Cleveland-Cliffs Inc. (CLF) Last Update 2/7/22
% of Stock Price
Gross Profits
Free Cash Flow
Cleveland-Cliffs Inc.
Net Debt
31.8% $12.09
Trefis Price
Top Drivers for Period
Key Drivers
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Potential upside & downside to trefis price

Cleveland-Cliffs Inc. Company


  1. Steel & Manufacturing constitutes 61% of the Trefis price estimate for Cleveland-Cliffs Inc.'s stock.
  2. North American Iron Ore constitutes 39% of the Trefis price estimate for Cleveland-Cliffs Inc.'s stock.


  1. Entry into Steel
    • In December 2019, Cleveland-Cliffs announced the acquisition of AK Steel. This $1.1 billion all-stock deal was concluded in March 2020, coinciding with the outbreak of the Covid-19 pandemic. The market was not too enthused with the deal as was reflected in the drop in CLF's stock price post the acquisition. AK Steel is one of the weakest steel companies in the US. After losing money for 8 years in a row, the company reported profits in 2017, 2018, and 2019. The steel industry did suffer a prolonged downturn during this period, but AK Steel was the most affected and the last to recover in the steel space. AK Steel is also a highly leveraged company, with a Debt-to EBITDA ratio of 5x in 2019, much higher than 1.7x for close rival Nucor. US Steel is the only major steel company to have a worse leverage ratio, though that is mainly due to a recent shift in strategy of the company, while AK Steel has remained highly leveraged for a couple of years. In September 2020, CLF announced the acquisition of ArcelorMittal’s US operations in a $1.4 billion cash and stock deal, and this deal was closed in December 2020. ArcelorMittal received over $500 million in cash upfront while the remaining portion will be almost a quarter share in CLF's stock. These deals transformed CLF into a vertically integrated producer of value-added iron ore and steel products. The combination is expected to create significant opportunities to generate additional value from market trends across the entire steel value chain and enable more consistent, predictable performance through normal market cycles.
  2. Q3 2021 Earnings
    • Cleveland-Cliffs' Q3 2021 results are not comparable to the earlier year period because the current quarter has the impact of the acquisition of ArcelorMittal U.S. Total revenues are up more than 3.6x from $1.646 billion in Q3 2020 to over $6 billion in Q3 2021. Higher revenue was due to the addition of steel making as a separate and largest division of the company, following the acquisition of AK Steel and ArcelorMittal U.S. in 2020. Earnings have improved to $2.46 per share in Q3 2021 from a loss of $0.02 per share in the year-ago period.
  3. Impact of Coronavirus
    • The global spread of coronavirus led to lockdown in various cities across the globe, which affected industrial and economic activity. The iron ore demand from industry players affects global iron ore price levels, in turn, impacting the company’s price realization for its products. Lower demand from construction players and shedding of capacity by major steel companies, mainly in China, and the pandemic has led to a drop in global iron ore prices recently. However, the Fed stimulus package and gradual lifting of lockdowns has led to recovery in iron ore and steel prices, which lifted the stock higher. The stock has recovered significantly since March 2020 lows and currently trades at $19 (as on 5th February 2022).
  4. Closure of CLF's Asia-Pacific Operations
    • As announced in January 2018 and as per the course of action from April 2018, Cleveland-Cliffs has successfully been able to complete its final shipment from the company's Asia Pacific Iron Ore mining operations in June 2018. It sold its mobile equipment to a third party and all other assets of the APAC business to Mineral Resources Limited in August 2018. The primary drivers for the sale of Asia Pacific operations were increasingly discounted prices for lower-iron-content ore and the quality of the remaining iron ore reserves. Thus, the APAC segment results appear as discontinued operations in the financial statements of the company.
  5. Potential impact of the federal government's infrastructure plan
    • The U.S. government has planned a ten year $1.5 trillion overhaul of domestic infrastructure, with a particular focus on transportation infrastructure. The implementation of this infrastructure plan, once Congress has passed it, is expected to sharply boost the demand for steel and, consequently, iron ore in the U.S.
  6. Imposition of punitive tariffs on unfairly traded steel imports to boost demand outlook
    • Competition from low priced steel imports had been negatively impacting the prospects of domestic steelmakers over the past few years. Positive findings of the Section 232 probe of the Trade Expansion Act of 1962 have led to the imposition of 25% tariffs on U.S. steel imports and are thus likely to boost the domestic demand for iron ore. As a result, the business outlook for both domestic steelmakers and iron ore miners has become more favorable.


Below are key drivers of Cliffs' value that present opportunities for upside or downside to the current Trefis price estimate for Cleveland-Cliffs Inc.:

North American Iron Ore Division

  • North American Iron Ore Revenue Per Ton: Iron ore prices fell considerably over the course of 2014-2015 due to a global oversupply situation, before bottoming out in 2016 as the supply glut dissipated. Iron ore prices have recovered from 2017 onward and expected to display strength going forward due to the prevalent favorable market conditions. However, lower demand has led to a drop in prices in mid-2019. This would lead to a decrease in revenue per ton for CLF's North American Iron Ore division, which has price adjustments linked to global iron ore prices. However, if the fall in iron ore prices is greater than anticipated and revenue per ton for the North American Iron Ore division reaches $100 per ton instead of $108 per ton (as currently factored into our model), it would represent a downside of around 20% to the Trefis price estimate.
  • North American Iron Ore EBITDA Margin: We expect the North American Iron Ore division's EBITDA margins to increase steadily and stabilize at around 33% toward the end of the forecast period, driven by an increase in iron ore shipments, a recovery in iron ore prices and the company's cost reduction efforts. However, if the recovery in margins is stronger than expected and the division's EBITDA margin stabilize at around 40% by the end of the forecast period, instead of 33% (as currently factored into our model), it would represent an upside of 20% to our current price estimate.

For additional details, select a driver above or select a division from the interactive Trefis split for Cleveland-Cliffs Inc. at the top of the page.


Cleveland-Cliffs Inc. is an international mining and natural resources company. The company is the largest producer of iron ore pellets in North America.

The company's operations are mostly located in North America, with five iron ore mines located across the US. The company has its mines and pellet plants located in Michigan and Minnesota. In 2021, it expects to be the sole producer of HBI in the Great Lakes region with the development of our first production plant in Toledo, Ohio.


The North American Iron Ore division is the company’s only reported segment currently and is the most valuable segment for the following two reasons:

Majority of Cliffs' revenue generation

The company gets its revenues from vertically integrated operations in iron ore and steel manufacturing. CLF's major customers are steel companies and industrial customers - mainly automobile players. Long-term contracts with these customers ensure the sale of a substantial portion of the firm's mineral production.


Volatility in iron ore prices

Iron ore prices fell considerably over the course of 2014-2015 as a result of an oversupply situation created due to weak demand conditions and rising supply of the commodity. Slowing economic growth in China, the world's largest importer of iron ore, translated into weak demand for the commodity. The sharp ramp-up of production by major iron ore mining companies such as Vale, Rio Tinto, and BHP Billiton despite faltering demand resulted in an oversupply situation. However, an extended period of declining iron ore prices over 2014-2015 resulted in the curtailment of production by several high-cost iron ore producers and moderation in production growth by the big mining companies. As a result, prices of the commodity stabilized during 2016 and 2017. Though prices saw some volatility in the last quarter of 2018, they have remained elevated for a major part of the year. Prices have increased in the first quarter of 2019, driven by lower supply, exacerbated by production cuts at Vale, which further affected global supply. However, in mid-2019, iron ore prices declined on the back of lower demand. Prices dropped significantly in 2020 following the outbreak of coronavirus pandemic, but has recovered over recent months due to stimulus measures.