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- **Automotive Steel Growth**: Secured multi-year contracts with major OEMs, driving Q3 auto shipments to highest since Q1 2024. 9 operational plants position Cliffs to capitalize on U.S. automotive recovery.
- **Rare Earth Opportunity**: Identified potential rare earth deposits in Michigan and Minnesota, aligning with national security goals to reduce foreign dependency.
- **Financial Strength**: Adjusted EBITDA up 52% QoQ to $143M, supported by $300M annualized cost savings. Debt refinancing extends maturity to 2029.
- **Strategic Shift**: Deprioritizing non-core assets (e.g., Toledo plant) in favor of MOU with global steelmaker. Slab contract expiration enables internal production for automotive growth.
- **Defense Contract**: $400M DLA contract for GOES reinforces Cliffs' role as sole U.S. supplier of critical defense materials.


**【CEO Summary Section】**
- **Automotive Steel Recovery**: Q3 marked the best auto steel shipment quarter since Q1 2024, driven by multi-year contracts with major OEMs (Ford, GM, Stellantis) covering 2027-2028. These agreements reflect a strategic shift by automakers to domestic steel to avoid tariffs and supply chain risks.
- **Capacity Utilization**: 9 automotive-grade galvanized steel plants (e.g., Spartan, Dearborn, Middletown) are operational, with capacity to expand production as demand grows. Cleveland-Cliffs is uniquely positioned to meet U.S. automotive demand, unlike competitors with delayed capacity builds.
- **Rare Earth Initiative**: Identified potential rare earth mineralization at sites in Michigan and Minnesota. This aligns with national security goals to reduce reliance on foreign critical materials.
- **Canada Challenges**: Stelco's Canadian operations remain underperforming due to lack of government action against dumped steel imports. Management expects U.S. automotive steel to remain resilient despite Canadian market headwinds.
- **Strategic Partnerships**: Entered MOU with a global steelmaker to leverage U.S. footprint for their North American production. This could lead to asset optimization and reduced focus on non-core assets like Toledo's direct reduction plant.

**【CFO Financial Commentary】**
- **Q3 Financials**: Adjusted EBITDA of $143M (52% QoQ increase), driven by higher automotive mix (30% of shipments) and pricing ($1,032/ton). Unit costs improved due to footprint optimization, with $300M annualized savings on track.
- **Cost Management**: Reduced 2025 CapEx to $525M (from $700M) and SG&A to $550M (from $625M). Debt refinancing extended maturity runway to March 2029, providing flexibility for asset sales proceeds deployment.
- **Contract Transition**: Slab contract with Brazilian index expires Dec 2022, enabling internal production for growing automotive demand. Proceeds from asset sales (e.g., Florida assets to SA Recycling) will reduce debt.

**【Q&A Highlights】**
- **Rare Earth Timeline**: Initial geological assessments ongoing; no timeline for feasibility studies disclosed. Focus on Michigan and Minnesota sites due to proximity to existing infrastructure.
- **Asset Sales Progress**: Sold Florida assets for undisclosed sum; Toledo direct reduction plant remains under consideration but deprioritized due to MOU negotiations. Remaining FPT assets have multiple interested buyers.
- **Cost Reduction Momentum**: Unit costs expected to decline $50/ton YoY in 2025, building on $80/ton reduction in 2023 and $30/ton in 2024. Q4 costs similar to Q3, with no immediate further reductions expected.
- **Electrical Steel Contract**: $400M 5-year DLA contract for grain-oriented electrical steel (GOES) to support U.S. strategic reserves. This underscores Cliffs' position as sole U.S. supplier of critical defense materials.


Cleveland-Cliffs Inc. (CLF) Q3 2025 Earnings Call Transcript

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