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Oct 21, 2024

Cleveland-Cliffs moves ahead with $150M electric transformer plant | Utility Dive

The electric industry is facing a transformer supply shortage, which the widespread adoption of AI will continue to exacerbate, according to Cleveland-Cliffs President and CEO Lourenco Goncalves.

The electric industry is facing a transformer supply shortage, which the widespread adoption of AI will continue to exacerbate, according to Cleveland-Cliffs President and CEO Lourenco Goncalves.

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The electric industry is facing a transformer supply shortage, which will continue to be exacerbated by the widespread adoption of AI in virtually all sectors of the economy, according to Cleveland-Cliffs President and CEO Lourenco Goncalves. “Said another way, there will be no AI without electricity, and there will be no electricity without transformers,” Goncalves said in the Q2 earnings call.

Cleveland-Cliffs announced last quarter it planned to close the Weirton, West Virginia, plant due to the International Trade Commission’s decision not to implement anti-dumping and countervailing duties on tin mill products from Canada, China, Germany and South Korea.

Due to the surge in unfairly priced tinplate imports flooding the U.S., Goncalves noted during a Q1 earnings call, the company’s desire to stand up a transformer factory in West Virginia using its existing workforce.

The state of West Virginia granted Cleveland-Cliffs $50 million to support the project while the steel company will supply the other $100 million.

Goncalves said the company will also seek funding from the Department of Energy.

“I'm going to also talk to the Department of Energy. If you notice, we didn't have even time to negotiate some type of grant from the DOE, but I'm sure that my dear friend Secretary Jennifer Granholm will be more than happy to sit down with me and see if the federal government can help. So we're in good shape,” Goncalves said on the call.

Once it restarts operations as a transformer plant, the facility will use currently under-utilized capacity to produce 30% to 40% more tonnage of grain-oriented electrical steel. It’s also expected to increase demand for GOES production at its steel mill in Butler, Pennsylvania, according to a July 22 earnings press release.

“With the ongoing trend on electrification and the growing adoption of electricity-heavy artificial intelligence, I can't think of a better business move than the production of electrical transformers,” Goncalves said. The CEO noted that pad-mounted transformers can sell for up to $300,000 per piece.