Cleveland-Cliffs broke ground Thursday for its $700 million hot-briquetted iron (HBI) manufacturing plant in Toledo, Ohio. HBI is customized feedstock for the domestic electric arc furnace (EAF) steelmakers located in the Great Lakes region

The company estimated the market for its new product at 3 million metric tons. Currently, that amount is supplied by Russia, Ukraine, Brazil and Venezuela, among others. 

Cliffs said the plant will open in the summer of 2020.

“As Cleveland-Cliffs begins the construction of the first hot-briquetted iron (HBI) production plant in the Great Lakes region, we are taking the initial steps to enable EAF steelmakers to produce the specs associated with high margin steels for sophisticated end markets, such as automotive and others,” Chairman, President and CEO Lorenco Goncalves said in a news release. “For several decades, Cleveland-Cliffs has been supplying the American steelmakers in the Great Lakes with customized pellets to feed their blast furnaces. With the growth in participation of EAFs, it was just a matter of time for Cliffs to become a supplier of these important steelmakers."

Feedstock for the EAFs will be regional taconite pellets.

On Friday, Cliffs revealed it will permanently close its Asia Pacific Iron Ores (APIO) mining operations by June 30. The company said increasingly discounted prices for lower-iron-content ore at the Australian mine was a key factor in the decision. Cliffs also noted a legitimate offer from a qualified buyer has not emerged for the property.

Total costs associated with the closure were projected between $140 and $170 million. In a Form 8K filed with the Securities and Exchange Commission, Cliffs said it expects that the majority of these charges will be recorded in the first half of 2018 and excludes any proceeds the company will receive from asset sales and other mitigation strategies.