to be disclosed. In addition, historical, current and forward-looking greenhouse gas-related statements may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve and assumptions that are subject to change in the future.

For additional factors affecting the business of Cliffs, refer to Part I – Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2023, and other filings with the U.S. Securities and Exchange Commission.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240524420377/en/

MEDIA CONTACT:

Patricia Persico

Senior Director, Corporate Communications

(216) 694-5316



INVESTOR CONTACT:

James Kerr

Director, Investor Relations

(216) 694-7719

Source: Cleveland-Cliffs Inc.

FAQ

What are Cleveland-Cliffs' new GHG emissions reduction targets?

Cleveland-Cliffs aims to reduce Scope 1 and 2 GHG emissions intensity by 30% and Scope 3 GHG emissions intensity by 20% per metric ton of crude steel by 2035, with a long-term goal of near net-zero emissions by 2050.

By when does Cleveland-Cliffs plan to achieve near net-zero emissions?

Cleveland-Cliffs plans to achieve near net-zero emissions by 2050.

How will Cleveland-Cliffs achieve its GHG emissions reduction targets?

Cleveland-Cliffs will achieve its targets through projects in Middletown, OH, and Butler, PA, in cooperation with the U.S. Department of Energy, as well as other operational initiatives and energy efficiency projects.

What is the significance of Cleveland-Cliffs' new emissions targets for investors?

The new emissions targets reflect Cleveland-Cliffs' commitment to sustainability, potentially enhancing the company's reputation and aligning with global environmental goals, which could positively influence investor sentiment.

Will Cleveland-Cliffs' capital expenditure plans change due to the new emissions targets?

No, Cleveland-Cliffs has stated that its capital expenditure plans remain unchanged despite the new emissions targets.