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What changed in CLEVELAND-CLIFFS INC.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of CLEVELAND-CLIFFS INC.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+470 added−469 removedSource: 10-K (2024-02-08) vs 10-K (2023-02-14)

Top changes in CLEVELAND-CLIFFS INC.'s 2023 10-K

470 paragraphs added · 469 removed · 359 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

126 edited+40 added−38 removed86 unchanged
Biggest changeSpecifically, there are several notable proposed or potential rulemakings or activities that could have a material adverse impact on our facilities in the future depending on their ultimate outcome: climate change and GHG regulations; changes to the National Ambient Air Quality Standard for particulate matter; changes to ozone transport regulations; selenium discharge regulation; Minnesota's sulfate wild rice water quality standard; and Minnesota's mercury TMDL and mercury reduction rules.
Biggest changeSome foreign competitors may benefit from less stringent environmental requirements in the countries where they produce, resulting in lower compliance costs for them and providing those foreign competitors with a cost advantage on their products. 10 | CLF 2023 FORM 10-K Table of Contents Specifically, there are several notable proposed or potential rulemakings or activities that could have a material adverse impact on our facilities in the future depending on their ultimate outcome: climate change and GHG regulations; changes to the National Ambient Air Quality Standard for particulate matter; changes to ozone transport regulations; selenium discharge regulation; Minnesota's sulfate wild rice water quality standard; Minnesota's mercury TMDL and mercury reduction rules; and changes to National Emission Standards for Hazardous Air Pollutants in the taconite, iron and steel, and coke sectors.
This market includes sales to manufacturers of HVAC, appliances, power transmission and distribution transformers, storage tanks, ships and railcars, wind towers, machinery parts, heavy equipment, military armor, food preservation and railway lines. Domestic construction activity and the replacement of aging infrastructure directly affect sales of steel to this market.
This market includes sales to manufacturers of HVAC, appliances, power transmission and distribution transformers, storage tanks, ships, railcars, wind towers, machinery parts, heavy equipment, military armor, food preservation and railway lines. Domestic construction activity and the replacement of aging infrastructure directly affect sales of steel to this market.
RISK AND TECHNOLOGY REVIEWS FOR TACONITE AND INTEGRATED IRON AND STEEL CATEGORIES Under the Clean Air Act, within eight years after promulgating National Emissions Standards for Hazardous Air Pollutants in industry-specific categories, the EPA must review the standards to determine whether they continue to protect public health with an ample margin of safety and protect against adverse environment effects.
RISK AND TECHNOLOGY REVIEWS FOR TACONITE, INTEGRATED IRON AND STEEL, AND COKE CATEGORIES Under the Clean Air Act, within eight years after promulgating National Emissions Standards for Hazardous Air Pollutants in industry-specific categories, the EPA must review the standards to determine whether they continue to protect public health with an ample margin of safety and protect against adverse environment effects.
The necessary resources that we have invested in our footprint are expected to keep our assets at an automotive-grade quality and reliability for years to come. Our industry leading portfolio of fixed price contracts provides us a competitive advantage as the steel industry is often viewed as volatile and subject to the market price of steel.
The necessary resources that we have invested in our footprint are expected to keep our assets at an automotive-grade level of quality and reliability for years to come. Our industry leading portfolio of fixed price contracts provides us a competitive advantage, as the steel industry is often viewed as volatile and subject to the market price of steel.
We also have a unique vertically integrated profile from mined raw materials, direct reduced iron, and ferrous scrap to primary steelmaking and downstream finishing, stamping, tooling and tubing. This positioning gives more predictable costs throughout our supply chain and more control over both our manufacturing inputs and our end product destination.
We also have a unique vertically integrated profile from mined raw materials, direct reduced iron, and ferrous scrap to primary steelmaking and downstream finishing, stamping, tooling and tubing. This positioning gives us more predictable costs throughout our supply chain and more control over both our manufacturing inputs and our end-product destination.
At this time, we believe the North American automotive industry is approaching a structural inflection point, with the adoption of electrical motors in passenger vehicles. As this market grows, it will require more advanced steel applications to meet the needs of EV producers and consumers.
At this time, we believe the North American automotive industry is at a structural inflection point, with the adoption of electrical motors in passenger vehicles. As this market grows, it will require more advanced steel applications to meet the needs of EV producers and consumers.
The potential changes to air pollution control equipment or operations needed at our plants to comply with a new particulate matter standard are not known at this time, and the potential cost is not estimable but could be material.
The potential changes to air pollution control equipment or operations needed at our plants to comply with the new particulate matter standard are not known at this time, and the potential cost is not estimable but could be material.
As the largest supplier of steel to the automotive industry in North America, we continue to meet all the requirements needed to serve the automotive industry and maintain our position as the industry leader going forward.
As the largest supplier of steel to the automotive industry in North America, we continue to meet all the requirements needed to serve the automotive industry and maintain our position as an industry leader going forward.
The steel industry has faced limited competition from aluminum manufacturers (and, to a lesser extent, other materials) as automotive manufacturers attempt to develop vehicles that are lighter in weight.
The steel industry has faced competition from aluminum manufacturers (and, to a lesser extent, other materials) as automotive manufacturers attempt to develop vehicles that are lighter in weight.
Further, our OneCliffs Way of Doing Business provides that we will not make employment-related decisions nor will we discriminate based on race, color, religion, national origin, age, military or veteran status, disability, sex (including sexual orientation and gender identity), genetic information or any other characteristic protected by applicable law.
Further, our OneCliffs Way of Doing Business provides that we will not make employment-related decisions nor will we discriminate based on race, color, religion, national origin, age, military or veteran status, disability, sex (including sexual orientation and gender identity), pregnancy, genetic information, ethnicity or any other characteristic protected by applicable law.
Our integrated footprint provides us with a significant competitive advantage in supplying automotive and other highly demanding end markets as we are able to produce a wide range of high-quality products. Our integrated facilities utilize domestic internally sourced iron ore as the primary feedstock, which allows us to produce a higher quality product with low residual content.
Our footprint provides us with a competitive advantage in supplying automotive and other highly demanding end markets, as we are able to produce a wide range of high-quality products. Our integrated facilities utilize domestic internally sourced iron ore as the primary feedstock, which allows us to produce a high-quality product with low residual content.
Depending on the country of origin, these reasons may include government subsidies; lower labor, raw material, energy and regulatory costs; less stringent environmental regulations; less stringent safety requirements; the maintenance of artificially low exchange rates against the U.S. dollar; and preferential trade practices in their home countries.
Depending on the country of origin, these reasons may include government subsidies; illegal dumping; lower labor, raw material, energy and regulatory costs; less stringent environmental regulations; less stringent safety requirements; the maintenance of artificially low exchange rates against the U.S. dollar; and preferential trade practices in their home countries.
For a discussion of the risks associated with certain applicable laws and regulations, see Part I – Item 1A, Risk Factors. RAW MATERIALS AND ENERGY Our steelmaking operations require iron ore, HBI, coke, coal, ferrous and carbon and stainless scrap, chrome, nickel and zinc as primary raw materials.
For a discussion of the risks associated with certain applicable laws and regulations, see Part I – Item 1A. Risk Factors. RAW MATERIALS AND ENERGY Our steelmaking operations require iron ore, HBI, coke, coal, ferrous and carbon and stainless scrap, chrome, nickel, zinc and other alloys as primary raw materials.
We are the largest supplier of steel to the automotive industry in North America and serve a diverse range of other markets due to our comprehensive offering of flat-rolled steel products. Headquartered in Cleveland, Ohio, we employ approximately 27,000 people across our operations in the United States and Canada.
We are the largest supplier of steel to the automotive industry in North America and serve a diverse range of other markets due to our comprehensive offering of flat-rolled steel products. Headquartered in Cleveland, Ohio, we employ approximately 28,000 people across our operations in the United States and Canada.
COMPETITIVE STRENGTHS As the largest flat-rolled steel producer in North America, we benefit from having the size and scale necessary in a competitive, capital intensive business. Our sizeable operating footprint provides us with the operational leverage and flexibility to achieve competitive margins throughout the business cycle.
COMPETITIVE STRENGTHS As the leading flat-rolled steel producer in North America, we benefit from having the size and scale necessary in a competitive, capital intensive business. Our sizeable operating footprint provides us with the operational leverage and flexibility to achieve competitive margins throughout the business cycle.
During 2022 and 2021, we sold 3 million and 4 million long tons of iron ore products, respectively, to third parties from our share of production from our iron ore mines. The merchant portion of our iron ore pellet production is sold pursuant to long-term supply agreements and through spot contracts.
During 2023 and 2022, we sold 4 million and 3 million long tons of iron ore products, respectively, to third parties from our share of production from our iron ore mines. The merchant portion of our iron ore pellet production is sold pursuant to long-term supply agreements and through spot contracts.
Name Age Position(s) Held Lourenco Goncalves 64 Chairman, President and Chief Executive Officer (August 2014 – present); and Chairman, President and Chief Executive Officer of Metals USA Holdings Corp., an American manufacturer and processor of steel and other metals (May 2006 – April 2013).
Name Age Position(s) Held Lourenco Goncalves 65 Chairman, President and Chief Executive Officer (August 2014 – present); and Chairman, President and Chief Executive Officer of Metals USA Holdings Corp., an American manufacturer and processor of steel and other metals (May 2006 – April 2013).
Our future GHG emissions reductions are expected to be driven by the use of direct reduced iron in blast furnaces, the stretching of hot metal with additional scrap, driving more productivity out of fewer blast furnaces, implementing hydrogen use where possible, utilizing carbon capture, procuring more clean energy and operating with higher energy efficiency.
Our future GHG emissions reductions are expected to be driven by the use of direct reduced iron in blast furnaces, the stretching of hot metal with additional scrap, driving more productivity out of fewer blast furnaces, implementing hydrogen use where possible, adopting carbon capture and utilization, procuring more clean energy and operating with higher energy efficiency.
Terry Fedor 58 Executive Vice President, Operations (October 2022 – present); Executive Vice President, Operations, East (September 2021 – October 2022); Executive Vice President, Chief Operating Officer, Steel Mills (March 2020 – September 2021); Executive Vice President, Operations (February 2019 – March 2020); and Executive Vice President, U.S. Iron Ore (January 2014 – February 2019).
Terry Fedor 59 Executive Vice President, Operations (October 2022 – present); Executive Vice President, Operations, East (September 2021 – October 2022); Executive Vice President, Chief Operating Officer, Steel Mills (March 2020 – September 2021); Executive Vice President, Operations (February 2019 – March 2020); and Executive Vice President, U.S. Iron Ore (January 2014 – February 2019).
Kimberly Floriani 40 Senior Vice President, Controller & Chief Accounting Officer (August 2021 – present); Vice President, Corporate Controller & Chief Accounting Officer (April 2020 – August 2021); and Director, Accounting & Reporting (August 2015 – April 2020). All executive officers serve at the pleasure of the Board.
Kimberly Floriani 41 Senior Vice President, Controller & Chief Accounting Officer (August 2021 – present); Vice President, Corporate Controller & Chief Accounting Officer (April 2020 – August 2021); and Director, Accounting & Reporting (August 2015 – April 2020). All executive officers serve at the pleasure of the Board.
Our primary competitive strength lies within our automotive steel business. We are the largest supplier of automotive-grade steel in the U.S. Compared to other steel end markets, automotive steel is generally higher quality, more operationally and technologically intensive to produce, and requires significantly more devotion to customer service than other steel end markets.
Our primary competitive strength lies within our automotive steel business. We are a leading supplier of automotive-grade steel in the U.S. Compared to other steel end markets, automotive steel is generally higher quality, more operationally and technologically intensive to produce, and requires significantly more devotion to customer service than other steel end markets.
We should also benefit from the Inflation Reduction Act, which provides a tax credit for consumers who buy new EVs, which should increase the demand for our electrical steel used in charging stations. Sales to this end market are made under a combination of annual fixed price contracts and index-linked pricing arrangements.
We should also continue to benefit from a tax credit provided by the Inflation Reduction Act for consumers who buy new EVs, which should increase the demand for our electrical steel used in charging stations. Sales to this end market are made under a combination of annual fixed price contracts and index-linked pricing arrangements.
Investor Relations 200 Public Square, Suite 3300 Cleveland, OH 44114-2315 15 | CLF 2022 FORM 10-K Table of Contents INFORMATION ABOUT OUR EXECUTIVE OFFICERS Following are the names, ages and positions of the executive officers of the Company as of February 14, 2023. Unless otherwise noted, all positions indicated are or were held with Cleveland-Cliffs Inc.
Investor Relations 200 Public Square, Suite 3300 Cleveland, OH 44114-2315 15 | CLF 2023 FORM 10-K Table of Contents INFORMATION ABOUT OUR EXECUTIVE OFFICERS Following are the names, ages and positions of the executive officers of the Company as of February 8, 2024. Unless otherwise noted, all positions indicated are or were held with Cleveland-Cliffs Inc.
Keith Koci 58 Executive Vice President & President, Cleveland-Cliffs Services (September 2021 – present); Executive Vice President, Chief Financial Officer (February 2019 – September 2021); and Senior Vice President and Chief Financial Officer, Metals USA Holdings Corp. (2013 – February 2019).
Keith Koci 59 Executive Vice President & President, Cleveland-Cliffs Services (September 2021 – present); Executive Vice President, Chief Financial Officer (February 2019 – September 2021); and Senior Vice President and Chief Financial Officer, Metals USA Holdings Corp. (2013 – February 2019).
There is no other family relationship between any of our executive officers or between any of our executive officers and any of our directors. 16 | CLF 2022 FORM 10-K Table of Contents
There is no other family relationship between any of our executive officers or between any of our executive officers and any of our directors. 16 | CLF 2023 FORM 10-K Table of Contents
Demand and pricing for this market can be highly dependent on a variety of factors, including global and domestic commodity steel production capacity, demand for manufactured goods, the price of scrap, the relative health of the global economy, the import and export levels of other steel producing nations, the provisions of international trade agreements and fluctuations in international currencies.
Demand and pricing for this market can be highly dependent on a variety of factors, including global and domestic commodity steel production capacity, demand for manufactured goods, the price of scrap, the relative health of the global economy, the import and export levels of other steel producing nations, service center inventory management, the provisions of international trade agreements and fluctuations in international currencies.
Clifford Smith 63 Executive Vice President & President, Cleveland-Cliffs Steel (September 2021 – present); Executive Vice President, Chief Operating Officer (January 2019 – September 2021); and Executive Vice President, Business Development (April 2015 – January 2019).
Clifford Smith 64 Executive Vice President & President, Cleveland-Cliffs Steel (September 2021 – present); Executive Vice President, Chief Operating Officer (January 2019 – September 2021); and Executive Vice President, Business Development (April 2015 – January 2019).
We primarily operate through one reportable segment – the Steelmaking segment. Our primary steel producing and finishing facilities are located across Illinois, Indiana, Michigan, Ohio, Pennsylvania and West Virginia. We operate 7 blast furnaces and 5 EAFs with the configured capability of producing approximately 20 million tons of raw crude steel annually.
We primarily operate through one reportable segment – the Steelmaking segment. Our primary steel producing and finishing facilities are located across Illinois, Indiana, Michigan, Ohio, Pennsylvania and West Virginia. We operate seven blast furnaces and five EAFs with the configured capability of producing approximately 20.5 million tons of raw steel annually.
Import levels are also affected to varying degrees by the relative level of steel production in China and other countries, the strength of demand for steel outside the U.S., and the relative strength or weakness of the U.S. dollar against various foreign currencies. Imports of finished steel into the U.S. accounted for 24% of domestic steel market consumption in 2022.
Import levels are also affected to varying degrees by the relative level of steel production in China and other countries, the strength of demand for steel outside the U.S., and the relative strength or weakness of the U.S. dollar against various foreign currencies. Imports of finished steel into the U.S. accounted for 21% of domestic steel market consumption in 2023.
Progress toward achieving our objectives is accomplished through a focus on proactive sustainable safety initiatives, and results are measured against established industry and Company benchmarks, including our Company-wide Total Reportable Incident Rate. During 2022, our Total Reportable Incident Rate (including contractors) was 1.36 per 200,000 hours worked.
Progress toward achieving our objectives is accomplished through a focus on proactive sustainable safety initiatives, and results are measured against established industry and Company benchmarks, including our Company-wide Total Reportable Incident Rate. During 2023, our Total Reportable Incident Rate (including contractors) was 1.22 per 200,000 hours worked.
In the construction and operation of our facilities, substantial costs have been and will continue to be incurred to comply with regulatory requirements and avoid undue effect on the environment. In 2022, 2021 and 2020, our capital expenditures relating to environmental matters totaled $133 million, $62 million and $34 million, respectively.
In the construction and operation of our facilities, substantial costs have been and will continue to be incurred to comply with regulatory requirements and avoid undue effect on the environment. In 2023, 2022 and 2021, our capital expenditures relating to environmental matters totaled $66 million, $133 million and $62 million, respectively.
This dedication to service and the infrastructure in place to meet our automotive customers’ demanding needs took decades to develop and we believe is unmatched in our industry. We have continued to invest capital and resources to meet the requirements needed to serve the automotive industry and intend to maintain our position as the industry leader going forward.
This dedication to service and the infrastructure in place to meet our automotive customers’ demanding needs took decades to develop. We have continued to invest capital and resources to meet the requirements needed to serve the automotive industry and intend to maintain our position as an industry leader going forward.
As of December 31, 2022, included within our Empire asset retirement obligation is a discounted liability of approximately $110 million, which includes the estimated costs associated with the construction of Empire's portion of the required infrastructure and expected future operating costs of the treatment facilities.
As of December 31, 2023, included within our Empire asset retirement obligation is a discounted liability of approximately $131 million, which includes the estimated costs associated with the construction of Empire's portion of the required infrastructure and expected future operating costs of the treatment facilities.
With increasing tightness in the scrap and metallics markets combined with our own internal needs, we expect our Toledo direct reduction plant to support healthy margins for us going forward. STRATEGY MAXIMIZE OUR COMMERCIAL STRENGTHS We offer a full suite of flat steel products encompassing all steps of the steel manufacturing process.
With increasing tightness in the scrap and metallics markets combined with our own internal needs, we expect our Toledo direct reduction plant to support healthy margins for us going forward. STRATEGY MAXIMIZE OUR COMMERCIAL STRENGTHS We offer a full suite of flat steel products encompassing effectively all of our customers' needs.
The proposal seeks comment on lowering the primary annual fine particulate matter (PM 2.5 ) level from 12 micrograms per cubic meter (ug/m3) of air to 9 – 10 ug/m3 while taking comment on alternative annual standard levels down to 8 ug/m3 and up to 11 ug/m3.
The proposal sought comment on lowering the primary annual fine particulate matter (PM 2.5 ) level from 12 micrograms per cubic meter (ug/m 3 ) of air to 9 – 10 ug/m 3 while taking comment on alternative annual standard levels down to 8 ug/m 3 and up to 11 ug/m 3 .
Traci Forrester 51 Executive Vice President, Environmental & Sustainability (May 2021 – present); Executive Vice President, Business Development (May 2019 – May 2021); Vice President, Deputy General Counsel & Assistant Secretary (January 2018 – May 2019); and Deputy General Counsel & Assistant Secretary (January 2017 – January 2018).
Traci Forrester 52 Executive Vice President, Environmental & Sustainability (May 2021 – present); Executive Vice President, Business Development (May 2019 – May 2021); and Vice President, Deputy General Counsel & Assistant Secretary (January 2018 – May 2019).
During 2022, we introduced our MOTOR-MAX™ product line of NOES for high frequency motors and generators. We believe our strong foundation in electrical steels and long-standing relationships with automotive manufacturers and their suppliers will provide us with an advantage in this market as it continues to grow and mature.
Our MOTOR-MAX™ NOES product line is used for high frequency motors and generators. We believe our strong foundation in electrical steels and long-standing relationships with automotive manufacturers and their suppliers will provide us with an advantage in this market as it continues to grow and mature.
The price for domestic HRC, the most significant index in driving the revenues and profitability of our Steelmaking segment, averaged $1,011 per net ton for 2022, compared to $1,573 per net ton in 2021.
The price for domestic HRC, the most significant index in driving the revenues and profitability of our Steelmaking segment, averaged $906 per net ton for 2023, compared to $1,011 per net ton in 2022.
Our current estimate for capital expenditures for environmental improvements in 2023 is approximately $90 million for various water treatment, air quality, dust control, tailings management and other miscellaneous environmental projects. Additionally, we expect capital expenditures for environmental improvements for each of 2024 and 2025 to be generally in line with 2023's estimated spending.
Our current estimate for capital expenditures for environmental improvements in 2024 is approximately $75 million for various water treatment, air quality, dust control, tailings management and other miscellaneous environmental projects. Additionally, we expect capital expenditures for environmental improvements for each of 2025 and 2026 to be generally in line with 2024's estimated spending.
As part of our underlying strategy to maintain and improve our product, service and technical capabilities, research and innovation spend totaled $24 million and $17 million in 2022 and 2021, respectively.
As part of our underlying strategy to maintain and improve our product, service and technical capabilities, research and innovation spend totaled $30 million and $24 million in 2023 and 2022, respectively.
The following table presents the percentage of our revenues to each of these markets during the year: Market Primary Products Sold to End Market 2022 2021 Direct automotive Cold-rolled, galvanized, aluminized, NOES and stainless 31 % 25 % Infrastructure and manufacturing Hot-rolled, cold-rolled, galvanized, plate, GOES, stainless, tinplate and rail 26 % 27 % Distributors and converters All grades of steel 28 % 38 % Steel producers Slab, scrap, iron ore, HBI, coal and coke 15 % 10 % The change in percentages of revenues to each market in 2022, compared to 2021, was driven primarily by the increase in selling prices for our fixed price contracts to the direct automotive market, lower pricing on index linked sales, lower spot sales, and the inclusion of full-year results from the FPT Acquisition.
The following table presents the percentage of our revenues to each of these markets during the year: Market Primary Products Sold to End Market 2023 2022 Direct automotive Cold-rolled, galvanized, aluminized, NOES and stainless 36 % 31 % Infrastructure and manufacturing Hot-rolled, cold-rolled, galvanized, plate, GOES, stainless, tinplate and rail 26 % 26 % Distributors and converters All grades of steel 25 % 28 % Steel producers Slab, scrap, iron ore, HBI, coal and coke 13 % 15 % The change in percentages of revenues to each market in 2023, compared to 2022, was driven primarily by the increase in volumes and in selling prices for our fixed price contracts to the direct automotive market, lower pricing on index-linked sales, and lower pricing on spot sales.
Celso Goncalves 34 Executive Vice President, Chief Financial Officer (September 2021 – present); Senior Vice President, Finance & Treasurer (March 2020 – September 2021); Vice President, Treasurer (January 2018 – March 2020); and Assistant Treasurer (September 2016 – January 2018).
Celso Goncalves 35 Executive Vice President, Chief Financial Officer (September 2021 – present); Senior Vice President, Finance & Treasurer (March 2020 – September 2021); and Vice President, Treasurer (January 2018 – March 2020).
The additional capacity from domestic EAF competition could displace imports as the U.S. 9 | CLF 2022 FORM 10-K Table of Contents is still the largest net importer of steel in the world, and domestically produced steel is generally more environmentally friendly than imported steel. Domestic steel producers can face significant competition from foreign producers.
The additional capacity from domestic EAF competition could displace imports as the U.S. is still the largest net importer of steel in the world, and domestically produced steel is generally more environmentally friendly than imported steel. Domestic steel producers can face significant competition from foreign producers.
James Graham 57 Executive Vice President, Human Resources, Chief Legal and Administrative Officer & Secretary (April 2022 – present); and Executive Vice President, Chief Legal Officer & Secretary (November 2014 – April 2022).
James Graham 58 Executive Vice President, Chief Legal and Administrative Officer & Secretary (January 2024 – present); Executive Vice President, Human Resources, Chief Legal and Administrative Officer & Secretary (April 2022 – January 2024); and Executive Vice President, Chief Legal Officer & Secretary (November 2014 – April 2022).
The price of busheling scrap, a necessary input for flat-rolled steel production in EAFs in the U.S., averaged $533 per long ton during 2022, an 11% decrease from the prior year, but remained well above the historical ten-year average of approximately $380 per long ton.
The price of busheling scrap, a necessary input for flat-rolled steel production in EAFs in the U.S., averaged $488 per long ton during 2023, an 8% decrease from the prior year, but remained well above the historical ten-year average of approximately $390 per long ton.
Through our OneCliffs Way of Doing Business (our Code of Business Conduct and Ethics), we outline our Core Values, which include Trust, Respect and Open Communication. To us, this means encouraging and accepting different views and supporting and advancing gender and racial diversity.
DIVERSITY, EQUITY AND INCLUSION We continue to foster a culture of diversity, equity and inclusion at Cliffs. Through our OneCliffs Way of Doing Business (our Code of Business Conduct and Ethics), we outline our Core Values, which include Trust, Respect and Open Communication. To us, this means encouraging and accepting different views and supporting and advancing gender and racial diversity.
We provide our employees and their families with access to a variety of innovative, flexible and convenient health and wellness programs, including benefits that provide protection and security so they can have peace of mind concerning events that may require time away from work or that impact their financial well-being; that support their physical and mental health by providing tools and resources to help them improve or maintain their health and encourage engagement in healthy behaviors; and that offer choice so they can customize their benefits to meet their needs and the needs of their families. 14 | CLF 2022 FORM 10-K Table of Contents DIVERSITY, EQUITY AND INCLUSION We continue to foster a culture of diversity, equity and inclusion at Cliffs.
We provide our employees and their families with access to a variety of innovative, flexible and convenient health and wellness programs, including benefits that provide protection and security so they can have peace of mind concerning events that may require time away from work or that impact their financial well-being; that support their physical and mental health by providing tools and resources to help them improve or maintain their health and encourage engagement in healthy behaviors; and that offer choice so they can customize their benefits to meet their needs and the needs of their families.
In 2022, we demonstrated our ability to generate healthy free cash flow and use it to reduce substantial amounts of debt, return capital to shareholders through our share repurchase program and make investments to both improve and grow our business.
Since the acquisition of our steelmaking assets in 2020, we have demonstrated our ability to generate healthy free cash flow and use it to reduce substantial amounts of debt, return capital to shareholders through our share repurchase program, and make investments to both improve and grow our business.
We believe access to low-cost and reliable sources of natural gas is available to meet our operations’ requirements. 13 | CLF 2022 FORM 10-K Table of Contents We purchase electricity for all of our operations in either regulated or deregulated markets. Due to the distinct nature of these markets, we procure electricity through either long-term or annual contracts.
We believe access to low-cost and reliable sources of natural gas is available to meet our operations’ requirements. We purchase electricity for all of our operations in either regulated or deregulated markets. Due to the distinct nature of the regulated market, we procure electricity through either long-term or annual contracts.
The largest end user for our steel products is the automotive industry in North America, which makes light vehicle production a key driver of demand. During 2022, North American light vehicle production was 14.3 million units, up from 13.0 million units in both 2020 and 2021.
The largest end user for our steel products is the automotive industry in North America, which makes light vehicle production a key driver of demand. During 2023, North American light vehicle production was 15.6 million units, up from 14.3 million units in 2022.
Properties for additional information. 6 | CLF 2022 FORM 10-K Table of Contents PRODUCTS AND MARKETS 2022 Product Mix (By Revenue) Primary Products ◦ HOT-ROLLED ◦ STAINLESS AND ELECTRICAL ◦ OTHER ◦ COLD-ROLLED ◦ Scrap ◦ COATED ◦ GOES ◦ Iron Ore ◦ Aluminized ◦ NOES ◦ HBI ◦ Electrogalvanized ◦ Auto Chrome ◦ Coal ◦ Galvalume ◦ PLATE ◦ Coke ◦ Galvanneal ◦ SLAB AND OTHER STEEL PRODUCTS ◦ NON-STEELMAKING ◦ Hot-dipped Galvanized ◦ Stamped Components ◦ Tinplate ◦ Slab ◦ Tool and Die ◦ Rail ◦ Tubing ◦ Blooms As a fully integrated steel enterprise, we have a comprehensive portfolio of steel solutions.
PRODUCTS AND MARKETS 2023 Product Mix (By Revenue) Primary Products ◦ HOT-ROLLED ◦ STAINLESS AND ELECTRICAL ◦ OTHER ◦ COLD-ROLLED ◦ Scrap ◦ COATED ◦ GOES ◦ Iron Ore ◦ Aluminized ◦ NOES ◦ HBI ◦ Electrogalvanized ◦ Auto Chrome ◦ Coal ◦ Galvalume ◦ PLATE ◦ Coke ◦ Galvanneal ◦ SLAB AND OTHER STEEL PRODUCTS ◦ NON-STEELMAKING ◦ Hot-dipped Galvanized ◦ Stamped Components ◦ Tinplate ◦ Slab ◦ Tool and Die ◦ Rail ◦ Tubing ◦ Blooms ◦ Cast Ingots As a fully integrated steel enterprise, we have a comprehensive portfolio of steel solutions.
We have an industry-leading market share in the automotive sector, where our portfolio of high-end products delivers a broad range of differentiated solutions for this highly sought after customer base. As a result of our exposure to these high-end markets, we have the highest fixed price contractual volumes in our industry.
We are a leading supplier to the automotive sector, where our portfolio of high-end products delivers a broad range of differentiated solutions for this highly sought after customer base. As a result of our exposure to these high-end markets, we have the highest fixed price contractual volumes in our industry. Approximately 40-45% of our volumes are sold under these contracts.
We collaborate with our automotive customers and their suppliers to develop innovative solutions using our developments in light weighting, efficiency, and material strength and formability across our extensive product portfolio, in combination with our automotive stamping and tube- 7 | CLF 2022 FORM 10-K Table of Contents making capabilities.
We collaborate with our automotive customers and their suppliers to develop innovative solutions using our developments in light weighting, efficiency, and material strength and formability across our extensive product portfolio, in combination with our automotive stamping and tube-making capabilities.
Some of our operations also use self-generated coke oven gas and/or blast furnace gas to produce electricity, which is an environmentally-friendly practice that also reduces our need to purchase electricity from external sources.
In deregulated markets, we purchase the majority of our electricity in the day-ahead market. Some of our operations also use self-generated coke oven gas and/or blast furnace gas to produce electricity, which is an environmentally-friendly practice that also reduces our need to purchase electricity from external sources.
SELENIUM DISCHARGE REGULATION In Michigan, our Empire and Tilden mines have implemented compliance plans to manage selenium according to applicable permit conditions. A water treatment system for both facilities is anticipated sometime before 2028.
SELENIUM DISCHARGE REGULATION In Michigan, our Empire and Tilden mines have implemented compliance plans to manage selenium according to applicable permit conditions. Construction of a water treatment system for both facilities is anticipated to begin in 2028, and the system is anticipated to be operational in 2030.
Additionally, included within our Tilden future capital plan is approximately $20 million for the construction of Tilden's portion of the required infrastructure. We are continuing to assess and develop potential cost effective and sustainable selenium treatment technologies.
Additionally, included within our Tilden future 11 | CLF 2023 FORM 10-K Table of Contents capital plan is approximately $32 million for the construction of Tilden's portion of the required infrastructure. We are continuing to assess and develop potential cost effective and sustainable selenium treatment technologies.
IMPROVE OUR FINANCIAL FLEXIBILITY Given the cyclicality of our business, it is important to us to be in the financial position to easily withstand economic cycles.
IMPROVE FINANCIAL FLEXIBILITY Given the cyclicality of our business, it is important to us to be in the financial position to easily withstand economic cycles and be opportunistic when attractive strategic opportunities arise.
COKE AND COAL We own three active cokemaking facilities, including one coke plant located within our Burns Harbor facility. These facilities currently provide approximately half of the coke requirements for our steelmaking operations and have an annual rated capacity of 2.6 million net tons. Additionally, we have coke supply agreements with suppliers that provide our remaining requirements.
We have an annual capacity of 1.9 million metric tons of HBI per year. COKE AND COAL We own three active cokemaking facilities, including one coke plant located within our Burns Harbor facility. These facilities currently provide approximately half of the coke requirements for our steelmaking operations and have an annual rated capacity of 2.6 million net tons.
In 2021, the EPA disapproved of Minnesota’s draft list and subsequently announced its proposed list of wild rice water bodies that were impaired due to sulfate under the Clean Water 11 | CLF 2022 FORM 10-K Table of Contents Act’s Section 303(d) process, which resulted in the addition of 32 waters in November 2021.
Minnesota submitted a list of impaired water revisions to the EPA in 2020. In 2021, the EPA disapproved of Minnesota’s draft list and subsequently announced its proposed list of wild rice water bodies that were impaired due to sulfate under the Clean Water Act’s Section 303(d) process, which resulted in the addition of 32 waters in November 2021.
We expect the price of busheling scrap to remain elevated above historical averages throughout 2023 due to the 8 | CLF 2022 FORM 10-K Table of Contents continued decline of prime scrap generation and the growth of EAF capacity in the U.S., along with a push for expanded scrap use globally.
We expect the price of busheling scrap to remain elevated above historical averages in the coming years due to the continued decline of prime scrap generation and the growth of EAF capacity in the U.S., along with a push for expanded scrap use globally.
Additionally, the availability of these materials can be unreliable as most competition relies on imported ore based metallics. Due to recently completed and further announced flat-rolled EAF capacity additions in the U.S. and increasing focus on industry decarbonization, we expect the price of scrap to remain elevated over historical averages, providing our integrated footprint a competitive cost advantage.
Due to recently completed and further announced flat-rolled EAF capacity additions in the U.S. and increasing focus on industry decarbonization, we expect the price of scrap to remain elevated over historical averages, providing our integrated footprint a competitive cost advantage.
A prime example of our ability to help our customers through research and development can be seen in the support and products we offer as automotive manufacturers have started increasing their development of EVs to meet the growing consumer adoption of EVs. We are the only North American producer of high-efficiency NOES, which is a critical component of EV motors.
A prime example of our ability to help our customers through research and development can be seen in the support and products we offer as automotive manufacturers have started increasing their development of EVs to meet the growing consumer adoption of EVs.
Our purchases of coke are made under annual or multi-year agreements with periodic price adjustments. We have annual rated metallurgical coal production capacity of 2.3 million net tons from our Princeton mine, which supplies a portion of our metallurgical coal needs. We typically purchase most of our metallurgical coal under annual fixed-price agreements.
Additionally, we have coke supply agreements with suppliers that provide our remaining requirements. Our purchases of coke are made under annual or multi-year agreements with periodic price adjustments. We have annual rated metallurgical coal production capacity of 1.8 million net tons from our Princeton mine, which supplies a portion of our metallurgical coal needs.
We constantly monitor our safety performance and make continuous improvements to effect change. Best practices and incident learnings are shared throughout the Company to ensure each facility can administer the most effective policies and procedures for enhanced workplace safety.
SAFETY Safe production is our primary core value as we continue to reinforce a zero injury culture at our facilities. We constantly monitor our safety performance and make continuous improvements to effect change. Best practices and incident learnings are shared throughout the Company to ensure each facility can administer the most effective policies and procedures for enhanced workplace safety.
Automotive manufacturers have also been increasing their development of EVs in order to meet the growing customer adoption of EVs. Many motors used in EVs being sold in the U.S. today are imported from foreign suppliers, but more local sourcing and manufacturing of motors is expected to occur in the future.
Many motors used in EVs being sold in the U.S. today are imported from foreign suppliers, but more local sourcing and manufacturing of motors is expected to occur in the future.
The ongoing conflict between Russia and Ukraine has displayed the importance of our U.S.-centric footprint, as our competitors who primarily operate EAF furnaces rely on imported pig iron to produce flat-rolled steel, the supply of which has been disrupted by that conflict.
The ongoing conflict between Russia and Ukraine, along with other global tensions, has displayed the importance of our U.S.-centric footprint, as our competitors who primarily operate EAF facilities rely on imported pig iron to produce flat-rolled steel, the supply of which has been disrupted. The best example is our legacy business of producing iron ore pellets.
The recently passed Infrastructure and Jobs Act in the U.S. provides funding to be used for the modernization of the electrical grid and the infrastructure needed to allow for increased EV adoption, both of which require electrical steels.
We are currently a leading producer of electrical steels referred to as GOES and NOES in the U.S. In November 2021, the Infrastructure and Jobs Act was passed in the U.S., which provides funding to be used for the modernization of the electrical grid and the infrastructure needed to allow for increased EV adoption, both of which require electrical steels.
Our selling prices under our annual fixed price contracts will be significantly higher in 2023 compared to the prior year as a result of favorable renewals. DISTRIBUTORS AND CONVERTERS MARKET Virtually all of the grades of steel we produce are sold to the steel distributors and converters market.
Our selling prices under our annual fixed price contracts are expected to be roughly similar in 2024 when compared to the prior year. DISTRIBUTORS AND CONVERTERS MARKET Virtually all of the grades of steel we produce are sold to the steel distributors and converters market.
When multi-year contracts are not available, or are not available on acceptable terms, we purchase the remainder of our raw material needs under annual contracts or conduct spot purchases. We 12 | CLF 2022 FORM 10-K Table of Contents also regularly evaluate alternative sources and substitute materials.
When multi-year contracts are not available, or are not available on acceptable terms, we purchase the remainder of our raw material needs under annual contracts or conduct spot purchases. We also regularly evaluate alternative sources and substitute materials. Additionally, we may hedge portions of our energy and raw materials purchases to reduce volatility and risk.
More than 90% of Cliffs’ hourly workforce are represented by three prominent unions — USW, UAW and IAM. The hardworking men and women of Cliffs are the lifeblood of our Company. Our employees operate and maintain our facilities and are, ultimately, responsible for safely delivering a quality product internally and to our customers.
The hardworking union-represented men and women of Cliffs are the lifeblood of our Company. Our employees operate and maintain our facilities and are, ultimately, responsible for safely delivering a quality product internally and to our customers.
In addition, our internally produced pig iron is more environmentally friendly than imported pig iron, which is often made from sintered iron ore fines and with higher coke rates, for example. While competitors are forced to scramble for materials, we are able to take advantage of our vertically integrated footprint.
In addition, our internally produced pig iron is more environmentally friendly than imported pig iron, which is often made from sintered iron ore fines and with higher coke rates, for example.
We, on the other hand, produce our pig iron and liquid steel entirely in the U.S., supported by internally sourced iron ore and HBI and supplemented with internally sourced scrap.
This supply remains largely disrupted, driving volatility in input costs and reducing availability for our competitors’ ferrous inputs. We, on the other hand, produce our pig iron and liquid steel entirely in the U.S., supported by internally sourced iron ore and HBI and supplemented with internally sourced scrap.
Natural gas is procured for our operations utilizing a combination of long-term, annual, quarterly, monthly and spot contracts from various suppliers at market-based pricing.
The majority of our energy requirements are purchased from outside sources. Access to long-term, low-cost sources of energy in various forms is critically important to our operations. Natural gas is procured for our operations utilizing a combination of long-term, annual, quarterly, monthly and spot contracts from various suppliers at market-based pricing.
Our ability to source our primary feedstock domestically and internally is a competitive strength. This model reduces our exposure to volatile pricing and unreliable global sourcing.
Our fixed price contracts mitigate pricing volatility and support us in achieving healthy margins through the cycle. Our ability to source our primary feedstock domestically and internally is a competitive strength. This model reduces our exposure to volatile pricing and unreliable global sourcing.
We also believe companies that primarily operate EAFs do not possess our breadth and depth of customer service, technical support and research and development capabilities. Since the acquisition of our steelmaking assets, we have dedicated significant resources to maintain and upgrade our facilities and equipment.
We also possess the breadth and depth related to customer service, technical support, and research and development, which are necessary to supply the demanding needs of the automotive industry. Since the acquisition of our steelmaking assets, we have dedicated significant resources to maintain and upgrade our facilities and equipment.
As the only North American producer of high-efficiency NOES, which is a critical component of EV motors, we are positioned to potentially benefit from the growth of EVs going forward. During 2022, we introduced our MOTOR-MAX™ product line of NOES for high frequency motors and generators.
As a leading producer in North America of high-efficiency NOES, which is a critical component of EV motors, we are positioned to potentially benefit from the growth of EVs going forward.
We believe that supplies of additional steel scrap to meet the needs of our steelmaking operations are readily available from outside sources at competitive market prices. OTHER MATERIALS We believe that supplies of chrome, nickel and zinc adequate to meet the needs of our steelmaking operations are readily available from outside sources at competitive market prices.
OTHER MATERIALS We believe that supplies of chrome, nickel, zinc and other alloys adequate to meet the needs of our steelmaking operations are readily available from outside sources at competitive market prices. ENERGY We consume a large amount of natural gas, electricity, industrial gases and diesel fuel, which are significant costs to our operations.
Our Other Businesses primarily includes the Tubular Components and Tooling and Stamping operating segments that provide customer solutions with carbon and stainless steel tubing products, advanced-engineered solutions, tool design and build, hot- and cold-stamped steel components and complex assemblies. Refer to Part I - Item 2.
We also operate a coal mining complex in West Virginia and produce coke from our facilities in Indiana, Ohio, and Pennsylvania. Our Other Businesses primarily includes the Tubular Components and Tooling and Stamping operating segments that provide customer solutions with carbon and stainless steel tubing products, advanced-engineered solutions, tool design and build, hot- and cold-stamped steel components and complex assemblies.
FPT is one of the largest processors of prime scrap in the country. Our expansion in scrap has continued to grow as we have leveraged our long-standing flat-rolled automotive and other customer relationships into recycling partnerships. Our steelmaking operations consume a large portion of the ferrous scrap processed by FPT. We also have third-party sales of ferrous and non-ferrous scrap.
Our scrap presence has developed further since acquiring FPT as we have leveraged our long-standing flat-rolled automotive and other customer relationships into recycling partnerships. Our 8 | CLF 2023 FORM 10-K Table of Contents steelmaking operations consume a large portion of the ferrous scrap processed by FPT. We also have third-party sales of ferrous and non-ferrous scrap.
The EPA is also proposing to retain current primary 24-hour PM 2.5 standard of 35 ug/m3 while soliciting comments on revising the level as low as 25 ug/m3. The lower the standard, the greater potential effect on our operations across the country.
The EPA also proposed to retain the current primary 24-hour PM 2.5 standard of 35 ug/m 3 while soliciting comments on revising the level as low as 25 ug/m 3 . The lower the standard, the greater potential effect on our operations. We actively engaged with various experts and trade associations to provide legal and technical comments on the proposal.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThis includes, among other things: changes in MSHA regulations, such as respirable silica standards; reevaluation of the National Ambient Air Quality Standards, such as revised nitrogen dioxide, sulfur dioxide, lead, ozone and particulate matter criteria; changes in the interpretation of OSHA regulations, such as standards for occupational exposure to noise, certain chemicals or hazardous substances and infectious diseases; and changes in tax laws and regulations, including the possible taxation under U.S. or foreign country laws of certain income from worldwide operations, the U.S. 1% excise tax on certain corporate stock repurchases (which could increase our cost of future activity under our existing share repurchase program) and 15% corporate alternative minimum tax, both enacted as part of the Inflation Reduction Act and effective in 2023, and the 15% global minimum corporate tax under Pillar Two of the Organization for Economic Cooperation and Development’s Global Anti-Base Erosion Rules, which has been adopted by the European Union requiring its Member States to implement national legislation applicable for fiscal years starting on or after December 31, 2023.
Biggest changeThis includes, among other things: changes in MSHA regulations, such as respirable silica standards and surface mobile equipment rules; reevaluation of the National Ambient Air Quality Standards, such as revised nitrogen dioxide, sulfur dioxide, lead, ozone and particulate matter criteria; changes in the interpretation of OSHA regulations, such as standards for occupational exposure to noise, certain chemicals or hazardous substances, infectious diseases and potentially hazardous machinery; and changes in tax laws and regulations, including the possible taxation under U.S. or foreign country laws of certain income from worldwide operations.
Before making an investment decision, investors should consider carefully all of the risks described below together with the other information included in this report and the other reports we file with the SEC.
Before making an investment decision, investors should carefully consider all of the risks described below together with the other information included in this report and the other reports we file with the SEC.
These laws and regulations may increase our costs of doing business in international jurisdictions and expose our operations and our employees to elevated risk.
These laws and regulations may increase our costs of doing business in international jurisdictions and expose our operations and employees to elevated risk.
Further, dredging issues and environmental changes, particularly at Great Lakes ports or along navigable rivers, could impact adversely our ability to move certain of our products or result in higher freight rates.
Further, dredging issues and environmental changes, particularly at Great Lakes ports or along navigable rivers, could adversely impact our ability to move certain of our products or result in higher freight rates.
Defects in title or loss of any access rights or leasehold interests in our mining properties could limit our ability to mine these properties or result in significant unanticipated costs. Many of our operations are conducted on properties we lease, license or as to which we have easements or other possessory interests.
Defects in title or loss of any access rights or leasehold interests in our mining properties could limit our ability to mine these properties or result in significant unanticipated costs. Many of our mining operations are conducted on properties we lease, license or as to which we have easements or other possessory interests.
Achieving this objective may be difficult due to a variety of factors, including fluctuations in the global economic and industry conditions, competitors’ hiring practices, cost reduction activities, and the effectiveness of our compensation programs. Competition for qualified personnel can be intense.
Achieving this objective may be difficult due to a variety of factors, including fluctuations in global economic and industry conditions, competitors’ hiring practices, cost reduction activities, and the effectiveness of our compensation programs. Competition for qualified personnel can be intense.
In addition, our cost of financing or refinancing, access to the capital markets, and the terms under which we purchase goods and services could be adversely affected if credit ratings agencies downgrade our ratings, whether due to factors specific to our business or debt profile, a prolonged cyclical downturn in the steel, scrap metal and mining industries or macroeconomic trends (such as global or regional recessions), increases in pension and OPEB obligations, recent adverse impacts of inflation and high interest rates, or trends in credit and capital markets more generally.
In addition, our cost of financing or refinancing, access to the capital markets, and the terms under which we purchase goods and services could be adversely affected if credit ratings agencies downgrade our ratings, whether due to factors specific to our business or debt profile, a prolonged cyclical downturn in the steel, scrap metal and mining industries or macroeconomic trends (such as global or regional recessions), increases in pension and OPEB obligations, adverse impacts of inflation and high interest rates, or trends in credit and capital markets more generally.
In addition, we may not be successful in achieving our current or any future short, medium or long-term GHG emissions reduction goals, including any net-zero or near-zero goals, due to adverse changes in business conditions over time, unanticipated financial challenges, operational improvement efforts like carbon capture and sequestration projects at certain of our facilities that may not be as successful as originally forecasted, or regulatory developments arising after such goals were initially announced.
In addition, we may not be successful in achieving our current or any future short, medium or long-term GHG emissions reduction goals, including any net-zero or near-zero goals, due to adverse changes in business conditions over time, unanticipated financial challenges, operational improvement efforts like carbon capture, utilization and sequestration projects at certain of our facilities that may not be as successful as originally forecasted, or regulatory developments arising after such goals were initially announced.
For example, as part of climate change mitigation strategies, federal, state or local governmental authorities may introduce mandatory carbon pricing obligations, carbon emissions limitations, carbon taxes or carbon trading mechanisms, any of which could impose significant costs on our operations, including causing us to incur higher energy and supplier costs, invest in costly and potentially unproven emissions control or reduction technologies, and engage in more intensive environmental monitoring and reporting efforts.
For example, as part of climate change mitigation strategies, federal, state, local or foreign governmental authorities may introduce mandatory carbon pricing obligations, carbon emissions limitations, carbon taxes or carbon trading mechanisms, any of which could impose significant costs on our operations, including causing us to incur higher energy and supplier costs, invest in costly and potentially unproven emissions control or reduction technologies, and engage in more intensive environmental monitoring and reporting efforts.
Severe financial hardship or bankruptcy of one or more of our major customers or key vendors could adversely affect our business operations and financial performance. Sales and operations of a majority of our customers are sensitive to general economic conditions in the North American automotive, housing, construction, appliance, energy, defense and other industries. Some of our customers are highly leveraged.
Severe financial hardship or bankruptcy of one or more of our major customers or key vendors could adversely affect our business operations and financial performance. Sales and operations for a majority of our customers are sensitive to general economic conditions in the North American automotive, housing, construction, appliance, energy, defense and other industries. Some of our customers are highly leveraged.
For example, the U.S. government has agreed to modified tariff rate quota systems with each of the European Union, Japan and the United Kingdom that allow more imports from those trading partners to enter the U.S. market free of Section 232 tariffs. The U.S. government may also negotiate reductions or eliminations of Section 232 duties with other trading partners.
For example, the U.S. government agreed to modified tariff rate quota systems with each of the European Union, Japan and the United Kingdom that allow more imports from those trading partners to enter the U.S. market free of Section 232 tariffs. The U.S. government may also negotiate reductions or eliminations of Section 232 duties with other trading partners.
All employees eligible for immediate retirement under the pension plans at the time of the permanent closure also could be eligible for OPEB, thereby accelerating our obligation to provide these benefits. Certain closures would precipitate a pension closure liability significantly greater than an ongoing operation liability and may trigger certain severance liability obligations.
The employees eligible for immediate retirement under the pension plans at the time of the permanent closure also could be eligible for OPEB, thereby accelerating our obligation to provide these benefits. Certain closures would precipitate a pension closure liability significantly greater than an ongoing operation liability and may trigger certain severance liability obligations.
In addition, complying with current or future international treaties and federal, state or local laws or regulations concerning climate change and GHG emissions could negatively impact our ability, and that of our customers and suppliers, to compete with companies located in areas not subject to or not complying with such constraints.
In addition, complying with current or future international treaties and federal, state, local or foreign laws or regulations concerning climate change and GHG emissions could negatively impact our ability, and that of our customers and suppliers, to compete with companies located in areas not subject to or not complying with such constraints.
Further, the cost to implement any given capital project may ultimately prove to be greater or may take more time than originally anticipated, including due to supply chain issues that may be experienced by our vendors, and the scope of a capital project may expand or otherwise be modified.
Further, the cost to implement any given capital project may prove to be greater or may take more time than originally anticipated, including due to supply chain issues that may be experienced by our vendors, and the scope of a capital project may expand or otherwise be modified.
While we may currently benefit from certain antidumping and countervailing duty orders, any such relief is subject to periodic reviews and challenges, which can result in revocation or modification of the orders or reduction of the duties. During 2022, the U.S.
While we may currently benefit from certain antidumping and countervailing duty orders, any such relief is subject to periodic reviews and challenges, which can result in revocation or modification of the orders or reduction of the duties. During 2022 and 2023, the U.S.
If automotive production and sales decline, whether due to consumers facing reduced purchasing power caused by inflation, newly higher interest rates or otherwise, our sales and shipments to the automotive market are likely to decline in a corresponding manner.
If automotive production and sales decline, whether due to consumers facing reduced purchasing power caused by inflation, higher interest rates or otherwise, our sales and shipments to the automotive market are likely to decline in a corresponding manner.
We experience direct impacts of steel price fluctuations through customer sales, as well as direct and indirect impacts of iron ore and scrap metal price fluctuations through third-party sales and the impacts that fluctuations in iron ore and scrap metal prices have on steel prices.
We experience direct impacts of steel price fluctuations through customer sales, as well as direct and indirect impacts of iron ore and scrap metal price fluctuations through third-party sales and the impacts that movements in iron ore and scrap metal prices have on steel prices.
As a result, the potential exists that we may lose market share to existing or new entrants or that automotive manufacturers will take advantage of the intense competition among potential suppliers during periodic contract renewal negotiations to pressure our pricing and margins in order to maintain or expand our market share with them, which could negatively affect our sales, financial results and cash flows.
As a result, the potential exists that we may lose market share to existing or new entrants or that automotive manufacturers will take advantage of the intense competition among potential suppliers during periodic contract renewal negotiations to pressure our pricing and margins in order to maintain or expand our market share with them, which could negatively affect our revenues, financial results and cash flows.
We generally do not maintain title insurance on our properties, and certain of our land access arrangements were negotiated many years ago and have not been updated.
We generally do not maintain title insurance on our mining properties, and certain of our land access arrangements were negotiated many years ago and have not been updated.
Management has identified several categories of material risks that we are subject to, including: (I) economic and market, (II) regulatory, (III) financial, (IV) operational, (V) sustainability and development and (VI) human capital. Although the risks are organized by these headings, and each risk is discussed separately, many are interrelated. I.
Management has identified several categories of material risks that we are subject to, including: (I) economic and market, (II) regulatory, (III) financial, (IV) operational, (V) sustainability and development and (VI) human capital. Although we have organized the risks by these headings and we have discussed each risk separately, many of the risks are interrelated. I.
If the Section 232 tariffs are further removed or substantially lessened, whether through legal challenge, legislation, executive action or otherwise, imports of foreign steel would likely increase and steel prices in the U.S. would likely fall, which could materially adversely affect our revenues, financial results and cash flows.
If the Section 232 measures are further removed or substantially lessened, whether through legal challenge, legislation, executive action or otherwise, imports of foreign steel would likely increase and steel prices in the U.S. would likely fall, which could materially adversely affect our revenues, financial results and cash flows.
Longer-term business disruptions could result in a loss of customers, which could adversely affect our future sales levels and revenues. Many of our production facilities and mines are dependent on a single source for electric power, natural gas, water, industrial gases and/or certain other raw materials or supplies.
Longer-term business disruptions could result in a loss of customers, which could adversely affect our future sales levels and revenues. Many of our production facilities and mines are dependent on a sole source for electric power, natural gas, water, industrial gases and/or certain other raw materials or supplies.
If we are unable to service our debt obligations, we could face substantial liquidity problems and we may be forced to reduce or delay investments and capital expenditures, or to sell assets, seek additional capital, including additional secured or unsecured debt, or restructure or refinance our debt, and we may be unable to continue as a going concern.
If we are unable to service our debt obligations, we could face substantial liquidity problems and we may be forced to reduce or delay investments, capital expenditures and share repurchases, or to sell assets, seek additional capital, including additional secured or unsecured debt, or restructure or refinance our debt, and we may be unable to continue as a going concern.
Although we are fully self-sufficient in iron ore and partially self-sufficient in coke, metallurgical coal and scrap metal, we are wholly or partially dependent on third-party suppliers for certain critical raw materials and production inputs, including industrial gases, graphite electrodes, chrome, zinc, coke, metallurgical coal and scrap metal.
Although we are fully self-sufficient in iron ore and partially self-sufficient in coke, metallurgical coal and scrap metal, we are wholly or partially dependent on third-party suppliers for certain critical raw materials and production inputs, including industrial gases, graphite electrodes, chrome, zinc, coke, metallurgical coal, scrap metal and other alloys.
From time to time, we undertake capital projects in order to enhance, expand, maintain or upgrade our production, mining and processing capabilities, such as the 2022 blast furnace reline project at our Cleveland Works, or to diversify our customer base, such as our Toledo direct reduction plant.
From time to time, we undertake capital projects to enhance, expand, maintain or upgrade our production, mining and processing capabilities, such as the 2022 blast furnace reline project at our Cleveland Works, or to diversify our customer base, such as our Toledo direct reduction plant.
We must continue to recruit, retain, develop and motivate our senior management and key personnel in order to maintain our businesses and support our projects. A loss of senior management and key personnel could prevent us from capitalizing on business opportunities, and our operating results could be adversely affected.
We must continue to recruit, retain, develop and motivate our senior management and key personnel to maintain our businesses and support our projects. A loss of senior management and key personnel could prevent us from capitalizing on business opportunities, and our operating results could be adversely affected.
These adverse impacts could negatively affect our sales, financial results and cash flows. 17 | CLF 2022 FORM 10-K Table of Contents Moreover, despite our position as the largest flat-rolled steel producer in North America, competition for automotive business has intensified in recent years, as steel producers and companies producing alternative materials have focused their efforts on capturing and/or expanding their market share of automotive business because of less favorable conditions in other markets for steel and other metals, including commodity products.
These adverse impacts could negatively affect our revenues, financial results and cash flows. 17 | CLF 2023 FORM 10-K Table of Contents Moreover, despite our position as the largest flat-rolled steel producer in North America, competition for automotive business has intensified in recent years, as steel producers and companies producing alternative materials have focused their efforts on capturing and/or expanding their market share of automotive business because of less favorable conditions in other markets for steel and other metals, including commodity products.
Any of these actions and their direct and indirect impacts could materially adversely affect our revenues, financial results and cash flows. We are subject to extensive governmental regulation, which imposes potential significant costs and liabilities on us.
Any of these actions and their direct and indirect impacts could materially adversely affect our revenues, financial results and cash flows. We are subject to extensive governmental regulation, which imposes potentially significant costs and liabilities on us.
Although we have extensive risk management policies, practices and procedures in place that are aimed to mitigate these risks, the occurrence of these uncertainties may nevertheless impair our business operations and adversely affect the actual outcome of matters as to which forward-looking statements are made. This report is qualified in its entirety by these risk factors.
Although we have extensive risk management policies, practices and procedures in place that are aimed at mitigating these risks, the occurrence of these uncertainties may nevertheless impair our business operations and adversely affect the actual outcome of matters as to which forward-looking statements are made. This report is qualified in its entirety by these risk factors.
Factors that could cause production disruptions could include adverse weather conditions due to climate change or otherwise (such as severe winter weather, tornadoes, floods, temperature extremes and the lack of availability of process water due to drought) and natural and human-caused disasters, lack of adequate raw materials, energy or other supplies, and infectious disease outbreaks, such as the COVID-19 pandemic.
Factors that could cause production disruptions could include adverse weather conditions due to climate change or otherwise (such as severe winter weather, tornadoes, floods, temperature extremes and the lack of availability of process water due to drought) and natural and human-caused disasters, lack of adequate raw materials, energy or other supplies, and infectious disease outbreaks.
In addition, a ny compromise of the security of our IT systems could result in a loss of confidence in our security measures and subject us to litigation, regulatory investigations and negative publicity that could adversely affect our reputation and financial condition.
In addition, any compromise of the security of our IT systems could result in a loss of confidence in our security measures and subject us to litigation, regulatory investigations and negative publicity that could adversely affect our reputation and financial condition.
Although we regularly monitor and from time to time challenge rate cases initiated by these utilities or other sources seeking to increase the amounts that our facilities have to pay for electricity, natural gas or water, there is no assurance that our challenges will be successful in reducing or eliminating proposed rate increases.
Although we regularly monitor and from time to time challenge rate cases initiated by these utilities or other sources seeking to increase the amounts that our facilities must pay for electricity, natural gas or water, there is no assurance that our challenges will be successful in reducing or eliminating proposed rate and/or cost increases.
For example, in March 2018, the U.S. government issued a proclamation pursuant to Section 232 imposing a 25% tariff on imported steel. These Section 232 tariffs were imposed on the basis of national security and addressed imported steel that was being unfairly traded by certain foreign competitors at artificially low prices.
For example, in March 2018, the U.S. government issued a proclamation pursuant to Section 232 imposing a 25% tariff on imported steel. These Section 232 tariffs were imposed on national security grounds and addressed imported steel that was being unfairly traded by certain foreign competitors at artificially low prices.
We also may have to record impairments on our goodwill, intangible assets, long-lived assets and/or inventory. Sustained lower prices also could cause us to further reduce existing mineral reserves if certain reserves no longer can be economically mined or processed at prevailing prices.
As a result, we also may have to record impairments on our goodwill, intangible assets, long-lived assets and/or inventory. Sustained lower prices also could cause us to further reduce existing mineral reserves if certain reserves can no longer be economically mined or processed at prevailing prices.
ITEM 1A. RISK FACTORS An investment in our common shares or other securities is subject to risks inherent in our businesses and the industries in which we operate. Described below are certain risks and uncertainties, the occurrences of which could have a material adverse effect on us.
ITEM 1A. RISK FACTORS An investment in our common shares or other securities is subject to risks inherent in our businesses and the industries in which we operate. We describe below certain risks and uncertainties, the occurrences of which could have a material adverse effect on us.
In addition, U.S. public utilities may impose rate increases and pass through additional capital and operating cost increases to their customers related to new or pending U.S. environmental regulations or other charges that may require significant capital investment and use of cleaner fuels in the future. In particular, the recent decision of the U.S.
In addition, U.S. public utilities may impose rate increases and/or pass through additional capital and operating cost increases to their customers related to new or pending U.S. environmental regulations or other charges that may require significant capital investment and/or use of cleaner fuels in the future.
Particularly during periods of increased inflation resulting in higher input costs as we experienced during 2022, we may be unable to decrease our costs in an amount sufficient to offset reductions in revenues and may incur losses. These events could have a material adverse effect on us.
Particularly during periods of increased inflation resulting in higher input costs, we may be unable to decrease our costs in an amount sufficient to offset reductions in revenues and may incur losses. These events could have a material adverse effect on us.
As described elsewhere in this report, the prices of steel, iron ore and scrap metal have fluctuated significantly in the recent past, which prices are unpredictable and affected by factors beyond our control, including: international demand for, and the impact of higher rates of inflation on, raw materials used in steel production; availability of scrap metal substitutes such as pig iron; commodity price speculation; rates of global economic growth, especially construction and infrastructure activity that requires significant amounts of steel; changes in the levels of economic activity in the U.S., China, India, Europe and other industrialized or developing economies, including as a result of the Russia-Ukraine conflict or otherwise; changes in China’s emissions policies and environmental compliance enforcement practices; changes in the production capacity, production rate and inventory levels of other steel producers, iron ore suppliers and scrap metal processors and traders; changes in trade laws; volumes of unfairly traded imports; imposition or termination of duties, tariffs, import and export controls and other trade barriers impacting the steel and iron ore markets; climate change and other weather-related disruptions, infectious disease outbreaks, such as the COVID-19 pandemic, or natural disasters that may impact the global supply of steel, iron ore or scrap metal; and the proximity, capacity and cost of infrastructure and transportation.
As described elsewhere in this report, the prices of steel, iron ore and scrap metal have fluctuated significantly in the recent past, and these pricing shifts are unpredictable and affected by factors beyond our control, including: international demand for, and the impact of higher rates of inflation on, raw materials used in steel production; availability of scrap metal substitutes such as pig iron; commodity price speculation; rates of global economic growth, especially construction and infrastructure activity that requires significant amounts of steel; changes in the levels of economic activity in the U.S., China, India, Europe and other industrialized or developing economies, including as a result of geopolitical conflicts or otherwise; changes in China’s emissions policies and environmental compliance enforcement practices; changes in the production capacity, production rate and inventory levels of other steel producers, distributors, iron ore suppliers and scrap metal processors and traders; changes in trade laws; volumes of unfairly traded imports; imposition or termination of duties, tariffs, import and export controls and other trade barriers impacting the steel and iron ore markets; climate change and other weather-related disruptions, infectious disease outbreaks, such as the COVID-19 pandemic, or natural disasters that may impact the global supply of steel, iron ore or scrap metal; and the proximity, capacity and cost of infrastructure and transportation.
Actual volume and grade of reserves recovered, production rates, revenues on third-party sales and expenditures with respect to our reserves will likely vary from estimates, and if such variances are material, our sales and profitability could be adversely affected.
Actual volume and grade of reserves recovered, production rates, revenues on third-party sales and expenditures with respect to our reserves will likely vary from estimates, and if such variances are material, our sales and gross margins could be adversely affected.
Our profitability could be adversely affected if we fail to maintain satisfactory labor relations. Our production is dependent upon the efforts of our employees. We are party to labor agreements with various labor unions that represent employees at the vast majority of our operations.
Our profitability could be adversely affected if we fail to maintain satisfactory labor relations. Our production is dependent upon the efforts of our employees. We are party to labor agreements with various labor unions that represent employees at most of our operations.
In order to maintain consistent operational performance and foster growth in our businesses, we must maintain our social license to operate with our stakeholders. Maintaining a strong reputation and consistent operational, environmental and safety track records is vital in order to continue to foster business growth and maintain our permission to operate.
To maintain consistent operational performance and foster growth in our businesses, we must maintain our social license to operate with our stakeholders. Maintaining a strong reputation and consistent operational, environmental and safety track records is vital to continuing to foster business growth and maintaining our permission to operate.
Accordingly, required permits may not be issued or renewed in a timely fashion or at all, or permits issued or renewed may include conditions that we cannot meet or otherwise be conditioned in ways that may restrict our ability to conduct our production, mining and processing activities efficiently or include requirements for additional financial assurances that we may not be able to provide on commercially reasonable terms or at all, which could reduce available borrowing capacity under our ABL Facility.
Due to these factors or for other reasons, required permits may not be issued or renewed in a timely fashion or at all, or permits issued or renewed may include conditions that we cannot meet or otherwise be conditioned in ways that may restrict our ability to conduct our production, mining and processing activities efficiently or include requirements for additional financial assurances that we may not be able to provide on commercially reasonable terms or at all, which could reduce available borrowing capacity under our ABL Facility.
For example, i ncreased electricity demand to the grid in response to physical climate-related risks, adverse or extreme weather events and electrification of the economy could adversely impact energy prices.
For example, increased electricity demand to the grid in response to physical climate-related risks, adverse or extreme weather events and electrification of the economy could adversely impact energy prices.
For example, the temporary production shutdowns in the automotive industry that occurred during 2020 as a result of the onset of the COVID-19 pandemic and associated reduction in demand for our products led to our decision to temporarily idle certain steelmaking facilities and iron ore mines.
For example, the temporary production shutdowns in the automotive industry that occurred during 2020 due to the onset of the COVID‑19 pandemic and associated reduction in demand for our products led to our decision to temporarily idle certain steelmaking facilities and iron ore mines.
Those events, including the occurrence of an infectious disease, widespread illness or public health emergency, such as the COVID-19 pandemic, could cause industry members or their suppliers to curtail production or shut down a portion or all of their operations, which could reduce the demand for our products and adversely affect our revenues, margins and profitability.
Those events, including the occurrence of an infectious disease, widespread illness or public health emergency, could cause industry members or their suppliers to curtail production or shut down a portion or all of their operations, which could reduce the demand for our products and adversely affect our revenues, margins and profitability.
As we source a portion of our critical supplies and raw materials from China, such as refractories, electrodes, chemicals and spare parts, existing tensions or further adverse geopolitical developments between the U.S. and China triggering or exacerbating sanctions or trading restrictions could lead to us experiencing disruptions, delays or higher costs in supplying our operations.
As we source a portion of our critical supplies, manufacturing equipment and raw materials from China, such as refractories, electrodes, chemicals and spare parts, existing tensions or further adverse geopolitical developments between the U.S. and China triggering or exacerbating sanctions or trading restrictions could lead to us experiencing disruptions, delays or higher costs in supplying our operations and maintaining steady-state production.
Such events could cause us to experience lost sales or losses associated with the potential inability to collect all outstanding accounts receivable and reduced liquidity.
Such events could cause us to experience lost sales or losses associated with the potential inability to collect all outstanding accounts receivable as well as reduced liquidity.
As described in detail in Part I - Item 1, Business - Environmental Matters - Regulatory Developments - Climate Change and GHG Regulations above, because our operations use carbon-based energy and produce GHG emissions, we are subject to a number of risks relating to decarbonization initiatives being undertaken by regulators and other stakeholders as part of global efforts to address the potential impacts of climate change.
Business - Environmental Matters - Regulatory Developments - Climate Change and GHG Regulations above, because our operations use carbon-based energy and produce GHG emissions, we are subject to a number of risks relating to decarbonization initiatives being undertaken by regulators and other stakeholders as part of global efforts to address the potential impacts of climate change.
We may not be able to refinance on commercially reasonable terms or at all, and any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants, making it more difficult to obtain surety bonds, letters of credit or other financial assurances that may be demanded by our vendors 21 | CLF 2022 FORM 10-K Table of Contents or regulatory agencies, particularly during periods in which credit markets are weak.
We may not be able to refinance on commercially reasonable terms or at all, and any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants, making it more difficult to obtain surety bonds, letters of credit or other financial assurances that may be demanded by our vendors or regulatory agencies, particularly during periods in which credit markets are weak.
From time to time, we release guidance, including that set forth under “Management’s Discussion and Analysis of Financial Condition and Results of Operations–Outlook” in our Annual Reports on Form 10-K and our Quarterly Reports on Form 10-Q, regarding our future performance.
Our actual operating results may differ significantly from our guidance. From time to time, we release guidance, including that set forth under “Management’s Discussion and Analysis of Financial Condition and Results of Operations–Outlook” in our Annual Reports on Form 10-K and our Quarterly Reports on Form 10-Q, regarding our future performance.
For example, cybersecurity vulnerabilities could result in an interruption of the functionality of our automated manufacturing, operating, or health and safety systems, which, if compromised, could cease, threaten, delay or slow down our ability to produce or process steel or any of our other products for the duration of 24 | CLF 2022 FORM 10-K Table of Contents such interruption or lead to unanticipated health or safety incidents, which could result in reputational harm and may adversely affect our employees, results of operations, financial condition and cash flows.
For example, cybersecurity vulnerabilities could result in an interruption of the functionality of our automated manufacturing, operating, or health and safety systems, which, if compromised, could cease, threaten, delay or slow down our ability to produce or process steel or any of our other products for the duration of such interruption or lead to unanticipated health or safety incidents, which could result in reputational harm and may adversely affect our employees, results of operations, financial condition and cash flows.
In addition, we are party to several joint ventures relating to iron ore mining, downstream steel processing and scrap metal recycling, and if our joint venture partners experience financial hardships or fail to perform their obligations upon closure, we may be required to assume significant additional obligations on behalf of the joint venture, including costs of environmental remediation and pension and OPEB obligations.
In addition, we are party to several joint ventures relating to iron ore mining, downstream steel processing and scrap metal recycling, and if our joint venture partners experience financial hardships or fail to perform their obligations upon closure, we may be required to assume significant 24 | CLF 2023 FORM 10-K Table of Contents additional obligations on behalf of the joint venture, including costs of environmental remediation and pension and OPEB obligations.
Similarly, if our key vendors face financial hardship or need to operate in bankruptcy, as we have been experiencing with one of our major steel mill slag services providers since 2022, such vendors could experience operational disruption or even face liquidation, which could result in such vendor defaulting on its obligations to us or in our inability to secure replacement materials or services on a timely basis, or at all, or cause us to incur increased costs to do so.
Similarly, if our key vendors face financial hardship or need to operate in bankruptcy, as we experienced with one of our major steel mill slag services providers during 2022-2023, such vendors could suffer operational disruption or even face liquidation, which could result in such vendor defaulting on its obligations to us or in our inability to secure replacement materials or services on a timely basis, or at all, or cause us to incur increased costs to do so.
In addition, even though we are partially self-sufficient in scrap metal, if the market price of scrap metal were to experience a sustained price increase, our cost to produce steel would be adversely affected due to the higher prices we would need to pay to acquire third-party scrap metal for consumption in our operations, which would adversely affect the margins we would realize on our fixed price contracts.
In addition, even though we are partially self-sufficient in scrap metal, if the market price of scrap metal were to experience a sustained price increase, our cost to produce steel would be adversely affected due to the higher 22 | CLF 2023 FORM 10-K Table of Contents prices we would need to pay to acquire third-party scrap metal for consumption in our operations, which would adversely affect the margins we would realize on our fixed price contracts.
Furthermore, as cybersecurity threats continue to evolve and become more sophisticated, we may be required to incur significant costs and invest additional resources to protect against and, if required, remediate the damage caused by such disruptions or system failures in the future.
Furthermore, as cybersecurity threats continue to evolve and become more sophisticated, including through the use of artificial intelligence, we may be required to incur significant costs and invest additional resources to protect against and, if required, remediate the damage caused by such disruptions or system failures in the future.
Future laws and regulations or the manner in which they are interpreted and enforced could increase these costs and liabilities or limit our ability to produce our raw materials and products.
Future laws and regulations or the way they are interpreted and enforced could increase these costs and liabilities or limit our ability to produce our raw materials and products.
A significant interruption in service from our suppliers due to production or transportation issues, workforce difficulties, terrorism or sabotage, weather conditions such as heat waves that may be attributable to climate change, natural disasters, equipment failure or any other cause could result in substantial losses that may not be fully recoverable, either from our business interruption insurance or responsible third parties.
A significant interruption in service from our suppliers due to production or transportation issues, workforce difficulties, terrorism or sabotage, weather conditions such as heat waves that may be attributable 23 | CLF 2023 FORM 10-K Table of Contents to climate change, natural disasters, equipment failure or any other cause could result in substantial losses that may not be fully recoverable, either from our business interruption insurance or responsible third parties.
Our ability to achieve the anticipated production volumes, revenues or otherwise realize acceptable returns on capital projects that we may undertake is subject to a number of risks, many of which are beyond our control, including a variety of market, operational, permitting and labor- 23 | CLF 2022 FORM 10-K Table of Contents related factors.
Our ability to achieve the anticipated production volumes, revenues or otherwise realize acceptable returns on capital projects that we may undertake is subject to a number of risks, many of which are beyond our control, including a variety of market, operational, permitting and labor-related factors.
Because all of our steel manufacturing facilities are located in North America and one of our principal markets is automotive manufacturing in North America, we believe that the USMCA has the potential to positively impact our business by incentivizing automakers and other manufacturers to increase manufacturing production in North America and to use North American steel.
Because all of our steel manufacturing facilities are located in North America and one of our principal markets is automotive manufacturing in North America, we believe that the USMCA has the potential to positively impact our business by incentivizing automakers and other manufacturers to increase manufacturing production in North America and to use North 18 | CLF 2023 FORM 10-K Table of Contents American steel.
Depending on the nature and extent of a loss, the insurance that we maintain to address risks that are typical in our businesses may not be adequate or available to fully protect or reimburse us, or our insurance 25 | CLF 2022 FORM 10-K Table of Contents coverage may be limited, canceled or otherwise terminated.
Depending on the nature and extent of a loss, the insurance that we maintain to address risks that are typical in our businesses may not be adequate or available to fully protect or reimburse us, or our insurance coverage may be limited, canceled or otherwise terminated.
We base our assumptions regarding the life of our mines on detailed studies we perform from time to time, but those studies and assumptions are subject to uncertainties and estimates that may not be accurate.
Although we base our assumptions regarding the life of our mines on detailed studies we perform from time to time, which are reviewed and validated by QPs, those studies and assumptions are subject to uncertainties and estimates that may not be accurate.
If there is a significant weakening of current economic conditions, whether because of operational, cyclical, supply chain or other issues, including inflationary pressures, higher interest rates or currently unanticipated adverse developments arising out of the COVID‑19 pandemic, it could cause customers to reduce, delay or cancel their orders with us, impact significantly the creditworthiness of our customers and lead to other financial difficulties or even bankruptcy filings by our customers.
If there is a significant weakening of current economic conditions, whether because of operational, cyclical, supply chain or other issues, including inflationary pressures, higher interest rates or an infectious disease outbreak, it could cause customers to reduce, delay or cancel their orders with us, impact significantly the creditworthiness of our customers, and lead to other financial difficulties or even bankruptcy filings by our customers.
Automotive production and sales are cyclical and sensitive to general economic conditions and other factors, including interest rates, consumer credit, spending and preferences, and supply chain disruptions, such as the current semiconductor shortage.
Automotive production and sales are cyclical and sensitive to general economic conditions and other factors, including interest rates, consumer credit, spending and preferences, and supply chain disruptions.
If we violate or fail to comply with these laws or regulations, we could be fined, required to cease operations, subject to criminal or civil liability, or otherwise sanctioned by regulators or barred from participating in 19 | CLF 2022 FORM 10-K Table of Contents government contracts.
If we violate or fail to comply with these laws or regulations, we could be fined, required to cease operations, subject to criminal or civil liability, or otherwise sanctioned by regulators or barred from participating in government contracts.
In the event we lose reserves, resources, deposits or surface rights, we may be required to shut down or significantly alter impacted mining operations, thereby affecting future production, internal supply patterns, revenues and cash flows. VI.
In the event we lose reserves, resources, deposits or surface rights, we may be required to shut down or significantly alter impacted mining operations, thereby affecting future production, internal supply patterns and margins, revenues and cash flows. 26 | CLF 2023 FORM 10-K Table of Contents VI.
Additionally, there are requirements for the prompt reporting of accidents and increased fines and penalties for violations of these and existing regulations. These laws and regulations may cause us to incur substantial additional costs.
Additionally, there are requirements for the prompt reporting 19 | CLF 2023 FORM 10-K Table of Contents of accidents and increased fines and penalties for violations of these and existing regulations. These laws and regulations may cause us to incur substantial additional costs.
As of December 31, 2022, we had $4,306 million aggregate principal amount of long-term debt outstanding, $829 million of which was secured (excluding $150 million of outstanding letters of credit and $215 million of finance leases), and $26 million of cash on our statement of consolidated financial position.
As of December 31, 2023, we had $3,192 million aggregate principal amount of long-term debt outstanding, $829 million of which was secured (excluding $56 million of outstanding letters of credit and $215 million of finance leases), and $198 million of cash on our statement of consolidated financial position.
Excess steel and iron ore supply combined with reduced global steel demand, including in China due to new or continuing COVID-19 lockdowns or otherwise, and increased foreign imports could also lead to lower steel and iron ore prices. Downward pressure on steel and/or iron ore prices could have an adverse effect on our results of operations, financial condition and profitability.
Excess steel and iron ore supply combined with reduced global steel demand and increased imports could also lead to lower steel and iron ore prices. Downward pressure on steel and/or iron ore prices could have an adverse effect on our results of operations, financial condition and profitability.
These emerging or recently enacted rules, regulations and policy guidance include, but are not limited to: trade regulations, such as the USMCA and/or other trade agreements, treaties or policies; changes in tariff policy, including with respect to the 25% tariff on certain imported steel imposed under Section 232; climate change mitigation strategies and GHG regulation; selenium discharge regulation; revisions to the sulfate wild rice water quality standard and its implementation; Minnesota’s Mercury TMDL and associated federal rules governing mercury air emission reductions; the Regional Haze FIP Rule; ozone transport regulations; agency decisions related to environmental justice initiatives; revised National Ambient Air Quality Standards, particularly for ozone and particulate matter; and Superfund chemical and substance excise taxes under CERCLA, which were reinstated effective July 1, 2022 as part of the Infrastructure and Jobs Act.
These emerging or recently enacted rules, regulations and policy guidance include, but are not limited to: trade regulations, such as the USMCA and/or other trade agreements, treaties or policies; changes in tariff policy, including with respect to the 25% tariff on certain imported steel imposed under Section 232; climate change mitigation strategies and GHG regulation; selenium discharge regulation; revisions to the sulfate wild rice water quality standard and its implementation; Minnesota’s Mercury TMDL and associated federal rules governing mercury air emission reductions; the Regional Haze FIP Rule; ozone transport regulations; agency decisions related to environmental justice initiatives; revised National Ambient Air Quality Standards, particularly for ozone and particulate matter; revised National Emission Standards for Hazardous Air Pollutants in the taconite, coke, and iron and steel sectors; and additional regulations regarding per- and polyfluoroalkyl substances.
Although certain of our U.S. competitors temporarily shut down production capacity during the COVID-19 pandemic, much of the previously idled capacity has been restarted, and certain of our competitors have announced and are moving ahead with plans to develop new steelmaking capacity in the near term.
Although certain of our U.S. competitors have shut down production capacity, certain of our competitors have announced and are moving ahead with plans to develop new steelmaking capacity in the near term.
REGULATORY RISKS U.S. government actions on trade agreements and treaties, laws, regulations or policies affecting trade could lead to lower or more volatile global steel prices, impacting our profitability.
Such events could adversely impact our continuity of operations, financial results and cash flows. II. REGULATORY RISKS U.S. government actions on trade agreements and treaties, laws, regulations, or policies affecting trade could lead to lower or more volatile global steel prices, impacting our profitability.
Further, increased pressure from customers or other business partners seeking to reduce their indirect carbon footprints and achieve certain overall decarbonization targets, including by sourcing a larger percentage of steel products from recycled steel, could result in the potential loss of business opportunities if we are unable to meet their carbon, GHG emissions or sustainability expectations, or if we are perceived to have higher GHG intensity than our competition.
Further, increased pressure from customers or other business partners seeking to reduce their indirect carbon footprints and achieve certain overall decarbonization targets, including by sourcing a larger percentage of steel products from recycled steel, could result in the potential loss of business opportunities if we are unable to meet their carbon, GHG emissions or sustainability expectations, or if we are perceived to have higher GHG intensity than our competition. 25 | CLF 2023 FORM 10-K Table of Contents In addition, as part of our decarbonization strategy, we are investigating and from time to time may consider investments in or other relationships with various renewable and clean energy initiatives.
SUSTAINABILITY AND DEVELOPMENT RISKS As our customers, competitors and investors seek to reduce their carbon footprint, transition toward carbon neutrality and enhance the sustainability of their respective businesses, we face increased financial, regulatory, legal and reputational risks and potential loss of business opportunities because our operations utilize carbon-based energy sources and produce GHG emissions.
SUSTAINABILITY AND DEVELOPMENT RISKS As we and our customers, competitors and investors seek reduced carbon footprints, transition toward carbon neutrality and enhance business sustainability, we face increased financial, regulatory, legal and reputational risks and potential loss of business opportunities because our operations utilize carbon-based energy sources and produce GHG emissions. As described in detail in Part I - Item 1.
For example, we have recently been engaging in various discussions with other companies, universities and national research laboratories with the goal of leveraging potential funding available under the DOE's Regional Clean Hydrogen Hubs Funding Opportunity Announcement to develop and implement clean hydrogen solutions for our industrial applications in place of carbon-based natural gas.
For example, we engaged in various discussions with other companies, universities and national research laboratories to leverage funding available under the DOE's Regional Clean Hydrogen Hubs Funding Opportunity Announcement to develop and implement clean hydrogen solutions for our industrial applications.
For example, due to increased scrap usage and reduced demand for iron ore pellets in our steelmaking operations, our Northshore mining and pelletizing facility has been temporarily idled since mid-2022, and we have continued to incur certain fixed costs at that facility during the idle period.
For example, due to increased scrap usage and less demand for iron ore pellets in our steelmaking operations, our Northshore mining and pelletizing facility was temporarily idled during portions of 2022 and 2023, and we incurred certain fixed costs at that facility during the idle periods.
The principal reason that we release such data is to provide a basis for our management to discuss our business outlook with analysts and investors. We do not accept any responsibility for any projections or reports published by any such third parties.
The principal reason that we release such data is to provide a basis for our management to discuss our business outlook with analysts and investors.
While we are pursuing these energy-related projects with the aim of contributing to a greener power grid and lowering our GHG emissions in alignment with our announced target of a 25% reduction from 2017 levels by 2030, there are no guarantees that sufficient funding or the necessary advanced technology will be available to complete any of these projects under currently anticipated timeframes or at all.
While we are pursuing these decarbonization and energy-related projects with the aim of contributing to a greener power grid and lowering our GHG emissions in alignment with our targets, there are no guarantees that sufficient funding or the necessary advanced technology will be available to complete any of these projects under currently anticipated timeframes or at all, and we may experience delays and higher-than-anticipated costs to install the necessary infrastructure to implement such renewable and clean energy initiatives.
International Trade Commission reviewed and continued antidumping and countervailing duty orders covering imports from several major trading partners of some of our key products, including corrosion-resistant steel, cold-rolled steel, hot-rolled steel and cut-to-length plate.
International Trade Commission reviewed and continued antidumping and countervailing duty orders covering imports from several major trading partners of some of our key products, including corrosion-resistant steel, cold-rolled steel, hot-rolled steel and cut-to-length plate. However, previously granted petitions for trade relief may not be successful or fully effective at preventing harm from dumped and subsidized imports.
We regularly evaluate, and engage third-party QPs to review and validate, our mineral reserves based on revenues and costs and update them as required in accordance with SEC regulations.
We rely on estimates of our recoverable mineral reserves, which are complex due to geological characteristics of the properties and the number of assumptions made. We regularly evaluate, and engage third-party QPs to review and validate, our mineral reserves based on revenues and costs and update them as required in accordance with SEC regulations.
Prices for electricity, natural gas, diesel fuel, oils and raw materials can fluctuate widely with availability and demand levels from other users, including fluctuations caused by the impact of recent inflationary pressures, supply chain constraints, the 22 | CLF 2022 FORM 10-K Table of Contents Russia-Ukraine conflict and the COVID-19 pandemic.
Prices for electricity, natural gas, diesel fuel, oils and raw materials can fluctuate widely with availability and demand levels from other users, including fluctuations caused by the impact of recent inflationary pressures, supply chain constraints, infectious disease outbreaks and geopolitical conflicts.

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Item 2. Properties

Properties — owned and leased real estate

42 edited+4 added−6 removed71 unchanged
Biggest changeDuring the year ended December 31, 2022, FPT processed approximately 3 million net tons of scrap metal, of which approximately 50% of total output was prime grade. DIRECT REDUCTION PLANT Our direct reduction plant is located in Toledo, Ohio, is near an existing dock, and has rail access and heavy haul roads for operation logistics.
Biggest changeThese facilities are primarily located in Michigan and Ohio, which are in close proximity to our scrap consuming steel facilities. During the years ended December 31, 2023 and 2022, FPT processed approximately 3 million net tons of scrap metal, of which approximately 50% of total output was prime grade.
As used in this Annual Report on Form 10-K, the terms “mineral resource,” “measured mineral resource,” “indicated mineral resource,” “inferred mineral resource,” “mineral reserve,” “proven mineral reserve” and “probable mineral reserve” are defined and used in accordance with subpart 1300 of Regulation S-K.
As used in this Annual Report on Form 10-K, the terms “mineral resource,” “measured mineral resource,” “indicated mineral resource,” “inferred mineral resource,” “mineral reserve,” “proven mineral reserve,” and “probable mineral reserve” are defined and used in accordance with subpart 1300 of Regulation S-K.
Reference point selected by the QP is the saleable tons based on the process recovery. Process recovery may change based on the required saleable product mix and is reported as wet product percentage.
Reference point selected by the QP is the saleable tons based on the process recovery. Process recovery may change based on the required saleable product mix and is reported as wet product percentage.
Mineral Reserves are classified as probable if not scheduled within the first 20 years. Mineral Reserves are reported at a $90.00/lt wet standard pellet price freight-on-board (FOB) Lake Superior, which is based on the mine planning model's three-year trailing average of the realized product revenue rate.
Mineral Reserves are classified as probable if not scheduled within the first 20 years. Mineral Reserves are reported at a $90.00/lt wet standard pellet price freight-on-board (FOB) Lake Superior, which is based on the mine planning model's three-year trailing average of the realized product revenue rate.
STEELMAKING Location Raw Material (Tons in millions) State Iron Ore Capacity (lt) HBI Capacity (mt) Coke Capacity (nt) Coal Capacity (nt) Scrap Capacity (mt) Hibbing Taconite MN l 7.0 Minorca MN l 3.0 Northshore MN l 5.0 Tilden MI l 7.0 United Taconite MN l 6.0 Toledo HBI OH l 1.9 Burns Harbor (Coke) IN l 1.8 Monessen PA l 0.3 Warren OH l 0.5 Princeton WV l 2.3 FPT Multiple l N/A 29 | CLF 2022 FORM 10-K Table of Contents Location Raw Steel Processing and Finishing (Tons in millions) State BF-BOF EAF Configured Capacity (nt) Hot-Rolled Cold-Rolled Coated Stainless & Electrical Plate Slab & Other Burns Harbor IN l 5.0 l l l l Burns Harbor Plate IN l Butler PA l 0.4 l Cleveland Works OH l 3.4 l l l l Coatesville PA l 0.2 l l Columbus OH l Conshohocken PA l Coshocton OH l Dearborn Works MI l 3.0 l l l Gary Plate IN l Indiana Harbor Works IN l 4.0 l l l l Mansfield Works OH l 0.5 l Middletown Works OH l 3.0 l l l l l Piedmont NC l Riverdale IL l 0.7 l Rockport Works IN l l l Steelton PA l 0.3 l Tek & Kote IN l l Weirton WV l l Zanesville OH l STEELMAKING AND FINISHING FACILITIES Our primary steel producing and finishing facilities are located across Illinois, Indiana, Michigan, Ohio, Pennsylvania and West Virginia.
STEELMAKING Location Raw Material (Tons in millions) State Iron Ore Capacity (lt) HBI Capacity (mt) Coke Capacity (nt) Coal Capacity (nt) Scrap Capacity (mt) Hibbing Taconite MN l 7.0 Minorca MN l 3.0 Northshore MN l 5.0 Tilden MI l 7.0 United Taconite MN l 6.0 Toledo HBI OH l 1.9 Burns Harbor (Coke) IN l 1.8 Monessen PA l 0.3 Warren OH l 0.5 Princeton WV l 1.8 FPT Multiple l N/A 29 | CLF 2023 FORM 10-K Table of Contents Location Raw Steel Processing and Finishing (Tons in millions) State BF-BOF EAF Configured Capacity (nt) Hot-Rolled Cold-Rolled Coated Stainless & Electrical Plate Slab & Other Burns Harbor IN l 5.0 l l l l Burns Harbor Plate IN l Butler PA l 0.4 l Cleveland Works OH l 3.4 l l l l Coatesville PA l 0.2 l l Columbus OH l Conshohocken PA l Coshocton OH l Dearborn Works MI l 3.0 l l l Gary Plate IN l Indiana Harbor Works IN l 4.0 l l l l Mansfield Works OH l 0.5 l Middletown Works OH l 3.0 l l l l l Piedmont NC l Riverdale IL l 0.7 l Rockport Works IN l l l Steelton PA l 0.3 l Tek & Kote IN l l Weirton WV l l Zanesville OH l STEELMAKING AND FINISHING FACILITIES Our primary steel producing and finishing facilities are located across Illinois, Indiana, Michigan, Ohio, Pennsylvania and West Virginia.
All mineral resource estimates were reviewed and validated by the QP, SLR. 34 | CLF 2022 FORM 10-K Table of Contents The following represents iron ore mineral resources, exclusive of mineral reserves, as of December 31, 2022 and 2021: Iron Ore Mineral Resources Measured Indicated Measured + Indicated Process Inferred (In millions of long tons) Tonnage % Grade Tonnage % Grade Tonnage % Grade Recovery Tonnage % Grade Total Iron Ore 1,351 22.5 1,483 23.6 2,834 23.1 31% 420 32.4 Michigan — — 135 35.5 135 35.5 36% 350 34.7 Minnesota 1,351 22.5 1,348 22.4 2,699 22.4 31% 70 21.0 Hibbing 1 8 19.2 1 18.7 9 19.2 25% — — Minorca 484 22.9 317 22.9 801 22.9 33% 30 21.1 Northshore 767 22.1 391 22.4 1,158 22.2 26% 14 19.8 Tilden — — 135 35.5 135 35.5 36% 350 34.7 United Taconite 92 23.6 639 22.2 731 22.4 32% 26 21.5 1 Hibbing is reported at 85.3% based on our ownership level.
All mineral resource estimates were reviewed and validated by the QP, SLR. 34 | CLF 2023 FORM 10-K Table of Contents The following represents iron ore mineral resources, exclusive of mineral reserves, as of December 31, 2023 and 2022: Iron Ore Mineral Resources Measured Indicated Measured + Indicated Process Inferred (In millions of long tons) Tonnage % Grade Tonnage % Grade Tonnage % Grade Recovery Tonnage % Grade Total Iron Ore 1,351 22.5 1,483 23.6 2,834 23.1 31% 420 32.4 Michigan — — 135 35.5 135 35.5 36% 350 34.7 Minnesota 1,351 22.5 1,348 22.4 2,699 22.4 31% 70 21.0 Hibbing 1 8 19.2 1 18.7 9 19.2 25% — — Minorca 484 22.9 317 22.9 801 22.9 33% 30 21.1 Northshore 767 22.1 391 22.4 1,158 22.2 26% 14 19.8 Tilden — — 135 35.5 135 35.5 36% 350 34.7 United Taconite 92 23.6 639 22.2 731 22.4 32% 26 21.5 1 Hibbing is reported at 85.3% based on our ownership level.
For more information, see Exhibit 96.2, Technical Report Summary on the Minorca Property, Minnesota, USA, prepared for the Company by the QP, SLR, with an effective date of December 31, 2021. 32 | CLF 2022 FORM 10-K Table of Contents NORTHSHORE Northshore's (100% owned) mine is located on the northeastern edge of the Mesabi Iron Range in northeastern Minnesota, approximately four miles southeast of Babbitt, Minnesota at latitude 47°40'12.15"N and longitude 91°53'1.28"W.
For more information, see Exhibit 96.2, Technical Report Summary on the Minorca Property, Minnesota, USA, prepared for the Company by the QP, SLR, with an effective date of December 31, 2021. 32 | CLF 2023 FORM 10-K Table of Contents NORTHSHORE Northshore's (100% owned) mine is located on the northeastern edge of the Mesabi Iron Range in northeastern Minnesota, approximately four miles southeast of Babbitt, Minnesota at latitude 47°40'12.15"N and longitude 91°53'1.28"W.
For more information, see Exhibit 96.5, Technical Report Summary on the Tilden Property, Michigan, USA, prepared for the Company by the QP, SLR, with an effective date of December 31, 2021. 33 | CLF 2022 FORM 10-K Table of Contents UNITED TACONITE United Taconite's (100% owned) mine and offices are located on Minnesota's Mesabi Iron Range just north of Eveleth, Minnesota at latitude 47°29'1.62" N, longitude 92°32'23.69" W.
For more information, see Exhibit 96.5, Technical Report Summary on the Tilden Property, Michigan, USA, prepared for the Company by the QP, SLR, with an effective date of December 31, 2021. 33 | CLF 2023 FORM 10-K Table of Contents UNITED TACONITE United Taconite's (100% owned) mine and offices are located on Minnesota's Mesabi Iron Range just north of Eveleth, Minnesota at latitude 47°29'1.62" N, longitude 92°32'23.69" W.
Its facilities feature eight large-bed, hot-stamping presses, providing 14 lines of production; 82 cold- 38 | CLF 2022 FORM 10-K Table of Contents stamping presses ranging from 150 net tons to 3,000 net tons of pressing capacity; 18 large-bed, high-tonnage tryout presses with prove-out capabilities for new tool builds; and 151 multi-axis welding assembly cells.
Its facilities feature eight large-bed, hot-stamping presses, providing 14 lines of production; 82 cold-stamping presses ranging from 150 net tons to 3,000 net tons of pressing capacity; 18 large-bed, high-tonnage tryout presses with 38 | CLF 2023 FORM 10-K Table of Contents prove-out capabilities for new tool builds; and 151 multi-axis welding assembly cells.
Mineral reserves estimates for our iron mines are constrained by fully designed open pits developed using three-dimensional modeling techniques. These open pits incorporate design slopes, practical mining shapes and access ramps to assure the accuracy of our mineral reserve estimates. All operations' mineral reserves have been adjusted net of production through year-end 2022.
Mineral reserves estimates for our iron mines are constrained by fully designed open pits developed using three-dimensional modeling techniques. These open pits incorporate design slopes, practical mining shapes and access ramps to assure the accuracy of our mineral reserve estimates. All operations' mineral reserves have been adjusted net of production through year-end 2023.
Overall, mineral reserves estimates as of December 31, 2022, as compared to the prior-year period, decreased by 3%, which was driven by mining depletion. INTERNAL CONTROLS DISCLOSURE We demonstrated repeated attainment of annual production and quality targets for at least 40 years at each material iron ore mine operated by the Company.
Overall, mineral reserves estimates as of December 31, 2023, as compared to the prior-year period, decreased by 3%, which was driven by mining depletion. INTERNAL CONTROLS DISCLOSURE We demonstrated repeated attainment of annual production and quality targets for at least 40 years at each material iron ore mine operated by the Company.
Mineral resources are reported at a $90.00/lt wet standard pellet price freight-on-board (FOB) Lake Superior, which is based on the mine planning model's three-year trailing average of the realized product revenue rate. We did not have any material changes to our mineral resources during 2022.
Mineral resources are reported at a $90.00/lt wet standard pellet price freight-on-board (FOB) Lake Superior, which is based on the mine planning model's three-year trailing average of the realized product revenue rate. We did not have any material changes to our mineral resources during 2023.
We lease 100% of the mineral rights comprising of 4,908 acres expiring between 2037 and 2066, with the exception of the State of Minnesota mineral lease, which expires in 2027. Leases are maintained by making minimum prepaid royalty payments. Mining leases routinely are renegotiated and renewed as they approach their respective expiration dates.
We lease 100% of the mineral rights, comprised of 4,908 acres expiring between 2037 and 2066, with the exception of the State of Minnesota mineral lease, which expires in 2027. Leases are maintained by making minimum prepaid royalty payments. Mining leases routinely are renegotiated and renewed as they approach their respective expiration dates.
Mineral reserves are estimated using the following cut-off grades: 25% FeT for Tilden hematite; 19% magnetic Fe for Northshore; 16% magnetic Fe for Minorca; 17% magnetic Fe for United Taconite; and 15% magnetic Fe for Hibbing. Tonnage is reported in long tons equivalent to 2,240 pounds and has been rounded to the nearest 100,000.
Mineral reserves are estimated using the following cut-off grades: 25% FeT for Tilden hematite; 19% magnetic Fe for Northshore; 16% magnetic Fe for Minorca; 17% magnetic Fe for United Taconite; and 13% magnetic Fe for Hibbing. Tonnage is reported in long tons equivalent to 2,240 pounds and has been rounded to the nearest 100,000.
Where QA/QC programs are still in 37 | CLF 2022 FORM 10-K Table of Contents development and prior to resource estimation, Cliffs conducted data verification studies utilizing a suite of blind crude ore standards and blind duplicates from historical sample reserves within the LoM plan.
Where QA/QC programs are still in 37 | CLF 2023 FORM 10-K Table of Contents development and prior to resource estimation, Cliffs conducted data verification studies utilizing a suite of blind crude ore standards and blind duplicates from historical sample reserves within the LoM plan.
You are specifically cautioned not to assume that any part or all of the mineral deposits (including any mineral resources) in these categories will ever be converted into mineral reserves, as defined by the SEC. You are cautioned that, except for that portion of mineral resources classified as mineral reserves, mineral resources do not have demonstrated economic value.
Investors are specifically cautioned not to assume that any part or all of the mineral deposits (including any mineral resources) in these categories will ever be converted into mineral reserves, as defined by the SEC. Investors are cautioned that, except for that portion of mineral resources classified as mineral reserves, mineral resources do not have demonstrated economic value.
The mining and processing operation is located between latitude 47°25’48” N and 47°31’48” N and longitude 93°04’54” W and 92°54’36” W. 31 | CLF 2022 FORM 10-K Table of Contents Mining began in 1976 as a joint venture between Bethlehem Steel Corporation and Steel Company of Canada.
The mining and processing operation is located between latitude 47°25’48” N and 47°31’48” N and longitude 93°04’54” W and 92°54’36” W. 31 | CLF 2023 FORM 10-K Table of Contents Mining began in 1976 as a joint venture between Bethlehem Steel Corporation and Steel Company of Canada.
ITEM 2. PROPERTIES The following map shows the locations of our operations and corporate headquarters as of December 31, 2022: CORPORATE OFFICES We lease our corporate headquarters in Cleveland, Ohio. We also have leased office space in West Chester, Ohio; Chicago, Illinois; and Detroit, Michigan.
ITEM 2. PROPERTIES The following map shows the locations of our operations and corporate headquarters as of December 31, 2023: CORPORATE OFFICES We lease our corporate headquarters in Cleveland, Ohio. We also have leased office space in West Chester, Ohio; Chicago, Illinois; and Detroit, Michigan.
Therefore, you are cautioned not to assume that all or any part of an inferred mineral resource exists, that it can be the basis of an economically viable project, or that it will ever be upgraded to a higher category.
Therefore, investors are cautioned not to assume that all or any part of an inferred mineral resource exists, that it can be the basis of an economically viable project, or that it will ever be upgraded to a higher category.
Sustainability and Development Risks - We rely on estimates of our recoverable mineral reserves, which is complex due to geological characteristics of the properties and the number of assumptions made .
Sustainability and Development Risks – We rely on estimates of our recoverable mineral reserves, which are complex due to geological characteristics of the properties and the number of assumptions made .
Sustainability and Development Risks - We rely on estimates of our recoverable mineral reserves, which is complex due to the geological characteristics of the properties and the number of assumptions made.
Sustainability and Development Risks - We rely on estimates of our recoverable mineral reserves, which are complex due to geological characteristics of the properties and the number of assumptions made.
Any discrepancies identified are corrected by referring to hard-copy assay and core log information archived in Cliffs' Mine Engineering department file cabinets. Prior to modeling, a secondary validation check is completed using built-in data validation routines in the modeling software.
Any discrepancies identified are corrected by referring to hard-copy assay and core log information archived in Cliffs' Mine Engineering department files. Prior to modeling, a secondary validation check is completed using built-in data validation routines in the modeling software.
We operate 7 blast furnaces and 5 EAFs on 9 properties. Finishing is completed on site at our integrated operations or at one of our 10 stand-alone processing and finishing facilities. In the aggregate, we have annual configured production capacity of approximately 20.5 million net tons of raw steel.
We operate seven blast furnaces and five EAFs on nine properties. Finishing is completed on site at our integrated operations or at one of our 10 stand-alone processing and finishing facilities. In the aggregate, we have annual configured production capacity of approximately 20.5 million net tons of raw steel.
The property is comprised of 6,320 acres of mineral leases expiring between 2023 and 2056. Leases are maintained by making minimum prepaid royalty payments. Mining leases routinely are renegotiated and renewed as they approach their respective expiration dates.
The property is comprised of 6,913 acres of mineral leases expiring between 2024 and 2056. Leases are maintained by making minimum prepaid royalty payments. Mining leases routinely are renegotiated and renewed as they approach their respective expiration dates.
For more information, see Exhibit 96.4, Technical Report Summary on the United Taconite Property, Minnesota, USA, prepared for the Company by the QP, SLR, with an effective date of December 31, 2021.
For more information, see Exhibit 96.3, Technical Report Summary on the Northshore Property, Minnesota, USA, prepared for the Company by the QP, SLR, with an effective date of December 31, 2021.
Under subpart 1300 of Regulation S-K, mineral resources may not be classified as “mineral reserves” unless the determination has been made by a QP that the mineral resources can be the basis of an 30 | CLF 2022 FORM 10-K Table of Contents economically viable project.
Under subpart 1300 of Regulation S-K, mineral resources may not be classified as “mineral reserves” unless the determination has been made by a QP that the mineral resources can be the basis of an economically viable project.
COAL MINING AND COKEMAKING Princeton is a coal mining complex located in West Virginia that specializes in surface and underground mining of metallurgical coal to produce coke and pulverized coal injection coal. We have annual rated metallurgical coal production capacity of 2.3 million net tons from our Princeton mine. In 2022, the mine produced 1.5 million net tons of coal.
COAL MINING AND COKEMAKING Princeton is a coal mining complex located in West Virginia that specializes in surface and underground mining of metallurgical coal to produce coke and pulverized coal injection coal. As of December 31, 2023, we have annual rated metallurgical coal production capacity of 1.8 million net tons from our Princeton mine.
It is anticipated that the Northshore mine will restart no earlier than the second quarter of 2023. The following provides an overview of our iron ore properties: All the infrastructure necessary to mine and process significant commercial quantities of iron ore is currently in place at all of our mine locations.
The Northshore mine restarted production in the second quarter of 2023. The following provides an overview of our iron ore properties: All the infrastructure necessary to mine and process significant commercial quantities of iron ore is currently in place at all of our mine locations.
The material assumptions and criteria used for the mineral reserves estimates, including but not limited to leases, permits and geotechnical pit design, are covered in more detail in Sections 11 through 13 of the respective Technical Report Summaries filed as Exhibits 96.1 through 96.5 to this Annual Report on Form 10-K. 36 | CLF 2022 FORM 10-K Table of Contents For comparison purposes, the following represents iron ore mineral reserves as of December 31, 2021: Iron Ore Mineral Reserves as of December 31, 2021 Proven Probable Proven & Probable Process (In millions of long tons) Tonnage % Grade Tonnage % Grade Tonnage % Grade Recovery Total Iron Ore 638 23.6 1,682 26.6 2,320 25.8 33% Michigan 4 35.3 516 34.7 520 34.7 37% Minnesota 634 23.5 1,166 23.0 1,800 23.2 31% Hibbing 1 85 18.7 8 18.7 93 18.7 25% Minorca 103 23.6 7 25.3 110 23.7 34% Northshore 303 25.3 519 24.1 822 24.6 29% Tilden 4 35.3 516 34.7 520 34.7 37% United Taconite 143 23.1 632 22.1 775 22.3 33% 1 Hibbing is reported at 85.3% based on our ownership level.
The material assumptions and criteria used for the mineral reserves estimates, including but not limited to leases, permits and geotechnical pit design, are covered in more detail in Sections 11 through 13 of the respective Technical Report Summaries filed as Exhibits 96.1 through 96.5 to this Annual Report on Form 10-K. 36 | CLF 2023 FORM 10-K Table of Contents For comparison purposes, the following represents iron ore mineral reserves as of December 31, 2022: Iron Ore Mineral Reserves as of December 31, 2022 Proven Probable Proven & Probable Process (In millions of long tons) Tonnage % Grade Tonnage % Grade Tonnage % Grade Recovery Total Iron Ore 593 23.8 1,665 26.5 2,258 25.8 32% Michigan 4 35.3 500 34.7 504 34.7 37% Minnesota 589 23.7 1,165 23.0 1,754 23.2 31% Hibbing 1 67 18.7 8 18.7 75 18.7 26% Minorca 95 23.7 7 25.1 102 23.8 34% Northshore 299 25.3 519 24.1 818 24.6 29% Tilden 4 35.3 500 34.7 504 34.7 37% United Taconite 128 23.1 631 22.1 759 22.3 33% 1 Hibbing is reported at 85.3% based on our ownership level.
Likewise, you are cautioned not to assume that all or any part of measured or indicated mineral resources will ever be converted to mineral reserves. See Part I – Item 1A, Risk Factors – V.
Likewise, investors are cautioned not to assume that all or any part of measured or indicated mineral resources will ever be converted to mineral reserves. 30 | CLF 2023 FORM 10-K Table of Contents See Part I – Item 1A. Risk Factors – V.
All mineral reserves estimates as of December 31, 2021 were reviewed and validated by the QP, SLR. 35 | CLF 2022 FORM 10-K Table of Contents The following represents iron ore mineral reserves as of December 31, 2022: Iron Ore Mineral Reserves as of December 31, 2022 Last LoM Plan Proven Probable Proven & Probable Process (In millions of long tons) Reserve Analysis Tonnage % Grade Tonnage % Grade Tonnage % Grade Recovery Total Iron Ore 593 23.8 1,665 26.5 2,258 25.8 32% Michigan 4 35.3 500 34.7 504 34.7 37% Minnesota 589 23.7 1,165 23.0 1,754 23.2 31% Hibbing 1 2021 67 18.7 8 18.7 75 18.7 26% Minorca 2021 95 23.7 7 25.1 102 23.8 34% Northshore 2020 299 25.3 519 24.1 818 24.6 29% Tilden 2021 4 35.3 500 34.7 504 34.7 37% United Taconite 2019 128 23.1 631 22.1 759 22.3 33% 1 Hibbing is reported at 85.3% based on our ownership level.
All mineral reserves estimates as of December 31, 2021 were reviewed and validated by the QP, SLR. 35 | CLF 2023 FORM 10-K Table of Contents The following represents iron ore mineral reserves as of December 31, 2023: Iron Ore Mineral Reserves as of December 31, 2023 Last LoM Plan Proven Probable Proven & Probable Process (In millions of long tons) Reserve Analysis Tonnage % Grade Tonnage % Grade Tonnage % Grade Recovery Total Iron Ore 539 24.0 1,643 26.4 2,182 25.8 33% Michigan 4 35.3 478 34.7 482 34.7 37% Minnesota 535 23.9 1,165 23.0 1,700 23.3 31% Hibbing 1 2021 47 18.7 8 18.7 55 18.7 26% Minorca 2021 86 23.7 7 25.1 93 23.8 34% Northshore 2020 288 25.3 519 24.1 807 24.5 29% Tilden 2021 4 35.3 478 34.7 482 34.7 37% United Taconite 2019 114 23.1 631 22.1 745 22.3 33% 1 Hibbing is reported at 85.3% based on our ownership level.
From the site, pellets are transported by BNSF (Burlington Northern Santa Fe, LLC) rail to a ship loading port at Superior, Wisconsin, operated by BNSF. The book value of Hibbing's long-lived assets was $151 million as of December 31, 2022.
From the site, pellets are transported by BNSF (Burlington Northern Santa Fe, LLC) rail to a ship loading port at Superior, Wisconsin, operated by BNSF. The net book value of our ownership of Hibbing's property, plant and equipment was $85 million as of December 31, 2023.
The following represents iron ore production for the last three fiscal years: Iron Ore Production (In millions of long tons) 2022 2021 2020 Hibbing 1 5 7 2 Minorca 1 3 3 — Northshore 2 1 5 4 Tilden 6 7 6 United Taconite 5 5 5 Total 20 27 17 1 Tonnage shown is reflective of ownership percentage during respective periods. 2 In the second quarter of 2022, we temporarily idled our Northshore operations.
The following represents iron ore production for the last three fiscal years: Iron Ore Production (In millions of long tons) 2023 2022 2021 Hibbing 1 6 5 7 Minorca 3 3 3 Northshore 2 3 1 5 Tilden 8 6 7 United Taconite 5 5 5 Total 25 20 27 1 Hibbing is reported at 85.3% based on our ownership level. 2 In the second quarter of 2022, we temporarily idled our Northshore operations.
The concentrator utilizes rod mills and magnetic separation to produce a magnetite concentrate, which is delivered to the on-site pellet plant. From the plant site, pellets are transported by CN rail to a ship loading port at Duluth, MN, operated by CN. The book value of United Taconite's long-lived assets was $568 million as of December 31, 2022.
The concentrator utilizes rod mills and magnetic separation to produce a magnetite concentrate, which is delivered to the on-site pellet plant. From the plant site, pellets are transported by CN rail to a ship loading port at Duluth, Minnesota, operated by CN.
Pellets are transported by CN rail to ports on Lake Superior. The book value of Minorca's long-lived assets was $214 million as of December 31, 2022.
Pellets are transported by CN rail to ports on Lake Superior. The net book value of Minorca's property, plant and equipment was $209 million as of December 31, 2023.
Princeton's operations consist of three open-pit surface mines, two underground mines, a preparation plant and two rail loadouts. Our Monessen and Warren facilities produce furnace coke and related by-products in Monessen, Pennsylvania and Warren, Ohio, respectively. We also operate a cokemaking facility located within Burns Harbor. These facilities have an aggregate annual rated capacity of 2.6 million net tons.
Mining leases routinely are renegotiated and renewed as they approach their respective expiration dates. Princeton's operations consist of three open-pit surface mines, two underground mines, a preparation plant and two rail loadouts. Our Monessen and Warren facilities produce furnace coke and related by-products in Monessen, Pennsylvania and Warren, Ohio, respectively. We also operate a cokemaking facility located within Burns Harbor.
OTHER BUSINESSES Our Tubular operating segment consists of our subsidiary Tubular Components, which has plants in Walbridge, Ohio and Columbus, Indiana. The Walbridge plant operates six electric resistance welded tube mills on owned property. The Columbus plant operates five electric resistance welded tube mills and four high-speed cold saws on leased property.
The Walbridge plant operates six electric resistance welded tube mills on owned property. The Columbus plant operates five electric resistance welded tube mills and four high-speed cold saws on leased property.
During the years ended December 31, 2022 and 2021, our direct reduction plant produced a total of 1.6 million and 1.4 million metric tons of HBI, respectively.
This plant produces a specialized high quality iron alternative to scrap and pig iron and has annual capacity of 1.9 million metric tons of HBI. During the years ended December 31, 2023 and 2022, our direct reduction plant produced a total of 1.7 million and 1.6 million metric tons of HBI, respectively.
The plant site has its own ship loading port located on Lake Superior. The book value of Northshore's long-lived assets was $243 million as of December 31, 2022. For more information, see Exhibit 96.3, Technical Report Summary on the Northshore Property, Minnesota, USA, prepared for the Company by the QP, SLR, with an effective date of December 31, 2021.
The net book value of United Taconite's property, plant and equipment was $559 million as of December 31, 2023. For more information, see Exhibit 96.4, Technical Report Summary on the United Taconite Property, Minnesota, USA, prepared for the Company by the QP, SLR, with an effective date of December 31, 2021.
We own 100% of the Princeton mine, which has been operating since 1995. We own 60% of the mineral rights and lease 40% via multiple mineral leases having varying expiration dates. Mining leases routinely are renegotiated and renewed as they approach their respective expiration dates.
During the years ended December 31, 2023 and 2022, the mine produced 1.3 million and 1.5 million net tons of coal, respectively. We own 100% of the Princeton mine, which has been operating since 1995. We own 60% of the mineral rights and lease 40% via multiple mineral leases having varying expiration dates.
The book value of Tilden's long-lived assets was $233 million as of December 31, 2022.
The net book value of Tilden's property, plant and equipment was $245 million as of December 31, 2023.
SCRAP PROCESSING FACILITIES Our scrap business consists of our subsidiary FPT, which has 22 locations in Michigan, Ohio, Tennessee, Florida and Ontario. These facilities are primarily located in Michigan and Ohio, which are in close proximity to our scrap consuming steel facilities.
During the years ended December 31, 2023 and 2022, our steelmaking facilities produced a total of 19.0 million and 16.8 million net tons of raw steel, respectively. SCRAP PROCESSING FACILITIES Our scrap business consists of our subsidiary FPT, which has 22 locations in Michigan, Ohio, Tennessee, Florida and Ontario.
Removed
During the years ended December 31, 2022 and 2021, our steelmaking facilities produced a total of 16.8 million and 18.3 million net tons of raw steel, respectively. We indefinitely idled our Indiana Harbor #4 blast furnace in the second quarter of 2022, which had a production capacity of 2.1 million net tons of hot metal.
Added
DIRECT REDUCTION PLANT Our direct reduction plant is located in Toledo, Ohio, is near an existing dock, and has access to rail and heavy haul roads for operation logistics. We are leasing the property on which the plant is located.
Removed
The decision was based on the successful implementation of operational improvements, particularly the addition of significant amounts of HBI to the burden of our other blast furnaces and the maximization of scrap usage in BOFs.
Added
The plant site has its own ship loading port located on Lake Superior. The net book value of Northshore's property, plant and equipment was $235 million as of December 31, 2023.
Removed
We completed a reline of blast furnace #5 at Cleveland Works in the third quarter of 2022 along with other significant repairs and maintenance, such as work on the wastewater treatment plant and the onsite powerhouse. A reline is generally only performed once every 20 years.
Added
These facilities have an aggregate annual rated capacity of 2.6 million net tons. During the years ended December 31, 2023 and 2022, our cokemaking facilities produced 2.4 million and 2.1 million net tons of coke, respectively. OTHER BUSINESSES Our Tubular operating segment consists of our subsidiary Tubular Components, which has plants in Walbridge, Ohio and Columbus, Indiana.
Removed
We are leasing the property on which the plant is located. This plant produces a specialized high quality iron alternative to scrap and pig iron. It has annual capacity of 1.9 million metric tons of HBI per year.
Added
Our European operating segment consists of a metal distribution company that buys and sells steel, steel products and other materials. We operate out of six different European countries: the Netherlands, Italy, Germany, France, Spain and the United Kingdom.
Removed
In 2022, our cokemaking facilities produced 2.1 million net tons of coke. As a result of our internal usage of HBI, coupled with our ongoing evaluation of coke use strategies, we idled our coke facility at Middletown Works during the third quarter of 2021 and permanently closed our Mountain State Carbon coke plant in the first quarter of 2022.
Removed
Our newly constructed facility in Tennessee began production in the third quarter of 2022. Our European operating segment consists of trading companies that buy and sell steel, steel products and other materials.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changePursuant to SEC regulations, we use a threshold of $1 million for purposes of determining whether disclosure of any such proceedings is required. We believe that this threshold is reasonably designed to result in disclosure of any such proceedings that are material to our business or financial condition.
Biggest changePursuant to SEC regulations, we use a threshold of $1 million for purposes of determining whether disclosure of any such proceedings is required. We believe that this threshold is reasonably designed to result in disclosure of any such proceedings that are material to our business or financial condition. Burns Harbor Water Issues.
Discovery is ongoing. We believe the claims asserted against us are without merit, and we intend to continue to vigorously defend against all remaining claims in the lawsuit. Certain Legacy Legal Proceedings Relating to our Steel Operations .
We believe the claims asserted against us are without merit, and we intend to continue to vigorously defend against all remaining claims in the lawsuit. Certain Legacy Legal Proceedings Relating to our Steel Operations .
Removed
Information for this item relating to certain other environmental proceedings may be found under the heading Burns Harbor Water Issues in NOTE 20 - COMMITMENTS AND CONTINGENCIES to the consolidated financial statements in Part II – Item 8. Financial Statements and Supplementary Data , which information is incorporated herein by reference. 39 | CLF 2022 FORM 10-K Table of Contents
Added
Discovery has been completed, and we have filed for summary judgment on all claims that Mesabi Metallics has asserted against us. Mesabi Metallics, Chippewa and Clarke have also filed for summary judgment on various claims and issues in the case.
Added
In August 2019, ArcelorMittal Burns Harbor LLC (n/k/a Cleveland-Cliffs Burns Harbor LLC) suffered a loss of the blast furnace cooling water recycle system, which led to the discharge of cyanide and ammonia in excess of the Burns Harbor plant's NPDES permit limits.
Added
Since that time, the facility has taken numerous steps to prevent recurrence and maintain compliance with its NPDES permit. We engaged in settlement discussions with the U.S. Department of Justice, the EPA and the State of Indiana to resolve any alleged violations of environmental laws or regulations arising out of the August 2019 event.
Added
Later 39 | CLF 2023 FORM 10-K Table of Contents stages of the settlement discussions included the Environmental Law and Policy Center (ELPC) and Hoosier Environmental Council (HEC), which had filed a lawsuit on December 20, 2019 in the U.S.
Added
District Court for the Northern District of Indiana alleging violations resulting from the August 2019 event and other Clean Water Act claims.
Added
On February 14, 2022, the United States and the State of Indiana filed a complaint and a proposed consent decree, and on April 21, 2022, the United States, with the consent of all of the parties, filed a motion seeking final approval of the consent decree from the court.
Added
The consent decree was approved by the court with an effective date of May 6, 2022. The consent decree requires specified enhancements to the mill's wastewater treatment systems and required us to pay a $3 million civil penalty, along with other terms and conditions.
Added
Other parties to the consent decree include the United States, the State of Indiana, ELPC and HEC. The ELPC/HEC civil litigation was dismissed with prejudice on May 12, 2022.
Added
In addition, ArcelorMittal Burns Harbor LLC was served with a subpoena on December 5, 2019, from the United States District Court for the Northern District of Indiana, relating to the August 2019 event. We responded to the subpoena requests, including follow-up requests, and we have been informed that the government has now closed its investigation.
Added
With the resolution of monetary sanctions and injunctive relief requirements under the consent decree, we do not believe that the costs to resolve any other third-party claims that arise out of the August 2019 event, including natural resource damages claims pending final resolution, are likely to have, individually or in the aggregate, a material adverse effect on our consolidated financial condition, results of operations or cash flows.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeUnder the Dodd-Frank Act, each operator of a coal or other mine is required to include certain mine safety information within its periodic reports filed with the SEC.
Biggest changeUnder the Dodd-Frank Act, each operator of a coal or other mine is required to include certain mine safety results within its periodic reports filed with the SEC.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

3 edited+0 added−0 removed2 unchanged
Biggest changeReturn % — 6.66 12.60 77.46 49.52 (26.00) Cumulative $ 100.00 106.66 120.09 213.12 318.65 235.81 S&P 500 Index Return % — (4.39) 31.48 18.39 28.68 (18.13) Cumulative $ 100.00 95.61 125.70 148.81 191.48 156.77 S&P Metals and Mining Select Industry Index Return % — (26.76) 14.70 15.97 34.94 13.12 Cumulative $ 100.00 73.24 84.01 97.42 131.46 148.70 S&P MidCap 400 Index Return % — (11.10) 26.17 13.65 24.73 (13.10) Cumulative $ 100.00 88.90 112.17 127.48 159.01 138.18 41 | CLF 2022 FORM 10-K Table of Contents ISSUER PURCHASES OF EQUITY SECURITIES The following table presents information with respect to repurchases by the Company of our common shares during the periods indicated: Period Total Number of Shares (or Units) Purchased 1 Average Price Paid per Share (or Unit) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet be Purchased Under the Plans or Programs 2 October 1 - 31, 2022 894 $ 19.54 — $ 790,302,500 November 1 - 30, 2022 28,208 28.79 — 790,302,500 December 1 - 31, 2022 2,000,054 15.06 2,000,000 760,216,700 Total 2,029,156 $ 15.25 2,000,000 1 Includes 894 shares that were delivered to us in October 2022, 28,208 shares that were delivered to us in November 2022, and 54 shares that were delivered to us in December 2022 to satisfy tax withholding obligations due upon the vesting or payment of stock awards. 2 On February 10, 2022, our Board of Directors authorized a program to repurchase our outstanding common shares in the open market or in privately negotiated transactions, which may include purchases pursuant to Rule 10b5-1 plans or accelerated share repurchases, up to a maximum of $1 billion.
Biggest changeReturn % — 12.60 77.46 49.52 (26.00) 26.75 Cumulative $ 100.00 112.60 199.82 298.77 221.09 280.23 S&P 500 Index Return % — 31.48 18.39 28.68 (18.13) 26.26 Cumulative $ 100.00 131.48 155.66 200.30 163.99 207.05 S&P Metals and Mining Select Industry Index Return % — 14.70 15.97 34.94 13.12 21.51 Cumulative $ 100.00 114.70 133.02 179.50 203.05 246.73 S&P MidCap 400 Index Return % — 26.17 13.65 24.73 (13.10) 16.39 Cumulative $ 100.00 126.17 143.39 178.85 155.42 180.89 41 | CLF 2023 FORM 10-K Table of Contents ISSUER PURCHASES OF EQUITY SECURITIES The following table presents information with respect to repurchases by the Company of our common shares during the periods indicated: Period Total Number of Shares (or Units) Purchased 1 Average Price Paid per Share (or Unit) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet be Purchased Under the Plans or Programs 2 October 1 - 31, 2023 7,796 $ 18.33 — $ 608,285,509 November 1 - 30, 2023 3,165 16.79 — 608,285,509 December 1 - 31, 2023 601 17.30 — 608,285,509 Total 11,562 $ 17.85 — 1 All shares were delivered to us to satisfy tax withholding obligations due upon the vesting or payment of stock awards. 2 On February 10, 2022, our Board of Directors authorized a program to repurchase our outstanding common shares in the open market or in privately negotiated transactions, which may include purchases pursuant to Rule 10b5-1 plans or accelerated share repurchases, up to a maximum of $1 billion.
The values of each investment are based on price change plus reinvestment of all dividends reported to shareholders, based on monthly granularity. 2017 2018 2019 2020 2021 2022 Cleveland-Cliffs Inc.
The values of each investment are based on price change plus reinvestment of all dividends reported to shareholders, based on monthly granularity. 2018 2019 2020 2021 2022 2023 Cleveland-Cliffs Inc.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES STOCK EXCHANGE INFORMATION Our common shares (ticker symbol CLF) are listed on the NYSE (New York Stock Exchange). HOLDERS At February 13, 2023, we had 2,528 shareholders of record.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES STOCK EXCHANGE INFORMATION Our common shares (ticker symbol CLF) are listed on the NYSE (New York Stock Exchange). HOLDERS At February 8, 2024, we had 2,526 shareholders of record.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

85 edited+46 added−42 removed55 unchanged
Biggest changeThe following is a summary of the Steelmaking segment operating results: Total Revenue Gross Margin Adjusted EBITDA Steel Shipments (nt) 2021 2022 2021 2022 2021 2022 2021 2022 STEEL PRODUCT REVENUE: GROSS MARGIN %: ADJUSTED EBITDA %: AVERAGE SELLING PRICE PER TON OF STEEL PRODUCTS: $18,850 $ 20,054 23% 11% 27% 14% $1,187 $1,360 44 | CLF 2022 FORM 10-K Table of Contents REVENUE The following tables represent our steel shipments by product and total sales by market: Year Ended December 31, 2022 2021 (In thousands of net tons) Volume % Volume % % Change Steel shipments by product: Hot-rolled steel 4,326 29 % 4,886 31 % (11) % Cold-rolled steel 2,286 16 % 2,790 18 % (18) % Coated steel 4,730 32 % 5,056 32 % (6) % Stainless and electrical steel 763 5 % 674 4 % 13 % Plate 880 6 % 1,020 6 % (14) % Slab and other steel products 1,766 12 % 1,460 9 % 21 % Total steel shipments by product 14,751 15,886 (7) % Year Ended December 31, 2022 2021 (In millions) Revenue % Revenue % % Change Steelmaking revenues by market: Direct automotive $ 6,661 30 % $ 4,726 24 % 41 % Infrastructure and manufacturing 5,869 26 % 5,380 27 % 9 % Distributors and converters 6,388 29 % 7,671 38 % (17) % Steel producers 3,465 15 % 2,124 11 % 63 % Total steelmaking revenues by market $ 22,383 $ 19,901 12 % Revenues increased by 12% during the year ended December 31, 2022, as compared to the prior-year, primarily due to: • An increase in the direct automotive market of $1,935 million, or 41%, predominantly due to increases in selling prices as a result of favorable renewals of annual fixed price contracts. • An increase in sales to the steel producers market of $1,341 million, or 63%, which was primarily driven by the inclusion of full-year results from the FPT Acquisition. • These increases were partially offset by a decrease in the distributors and converters market of $1,283 million, or 17%, predominantly due to service center destocking, interest rate hikes driving caution on new business and pricing for metallics declining, which caused weaker demand from service centers for our steel products and large declines in spot steel pricing.
Biggest changeWe expect to benefit further from reduced costs in 2024 as we have worked through higher cost inventory, production volumes should remain similar, and reductions in coal and alloy costs should mitigate any cost increases. 44 | CLF 2023 FORM 10-K Table of Contents STEELMAKING RESULTS COMPARISON OF 2023 TO 2022 The following is a summary of the Steelmaking segment operating results for the years ended December 31, 2023 and 2022 (dollars in millions, except for average selling price and shipments in thousands of net tons): Total Revenue Gross Margin Adjusted EBITDA Steel Shipments (nt) 2022 2023 2022 2023 2022 2023 2022 2023 STEEL PRODUCT REVENUE: GROSS MARGIN %: ADJUSTED EBITDA %: AVERAGE SELLING PRICE PER TON OF STEEL PRODUCTS: $20,054 $19,237 11% 6% 14% 9% $1,360 $1,171 REVENUE The following tables represent our steel shipments by product and total revenues by market: Year Ended December 31, (In thousands of net tons) 2023 2022 % Change Steel shipments by product: Hot-rolled steel 5,899 4,326 36 % Cold-rolled steel 2,389 2,286 5 % Coated steel 4,791 4,730 1 % Stainless and electrical steel 682 763 (11) % Plate 899 880 2 % Slab and other steel products 1,772 1,766 — % Total steel shipments by product 16,432 14,751 11 % Year Ended December 31, (In millions) 2023 2022 % Change Steelmaking revenues by market: Direct automotive $ 7,440 $ 6,661 12 % Infrastructure and manufacturing 5,612 5,869 (4) % Distributors and converters 5,330 6,388 (17) % Steel producers 2,949 3,465 (15) % Total Steelmaking revenues by market $ 21,331 $ 22,383 (5) % Revenues decreased by 5% during the year ended December 31, 2023, as compared to the prior year, primarily due to: • A decrease in revenues from the distributors and converters market of $1,058 million, or 17%, predominantly due to the average HRC price declining, which was partially offset by increased hot-rolled steel shipments; and • A decrease in revenues from the steel producers market of $516 million, or 15%, which was primarily due to the decrease in pricing indices for slabs and busheling scrap. • These decreases were partially offset by an increase in revenues from the direct automotive market of $779 million, or 12%, predominantly due to increases in selling prices as a result of favorable renewals of annual fixed price contracts and an increase in shipments. 45 | CLF 2023 FORM 10-K Table of Contents GROSS MARGIN Gross margin decreased by $1,117 million, or 45%, during the year ended December 31, 2023, as compared to the prior year, primarily due to: • A decrease in selling prices (approximately $2.4 billion impact) predominantly due to lower spot prices, which was partially offset by favorable renewals of annual sales contracts. • This decrease was partially offset by a decrease in costs of production (approximately $700 million impact) driven by lower raw materials and utility costs, including natural gas, coal, coke, alloys and scrap, coupled with decreased maintenance costs; and • An increase in sales volumes (approximately $500 million impact).
Our financial results can vary for our operations as a result of fluctuations in market prices. We attempt to mitigate these risks by aligning fixed and variable components in our customer pricing contracts, supplier purchasing agreements and derivative financial instruments. Some customer contracts have fixed-pricing terms, which increases our exposure to fluctuations in raw material and energy costs.
Our financial results can vary for our operations as a result of fluctuations in market prices. We attempt to mitigate these risks by aligning fixed and variable components in our customer pricing contracts, supplier purchasing agreements and derivative financial instruments. Some customer contracts have fixed pricing terms, which increase our exposure to fluctuations in raw material and energy costs.
The recent market environment has provided us opportunities to reduce our debt and return capital to shareholders with our own free cash flow generation.
The recent market environment has provided us opportunities to reduce our debt and return capital to shareholders with our free cash flow generation.
We determined that our other identified reporting units were not at risk of failing the goodwill impairment test as of December 31, 2022. OTHER LONG-LIVED ASSETS Long-lived assets are reviewed for impairment upon the occurrence of events or changes in circumstances that would indicate that the carrying value of the assets may not be recoverable.
We determined that our other identified reporting units were not at risk of failing the goodwill impairment test as of December 31, 2023. OTHER LONG-LIVED ASSETS Long-lived assets are reviewed for impairment upon the occurrence of events or changes in circumstances that would indicate that the carrying value of the assets may not be recoverable.
Information for the non-Guarantor subsidiaries was excluded from the combined summarized financial information of the obligated group. Each Guarantor subsidiary is consolidated by Cleveland-Cliffs Inc. as of December 31, 2022. Refer to Exhibit 22 , incorporated herein by reference, for the detailed list of entities included within the obligated group as of December 31, 2022.
Information for the non-Guarantor subsidiaries was excluded from the combined summarized financial information of the obligated group. Each Guarantor subsidiary is consolidated by Cleveland-Cliffs Inc. as of December 31, 2023. Refer to Exhibit 22 , incorporated herein by reference, for the detailed list of entities included within the obligated group as of December 31, 2023.
In projecting future taxable income, we begin with historical results adjusted for the results of discontinued operations and changes in accounting policies and incorporate assumptions including the amount of future state, federal and foreign pretax operating income, the reversal of temporary differences, and the implementation of feasible and prudent tax planning strategies.
In projecting future taxable income, we begin with historical results adjusted for the results of discontinued operations and changes in accounting policies and incorporate assumptions including the amount of future state, federal and foreign pre-tax operating income, the reversal of temporary differences, and the implementation of feasible and prudent tax planning strategies.
In addition, historical, current and forward-looking GHG-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. ITEM 7A.
In addition, historical, current and forward-looking GHG-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.
Assumptions and calculations are reviewed by management and reflect our best estimates and judgment. Future changes in assumptions or differences between actual and expected can significantly impact the future funded status of our plans as well as their related net periodic benefit expense. We believe discount rates and expected return on assets are the most critical assumptions.
Assumptions and calculations are reviewed by management and reflect our best estimates and judgment. Future changes in assumptions or differences between actual and expected can significantly impact the future funded status of our plans as well as their related net periodic benefit cost or credit. We believe discount rates and expected return on assets are the most critical assumptions.
Management's Discussion and Analysis of Financial Condition and Results of Operations included in this report discusses our financial condition and results of operations as of and for the years ended December 31, 2022 and 2021.
Management's Discussion and Analysis of Financial Condition and Results of Operations included in this report discusses our financial condition and results of operations as of and for the years ended December 31, 2023 and 2022.
The guarantee of a Guarantor subsidiary with respect to Cliffs' 6.750% 2026 Senior Secured Notes, the 5.875% 2027 Senior Notes, the 7.000% 2027 Senior Notes, the 4.625% 2029 Senior Notes and the 4.875% 2031 Senior Notes will be automatically and unconditionally released and discharged, and such Guarantor subsidiary’s obligations under the guarantee and the related indentures (the “Indentures”) will be automatically and unconditionally released and discharged, upon the occurrence of any of the following, along with the delivery to the trustee of an officer’s certificate and an opinion of counsel, each stating that all conditions precedent provided for in the applicable Indenture relating to the release and discharge of such Guarantor subsidiary’s guarantee have been complied with: (a) any sale, exchange, transfer or disposition of such Guarantor subsidiary (by merger, consolidation, or the sale of) or the capital stock of such Guarantor subsidiary after which the applicable Guarantor subsidiary is no longer a subsidiary of the Company or the sale of all or substantially all of such Guarantor subsidiary’s assets (other than by lease), whether or not such Guarantor subsidiary is the surviving entity in such transaction, to a person which is not the Company or a subsidiary of the Company; provided that (i) such sale, exchange, transfer or disposition is made in compliance with the applicable Indenture, including the covenants regarding consolidation, merger and sale of assets and, as applicable, dispositions of assets that constitute notes collateral, and (ii) all the obligations of such Guarantor subsidiary under all debt of the Company or its subsidiaries terminate upon consummation of such transaction; (b) designation of any Guarantor subsidiary as an “excluded subsidiary” (as defined in the Indentures); or (c) defeasance or satisfaction and discharge of the Indentures.
As of December 31, 2023, the guarantee of a Guarantor subsidiary with respect to Cliffs' 6.750% 2026 Senior Secured Notes, the 5.875% 2027 Senior Notes, the 7.000% 2027 Senior Notes, the 4.625% 2029 Senior Notes, the 6.750% 2030 Senior Notes and the 4.875% 2031 Senior Notes will be automatically and unconditionally released and discharged, and such Guarantor subsidiary’s obligations under the guarantee and the related indentures (the “Indentures”) will be automatically and unconditionally released and discharged, upon the occurrence of any of the following, along with the delivery to the trustee of an officer’s certificate and an opinion of counsel, each stating that all conditions precedent provided for in the applicable Indenture relating to the release and discharge of such Guarantor subsidiary’s guarantee have been complied with: 51 | CLF 2023 FORM 10-K Table of Contents (a) any sale, exchange, transfer or disposition of such Guarantor subsidiary (by merger, consolidation, or the sale of) or the capital stock of such Guarantor subsidiary after which the applicable Guarantor subsidiary is no longer a subsidiary of the Company or the sale of all or substantially all of such Guarantor subsidiary’s assets (other than by lease), whether or not such Guarantor subsidiary is the surviving entity in such transaction, to a person which is not the Company or a subsidiary of the Company; provided that (i) such sale, exchange, transfer or disposition is made in compliance with the applicable Indenture, including the covenants regarding consolidation, merger and sale of assets and, as applicable, dispositions of assets that constitute notes collateral, and (ii) all the obligations of such Guarantor subsidiary under all debt of the Company or its subsidiaries terminate upon consummation of such transaction; (b) designation of any Guarantor subsidiary as an “excluded subsidiary” (as defined in the Indentures); or (c) defeasance or satisfaction and discharge of the Indentures.
Additionally, we have started forming partnerships to develop renewable energy sources - such as wind, solar and hydrogen - which will benefit our own environmental footprint while combating the global impacts of climate change.
Additionally, we have continued forming partnerships to develop renewable and clean energy sources - such as wind, solar and hydrogen - which will benefit our own environmental footprint while combating the global impacts of climate change.
A discussion related to our financial condition and results of operations for 2021 as compared to 2020 can be found in Part II, Item 7., "Management's Discussion and Analysis of Financial Condition and Results of Operations," of our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on February 11, 2022.
A discussion related to our financial condition and results of operations for 2022 as compared to 2021 can be found in Part II - Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 14, 2023.
These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates we are using to manage the underlying businesses. At December 31, 2022 and 2021, we had a valuation allowance of $390 million and $409 million, respectively, against our deferred tax assets.
These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates we are using to manage the underlying businesses. At December 31, 2023 and 2022, we had a valuation allowance of $396 million and $390 million, respectively, against our deferred tax assets.
For accounting purposes, we use various actuarial assumptions and methodologies to measure the plan obligations, assets and related net periodic benefit expense at the end of each year. These assumptions include discount rates, expected return on plan assets, mortality rates, rates of compensation increase, healthcare trend rates and certain demographic assumptions.
For accounting purposes, we use various actuarial assumptions and methodologies to measure the plan obligations, assets and related net periodic benefit cost or credit at the end of each year. These assumptions include discount rates, expected return on plan assets, mortality rates, rates of compensation increase, healthcare trend rates and certain demographic assumptions.
MATERIAL CASH REQUIREMENTS We have material cash requirements for known contractual obligations and commitments for the following: CAPITAL EXPENDITURES We anticipate total cash used for capital expenditures during the next 12 months to be between $700 and $750 million, which primarily consists of sustaining capital spend.
MATERIAL CASH REQUIREMENTS We have material cash requirements for known contractual obligations and commitments for the following: CAPITAL EXPENDITURES We anticipate total cash used for capital expenditures during the next 12 months to be between $675 and $725 million, which primarily consists of sustaining capital spend.
Uncertainties and risk factors that could affect our future performance and cause results to differ from the forward-looking statements in this report include, but are not limited to: • continued volatility of steel, iron ore and scrap metal market prices, which directly and indirectly impact the prices of the products that we sell to our customers; • uncertainties associated with the highly competitive and cyclical steel industry and our reliance on the demand for steel from the automotive industry, which has been experiencing supply chain disruptions, such as the semiconductor shortage, and higher consumer interest rates, which could result in lower steel volumes being demanded; • potential weaknesses and uncertainties in global economic conditions, excess global steelmaking capacity, oversupply of iron ore, prevalence of steel imports and reduced market demand, including as a result of inflationary pressures, the COVID-19 pandemic, conflicts or otherwise; 56 | CLF 2022 FORM 10-K Table of Contents • severe financial hardship, bankruptcy, temporary or permanent shutdowns or operational challenges of one or more of our major customers, including customers in the automotive market, key suppliers or contractors, which, among other adverse effects, could disrupt our operations or lead to reduced demand for our products, increased difficulty collecting receivables, and customers and/or suppliers asserting force majeure or other reasons for not performing their contractual obligations to us; • disruptions to our operations relating to an infectious disease outbreak or the COVID-19 pandemic, including workforce challenges and the risk that novel variants will prove resistant to existing vaccines or that new or continuing pandemic lockdowns in China will impact our ability to source certain critical supplies in a timely and predictable manner; • risks related to U.S. government actions with respect to Section 232, the USMCA and/or other trade agreements, tariffs, treaties or policies, as well as the uncertainty of obtaining and maintaining effective antidumping and countervailing duty orders to counteract the harmful effects of unfairly traded imports; • 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; • our ability to maintain adequate liquidity, our level of indebtedness and the availability of capital could limit our financial flexibility and cash flow necessary to fund working capital, planned capital expenditures, acquisitions, and other general corporate purposes or ongoing needs of our business; • our ability to reduce our indebtedness or return capital to shareholders within the currently expected timeframes or at all; • adverse changes in credit ratings, interest rates, foreign currency rates and tax laws, including adverse impacts as a result of the Inflation Reduction Act; • the outcome of, and costs incurred in connection with, lawsuits, claims, arbitrations or governmental proceedings relating to commercial and business disputes, antitrust claims, environmental matters, government investigations, occupational or personal injury claims, property damage, labor and employment matters, or suits involving legacy operations and other matters; • uncertain availability or cost, due to inflation or otherwise, of critical manufacturing equipment and spare parts; • supply chain disruptions or changes in the cost, quality or availability of energy sources, including electricity, natural gas and diesel fuel, or critical raw materials and supplies, including iron ore, industrial gases, graphite electrodes, scrap metal, chrome, zinc, coke and metallurgical coal; • problems or disruptions associated with transporting products to our customers, moving manufacturing inputs or products internally among our facilities, or suppliers transporting raw materials to us; • the risk that the cost or time to implement a strategic or sustaining capital project may prove to be greater than originally anticipated; • uncertainties associated with natural or human-caused disasters, adverse weather conditions, unanticipated geological conditions, critical equipment failures, infectious disease outbreaks, tailings dam failures and other unexpected events; • cybersecurity incidents relating to, disruptions in, or failures of, information technology systems that are managed by us or third parties that host or have access to our data and systems, including the loss, theft or corruption of sensitive or essential business or personal information and the inability to access or control systems; • liabilities and costs arising in connection with any business decisions to temporarily or indefinitely idle or permanently close an operating facility or mine, which could adversely impact the carrying value of associated assets and give rise to impairment charges or closure and reclamation obligations, as well as uncertainties associated with restarting any previously idled operating facility or mine; • our level of self-insurance and our ability to obtain sufficient third-party insurance to adequately cover potential adverse events and business risks; • uncertainties associated with our ability to meet customers’ and suppliers’ decarbonization goals and reduce our GHG emissions in alignment with our own announced targets; • 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 GHG emissions, and our ability to foster a consistent operational and safety track record; • our actual economic mineral reserves or reductions in current mineral reserve estimates, and any title defect or loss of any lease, license, easement or other possessory interest for any mining property; • our ability to maintain satisfactory labor relations with unions and employees; 57 | CLF 2022 FORM 10-K Table of Contents • unanticipated or higher costs associated with pension and OPEB obligations resulting from changes in the value of plan assets or contribution increases required for unfunded obligations; • uncertain availability or cost of skilled workers to fill critical operational positions and potential labor shortages caused by experienced employee attrition or otherwise, as well as our ability to attract, hire, develop and retain key personnel; • the amount and timing of any repurchases of our common shares; and • potential significant deficiencies or material weaknesses in our internal control over financial reporting.
Uncertainties and risk factors that could affect our future performance and cause results to differ from the forward-looking statements in this report include, but are not limited to: • continued volatility of steel, iron ore and scrap metal market prices, which directly and indirectly impact the prices of the products that we sell to our customers; • uncertainties associated with the highly competitive and cyclical steel industry and our reliance on the demand for steel from the automotive industry; • potential weaknesses and uncertainties in global economic conditions, excess global steelmaking capacity, oversupply of iron ore, prevalence of steel imports and reduced market demand; • severe financial hardship, bankruptcy, temporary or permanent shutdowns or operational challenges of one or more of our major customers, key suppliers or contractors, which, among other adverse effects, could disrupt our operations or lead to reduced demand for our products, increased difficulty collecting receivables, and customers and/or suppliers asserting force majeure or other reasons for not performing their contractual obligations to us; • risks related to U.S. government actions with respect to Section 232, the USMCA and/or other trade agreements, tariffs, treaties or policies, as well as the uncertainty of obtaining and maintaining effective antidumping and countervailing duty orders to counteract the harmful effects of unfairly traded imports; • 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; • our ability to maintain adequate liquidity, our level of indebtedness and the availability of capital could limit our financial flexibility and cash flow necessary to fund working capital, planned capital expenditures, acquisitions, and other general corporate purposes or ongoing needs of our business, or to repurchase our common shares; • our ability to reduce our indebtedness or return capital to shareholders within the currently expected timeframes or at all; • adverse changes in credit ratings, interest rates, foreign currency rates and tax laws; • the outcome of, and costs incurred in connection with, lawsuits, claims, arbitrations or governmental proceedings relating to commercial and business disputes, antitrust claims, environmental matters, government investigations, occupational or personal injury claims, property-related matters, labor and employment matters, or suits involving legacy operations and other matters; • supply chain disruptions or changes in the cost, quality or availability of energy sources, including electricity, natural gas and diesel fuel, critical raw materials and supplies, including iron ore, industrial gases, graphite electrodes, scrap metal, chrome, zinc, other alloys, coke and metallurgical coal, and critical manufacturing equipment and spare parts; • problems or disruptions associated with transporting products to our customers, moving manufacturing inputs or products internally among our facilities, or suppliers transporting raw materials to us; • the risk that the cost or time to implement a strategic or sustaining capital project may prove to be greater than originally anticipated; • our ability to consummate any public or private acquisition transactions and to realize any or all of the anticipated benefits or estimated future synergies, as well as to successfully integrate any acquired businesses into our existing businesses; • uncertainties associated with natural or human-caused disasters, adverse weather conditions, unanticipated geological conditions, critical equipment failures, infectious disease outbreaks, tailings dam failures and other unexpected events; • cybersecurity incidents relating to, disruptions in, or failures of, information technology systems that are managed by us or third parties that host or have access to our data or systems, including the loss, theft or corruption of sensitive or essential business or personal information and the inability to access or control systems; • liabilities and costs arising in connection with any business decisions to temporarily or indefinitely idle or permanently close an operating facility or mine, which could adversely impact the carrying value of associated assets and give rise to impairment charges or closure and reclamation obligations, as well as uncertainties associated with restarting any previously idled operating facility or mine; 57 | CLF 2023 FORM 10-K Table of Contents • our level of self-insurance and our ability to obtain sufficient third-party insurance to adequately cover potential adverse events and business risks; • uncertainties associated with our ability to meet customers’ and suppliers’ decarbonization goals and reduce our GHG emissions in alignment with our own announced targets; • 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 GHG emissions, and our ability to foster a consistent operational and safety track record; • our actual economic mineral reserves or reductions in current mineral reserve estimates, and any title defect or loss of any lease, license, easement or other possessory interest for any mining property; • our ability to maintain satisfactory labor relations with unions and employees; • unanticipated or higher costs associated with pension and OPEB obligations resulting from changes in the value of plan assets or contribution increases required for unfunded obligations; • uncertain availability or cost of skilled workers to fill critical operational positions and potential labor shortages caused by experienced employee attrition or otherwise, as well as our ability to attract, hire, develop and retain key personnel; • the amount and timing of any repurchases of our common shares; and • potential significant deficiencies or material weaknesses in our internal control over financial reporting.
Although our actual returns will likely differ from our estimate on any given year, the returns over the long term are expected to match our assumptions. In 2023, our weighted average expected return on assets for pension and OPEB plans will increase from 6.87% to 7.66% and from 4.86% to 5.87%, respectively.
Although our actual returns will likely differ from our estimate on any given year, the returns over the long term are expected to match our assumptions. In 2024, our weighted average expected return on assets for pension and OPEB plans will increase from 7.66% to 7.85% and from 5.87% to 5.94%, respectively.
We expect the supply of busheling scrap to further tighten due to decreasing prime scrap generation from original equipment manufacturers and the growth of EAF capacity in the U.S., along with a push for expanded scrap use globally.
We expect the supply of busheling scrap to further tighten due to decreasing prime scrap generation from original equipment manufacturers and the growth of EAF capacity in the U.S., reduced metallics import availability, and a push for expanded scrap use globally.
Our obligations are determined based on detailed estimates adjusted for factors that a market participant would consider (e.g., inflation, overhead and profit), which are escalated at an assumed rate of inflation to the estimated closure dates and then discounted using the current credit-adjusted risk-free interest rate.
In 2023, we employed third-party specialists to assist in the evaluation. Our obligations are determined based on detailed estimates adjusted for factors that a market participant would consider (e.g., inflation, overhead and profit), which are escalated at an assumed rate of inflation to the estimated closure dates and then discounted using the current credit-adjusted risk-free interest rate.
As for iron ore, the Platts 62% price averaged $120 per metric ton in 2022, which is 23% higher than the historical ten-year average. While higher iron ore prices play a role in increased steel prices, we also directly benefit from higher iron ore prices for the portion of iron ore pellets we sell to third parties. The U.S.
As for iron ore, the Platts 62% price averaged $120 per metric ton in 2023, which is 24% higher than the prior annual ten-year average. While higher iron ore prices play a role in increased steel prices, we also directly benefit from higher iron ore prices for the portion of iron ore pellets we sell to third parties.
Technological progress could alleviate such factors or increase capacity of mineral reserves. 54 | CLF 2022 FORM 10-K Table of Contents We use our mineral reserve estimates, combined with our estimated annual production levels, to determine the mine closure dates utilized in recording the fair value liability for asset retirement obligations for our active operating mines.
Technological progress could alleviate such factors or increase capacity of mineral reserves. We use our mineral reserve estimates, combined with our estimated annual production levels and operating scenarios, to determine the mine closure dates utilized in recording the fair value liability for asset retirement obligations for our active operating mines.
The following table summarizes the negative effect of a hypothetical change in the fair value of our derivative instruments outstanding as of December 31, 2022, due to a 10% and 25% change in the market price of each of the indicated commodities: (In millions) Commodity Derivative 10% Change 25% Change Natural gas $ 54 $ 136 Electricity 3 6 Tin — 1 Any resulting changes in fair value would be recorded as adjustments to AOCI, net of income taxes, or recognized in net earnings, as appropriate.
The following table summarizes the negative effect of a hypothetical change in the fair value of our derivative instruments outstanding as of December 31, 2023, due to a 10% and 25% change in the market price of each of the indicated commodities: (In millions) Commodity Derivative 10% Change 25% Change Natural gas $ 53 $ 131 Electricity 15 36 Any resulting changes in fair value would be recorded as adjustments to AOCI, net of income taxes, or recognized in net earnings, as appropriate.
However, our ability to issue additional notes could be limited by market conditions. We intend from time to time to seek to redeem or repurchase our outstanding senior notes with cash on hand, borrowings from existing credit sources or new debt financings and/or exchanges for debt or equity securities, in open market purchases, privately negotiated transactions or otherwise.
We intend from time to time to seek to redeem or repurchase our outstanding senior notes with cash on hand, borrowings from existing credit sources or new debt financings and/or exchanges for debt or equity securities, in open market purchases, privately negotiated transactions or otherwise.
The fair value of each reporting unit is estimated using the guideline public company method, the discounted cash flow methodology, or a combination of both, which considers forecasted cash flows discounted at an estimated weighted average cost of capital.
The fair value of each reporting unit is estimated using the guideline public company method, the discounted cash flow methodology, or a combination of both, which considers forecasted cash flows 53 | CLF 2023 FORM 10-K Table of Contents discounted at an estimated weighted average cost of capital.
Additionally, the average age of cars on the road in the U.S. reached an all-time high during 2022, which should support demand as older vehicles need to be replaced. As the largest supplier of automotive-grade steel in the U.S., we expect to benefit from increased vehicle production in coming years.
Additionally, the average age of light vehicles on the road in the U.S. reached an all-time high during 2023, surpassing the previous record set in 2022, which should support demand as older vehicles need to be replaced. As a leading supplier of automotive-grade steel in the U.S., we expect to benefit from increased vehicle production over the coming years.
The following table provides a summary of our cash flows: Year Ended December 31, (In millions) 2022 2021 Cash flows provided by (used in): Operating activities $ 2,423 $ 2,785 Investing activities (936) (1,379) Financing activities (1,509) (1,470) Net decrease in cash and cash equivalents $ (22) $ (64) Free cash flow 1 $ 1,480 $ 2,080 1 See "— Non-GAAP Financial Measures" for a reconciliation of our free cash flows.
The following table provides a summary of our cash flow: Year Ended December 31, (In millions) 2023 2022 Cash flows provided by (used in): Operating activities $ 2,267 $ 2,423 Investing activities (591) (936) Financing activities (1,504) (1,509) Net increase (decrease) in cash and cash equivalents $ 172 $ (22) Free cash flow 1 $ 1,621 $ 1,480 1 See "— Non-GAAP Financial Measures" for a reconciliation of our free cash flow.
The following represents a summary of our tax provision and corresponding effective rates: Year Ended December 31, (In millions) 2022 2021 Income tax expense $ (423) $ (773) Effective tax rate 23 % 20 % 46 | CLF 2022 FORM 10-K Table of Contents A reconciliation of our income tax attributable to continuing operations compared to the U.S. federal statutory rate is as follows: Year Ended December 31, (In millions) 2022 2021 Tax at U.S. statutory rate $ 377 21 % $ 799 21 % Increase (decrease) due to: Percentage depletion in excess of cost depletion (49) (3) (99) (3) State taxes, net 71 4 86 2 Federal & state provision to return 27 1 (2) — Other items, net (3) — (11) — Provision for income tax expense and effective income tax rate including discrete items $ 423 23 % $ 773 20 % The decrease in income tax expense in 2022, as compared to the prior year, is directly related to the decrease in the pre-tax book income year-over-year.
The following represents a summary of our tax provision and corresponding effective rates: Year Ended December 31, (In millions) 2023 2022 Income tax expense $ (148) $ (423) Effective tax rate 25 % 23 % 46 | CLF 2023 FORM 10-K Table of Contents A reconciliation of our income tax attributable to continuing operations compared to the U.S. federal statutory rate is as follows: Year Ended December 31, (In millions) 2023 2022 Tax at U.S. statutory rate $ 125 21 % $ 377 21 % Increase (decrease) due to: Percentage depletion in excess of cost depletion (32) (5) (49) (3) Valuation allowance 14 2 — — Unrecognized tax benefits 7 1 2 — State taxes, net 28 5 71 4 Federal & state provision to return (20) (3) 27 1 Income not subject to tax (11) (2) (9) — Goodwill impairment 26 4 — — Other items, net 11 2 4 — Provision for income tax expense and effective income tax rate including discrete items $ 148 25 % $ 423 23 % The decrease in income tax expense in 2023, as compared to the prior year, is predominantly related to the decrease in the pre-tax book income year-over-year.
FORWARD-LOOKING STATEMENTS This report contains statements that constitute "forward-looking statements" within the meaning of the federal securities laws. As a general matter, forward-looking statements relate to anticipated trends and expectations rather than historical matters. Forward-looking statements are subject to uncertainties and factors relating to our operations and business environment that are difficult to predict and may be beyond our control.
As a general matter, forward-looking statements relate to anticipated trends and expectations rather than historical matters. Forward-looking statements are subject to uncertainties and factors relating to our operations and business environment that are difficult to predict and may be beyond our control.
The Inflation Reduction Act provides a tax credit for consumers who buy new EVs, which further incentivizes consumers to purchase vehicles in an environment where pent-up demand is still very strong from recent supply chain issues and low dealer inventory levels.
The Inflation Reduction Act provides a tax credit for consumers who buy new EVs, which further incentivizes consumers to purchase vehicles in an environment where pent-up 43 | CLF 2023 FORM 10-K Table of Contents demand is still very strong from a low unemployment rate, recent supply chain issues and lower than historical dealer inventory levels.
As of December 31, 2022, outstanding letters of credit totaled $150 million, which reduced availability. We issue standby letters of credit with certain financial institutions in order to support business obligations, including, but not limited to, workers' compensation, employee severance, insurance, operating agreements and environmental obligations. The ABL Facility agreement contains various financial and other covenants.
We issue standby letters of credit with certain financial institutions in order to support business obligations, including, but not limited to, workers' compensation, operating agreements, employee severance, environmental obligations and insurance. Our ABL Facility agreement contains various financial and other covenants. As of December 31, 2023, we were in compliance with all of our ABL Facility covenants.
Management reviews its environmental remediation sites quarterly to determine if additional cost adjustments or disclosures are required. The characteristics of environmental remediation obligations, where information concerning the nature and extent of clean-up activities is not immediately available and which are subject to changes in regulatory requirements, result in a significant risk of increase to the obligations as they mature.
The characteristics of environmental remediation obligations, where information concerning the nature and extent of clean-up activities is not immediately available and which are subject to changes in regulatory requirements, result in a significant risk of increase to the obligations as they mature.
Refer to NOTE 13 - ASSET RETIREMENT OBLIGATIONS, for further information. Since the liability represents the present value of the expected future obligation, a significant change in mineral reserves or mine lives could have a substantial effect on the recorded obligation.
Since the liability represents the present value of the expected future obligation, a significant change in mineral reserves or mine lives could have a substantial effect on the recorded obligation.
The following table provides a reconciliation of our Net income (loss) to Adjusted EBITDA: Year Ended December 31, (In millions) 2022 2021 2020 Net income (loss) $ 1,376 $ 3,033 $ (81) Less: Interest expense, net (276) (337) (238) Income tax benefit (expense) (423) (773) 111 Depreciation, depletion and amortization (1,034) (897) (308) Total EBITDA $ 3,109 $ 5,040 $ 354 Less: EBITDA from noncontrolling interests 1 $ 74 $ 75 $ 56 Gain (loss) on extinguishment of debt (75) (88) 130 Acquisition-related expenses and adjustments (1) (197) (148) Asset impairment (29) — — Other, net (29) (27) (37) Total Adjusted EBITDA $ 3,169 $ 5,277 $ 353 1 EBITDA of noncontrolling interests includes the following: Net income attributable to noncontrolling interests $ 41 $ 45 $ 41 Depreciation, depletion and amortization 33 30 15 EBITDA of noncontrolling interests $ 74 $ 75 $ 56 The following table provides a summary of our Adjusted EBITDA by segment: Year Ended December 31, (In millions) 2022 2021 Adjusted EBITDA: Steelmaking $ 3,089 $ 5,280 Other Businesses 69 9 Corporate and eliminations 11 (12) Total Adjusted EBITDA $ 3,169 $ 5,277 FREE CASH FLOW Free cash flow is a non-GAAP measure defined as operating cash flows less purchase of property, plant and equipment.
The following table provides a reconciliation of our Net income to Adjusted EBITDA: Year Ended December 31, (In millions) 2023 2022 2021 Net income $ 450 $ 1,376 $ 3,033 Less: Interest expense, net (289) (276) (337) Income tax expense (148) (423) (773) Depreciation, depletion and amortization (973) (1,034) (897) Total EBITDA $ 1,860 $ 3,109 $ 5,040 Less: EBITDA from noncontrolling interests 1 $ 83 $ 74 $ 75 Acquisition-related expenses and adjustments (12) (1) (197) Goodwill impairment (125) — — Non-cash gain on sale of business 28 — — Loss on extinguishment of debt — (75) (88) Asset impairment — (29) — Other, net (25) (29) (27) Total Adjusted EBITDA $ 1,911 $ 3,169 $ 5,277 1 EBITDA of noncontrolling interests includes the following: Net income attributable to noncontrolling interests $ 51 $ 41 $ 45 Depreciation, depletion and amortization 32 33 30 EBITDA of noncontrolling interests $ 83 $ 74 $ 75 50 | CLF 2023 FORM 10-K Table of Contents The following table provides a summary of our Adjusted EBITDA by segment: Year Ended December 31, (In millions) 2023 2022 Adjusted EBITDA: Steelmaking $ 1,873 $ 3,089 Other Businesses 43 69 Eliminations (5) 11 Total Adjusted EBITDA $ 1,911 $ 3,169 FREE CASH FLOW Free cash flow is a non-GAAP measure defined as operating cash flow less purchase of property, plant and equipment.
As of December 31, 2022, there was $760 million remaining under the authorization. We are not obligated to make any purchases and the program may be suspended or discontinued at any time. The share repurchase program does not have a specific expiration date.
As of December 31, 2023, there was $608 million remaining under the authorization. We are not obligated to make any purchases and the program may be suspended or discontinued at any time.
During 2022, our safety TRIR (including contractors) was 1.36 per 200,000 hours worked. Throughout 2022, we made continued progress towards our goal of reducing GHG emissions with our optimal utilization of HBI and scrap throughout our facilities, as well as more efficient power generation through recycling of off-gases.
During 2023, our safety Total Reportable Incident Rate (including contractors) was 1.22 per 200,000 hours worked. Throughout 2023, we continued to focus on our goal of reducing GHG emissions with our optimal utilization of HBI and scrap throughout our facilities, as well as efficient power generation through recycling of off-gases.
PRICING RISKS In the ordinary course of business, we are exposed to market risk and price fluctuations related to the sale of our products, which are impacted primarily by market prices for HRC, and the purchase of energy and raw materials used in our operations, which are impacted by market prices for electricity, natural gas, ferrous and stainless steel scrap, chrome, metallurgical coal, coke, nickel and zinc.
We have established policies and procedures to manage such risks; however, certain risks are beyond our control. 52 | CLF 2023 FORM 10-K Table of Contents PRICING RISKS In the ordinary course of business, we are exposed to market risk and price fluctuations related to the sale of our products, which are impacted primarily by market prices for HRC and other related spot pricing indices, and the purchase of energy and raw materials used in our operations, which are impacted by market prices for natural gas, electricity, ferrous and stainless steel scrap, metallurgical coal, coke, zinc, chrome, nickel and other alloys.
We expect to benefit from the spending related to the recently passed legislation in 2023 and beyond. The largest market for our steel products is the automotive industry in North America, which makes light vehicle production a key driver of demand. During 2022, North American light vehicle production was approximately 14.3 million units, the highest annual production volume since 2019.
OTHER KEY DRIVERS The largest market for our steel products is the automotive industry in North America, which makes light vehicle production a key driver of demand. During 2023, North American light vehicle production was approximately 15.6 million units, up from 14.3 million units in 2022, and the highest level since 2019.
ENVIRONMENTAL AND ASSET RETIREMENT OBLIGATIONS Refer to NOTE 20 - COMMITMENTS AND CONTINGENCIES and NOTE 13 - ASSET RETIREMENT OBLIGATIONS for further information on our environmental and asset retirement obligations. 49 | CLF 2022 FORM 10-K Table of Contents SHARE REPURCHASE PROGRAM On February 10, 2022, our Board of Directors authorized a program to repurchase outstanding common shares in the open market or in privately negotiated transactions, which may include purchases pursuant to Rule 10b5-1 plans or accelerated share repurchases, up to a maximum of $1 billion.
SHARE REPURCHASE PROGRAM On February 10, 2022, our Board of Directors authorized a program to repurchase outstanding common shares in the open market or in privately negotiated transactions, which may include purchases pursuant to Rule 10b5-1 plans or accelerated share repurchases, up to a maximum of $1 billion.
Refer to NOTE 12 - LEASE OBLIGATIONS for further information. POST-RETIREMENT EMPLOYEE BENEFITS We make both required and discretionary pension contributions. Required contributions are based on minimum funding requirements pursuant to ERISA regulations. We expect to make $32 million in contributions in 2023.
As of December 31, 2023, the current and long-term liabilities for our lease obligations were $90 million and $363 million, respectively. Refer to NOTE 12 - LEASE OBLIGATIONS for further information. POST-RETIREMENT EMPLOYEE BENEFITS We make both required and discretionary pension contributions. Required contributions are based on minimum funding requirements pursuant to ERISA regulations.
NON-GAAP FINANCIAL MEASURES ADJUSTED EBITDA We evaluate performance on an operating segment basis, as well as a consolidated basis, based on Adjusted EBITDA, which is a non-GAAP measure.
The presentation of these measures may be different from non-GAAP financial measures used by other companies. ADJUSTED EBITDA We evaluate performance on an operating segment basis, as well as a consolidated basis, based on Adjusted EBITDA, which is a non-GAAP measure.
MARKET RISKS We are subject to a variety of risks, including those caused by changes in commodity prices and interest rates. We have established policies and procedures to manage such risks; however, certain risks are beyond our control.
MARKET RISKS We are subject to a variety of risks, including those caused by changes in commodity prices and interest rates.
The following are sensitivities of potential further changes in these key assumptions on the estimated 2023 pension and OPEB expense and the pension and OPEB obligations as of December 31, 2022: Increase (Decrease) in Expense Increase in Benefit Obligation (In millions) Pension OPEB Pension OPEB Decrease discount rate 0.25% $ (2) $ 2 $ 92 $ 28 Decrease return on assets 1.00% 41 7 N/A N/A Refer to NOTE 9 - PENSIONS AND OTHER POSTRETIREMENT BENEFITS for further information.
The following are sensitivities of potential further changes in these key assumptions on the estimated 2024 pension and OPEB expense and the pension and OPEB obligations as of December 31, 2023: Increase (Decrease) in Expense Increase in Benefit Obligation (In millions) Pension OPEB Pension OPEB Decrease discount rate 0.25% $ (3) $ 1 $ 93 $ 22 Decrease return on assets 1.00% 41 7 N/A N/A Refer to NOTE 9 - PENSIONS AND OTHER POSTRETIREMENT BENEFITS for further information. 56 | CLF 2023 FORM 10-K Table of Contents FORWARD-LOOKING STATEMENTS This report contains statements that constitute "forward-looking statements" within the meaning of the federal securities laws.
We have also formed a partnership with the DOE as part of the Better Climate Challenge initiative, as we aim to build on our GHG emission reduction progress. We continue to pursue opportunities such as carbon capture and the use of hydrogen within our facilities.
We have also continued our partnership with the DOE as part of the Better Climate Challenge initiative, which was established in December 2021. We continue to pursue opportunities such as carbon capture and the use of hydrogen within our facilities.
Management believes it is an important measure to assess the cash generation available to service debt, strategic initiatives or other financing activities. 50 | CLF 2022 FORM 10-K Table of Contents The following table provides a reconciliation of our operating cash flows to free cash flows: Year Ended December 31, (In millions) 2022 2021 Operating cash flows $ 2,423 $ 2,785 Purchase of property, plant and equipment (943) (705) Free cash flows $ 1,480 $ 2,080 INFORMATION ABOUT OUR GUARANTORS AND THE ISSUER OF OUR GUARANTEED SECURITIES The accompanying summarized financial information has been prepared and presented pursuant to SEC Regulation S-X, Rule 3-10, “Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered,” and Rule 13-01 "Financial Disclosures about Guarantors and Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralized a Registrant's Securities." Certain of our subsidiaries (the "Guarantor subsidiaries") have fully and unconditionally, and jointly and severally, guaranteed the obligations under (a) the 5.875% 2027 Senior Notes, the 7.000% 2027 Senior Notes, the 4.625% 2029 Senior Notes and the 4.875% 2031 Senior Notes issued by Cleveland-Cliffs Inc. on a senior unsecured basis and (b) the 6.750% 2026 Senior Secured Notes on a senior secured basis.
The following table provides a reconciliation of our long-term debt to net debt: (In millions) December 31, 2023 December 31, 2022 Long-term debt $ 3,137 $ 4,249 Less: Cash and cash equivalents 198 26 Net debt $ 2,939 $ 4,223 INFORMATION ABOUT OUR GUARANTORS AND THE ISSUER OF OUR GUARANTEED SECURITIES The accompanying summarized financial information has been prepared and presented pursuant to SEC Regulation S-X, Rule 3-10, “Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered,” and Rule 13-01 "Financial Disclosures about Guarantors and Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralized a Registrant's Securities." Certain of our subsidiaries (the "Guarantor subsidiaries") as of December 31, 2023 have fully and unconditionally, and jointly and severally, guaranteed the obligations under (a) the 5.875% 2027 Senior Notes, the 7.000% 2027 Senior Notes, the 4.625% 2029 Senior Notes, the 6.750% 2030 Senior Notes, and the 4.875% 2031 Senior Notes issued by Cleveland-Cliffs Inc. on a senior unsecured basis and (b) the 6.750% 2026 Senior Secured Notes issued by Cleveland-Cliffs Inc. on a senior secured basis.
Looking forward, we expect domestic steel demand to improve as imports have become less attractive, service centers restock inventory, automotive supply chain issues ease and incremental steel demand from the Infrastructure and Jobs Act is realized. The recently passed CHIPS Act and Inflation Reduction Act should provide meaningful support for overall domestic steel demand in the coming years.
Looking forward, we expect domestic steel demand to remain healthy as automotive production continues to improve, service centers restock inventory and incremental steel demand stimulated by government legislation is realized. The Infrastructure and Jobs Act, the CHIPS Act and Inflation Reduction Act should continue to provide meaningful support for overall domestic steel demand in the coming years.
The ABL Facility, which matures in March 2025, has a maximum borrowing base of $4.5 billion, determined by applying customary advance rates to eligible accounts receivable, inventory and certain mobile equipment. The ABL Facility includes a $555 million sublimit for the issuance of letters of credit and a $200 million sublimit for swingline loans.
The available borrowing base is determined by applying customary advance rates to eligible accounts receivable, inventory and certain mobile equipment. Our ABL Facility includes a $555 million sublimit for the issuance of letters of credit and a $200 million sublimit for swingline loans. As of December 31, 2023, outstanding letters of credit totaled $56 million, which reduced availability.
The price for busheling scrap, a necessary input for flat-rolled steel production in EAFs in the U.S., averaged well above the historical ten-year average of $380 per long ton in 2022 and 2021. The busheling price averaged $533 per long ton in 2022 and $602 per long ton in 2021.
Since 2021, the price for busheling scrap, a necessary input for flat-rolled steel production in EAFs in the U.S., has continued to average well above the prior annual ten-year average of approximately $390 per long ton. The busheling price averaged $488 per long ton during 2023.
Refer to NOTE 8 - DEBT AND CREDIT FACILITIES for further information on our long-term debt and interest. LEASE OBLIGATIONS We have future minimum lease payments under noncancellable finance and operating leases. As of December 31, 2022, the current and long-term liabilities for our lease obligations were $136 million and $317 million, respectively.
DEBT We have principal long-term debt of $3,192 million with maturities starting in 2026. Refer to NOTE 8 - DEBT AND CREDIT FACILITIES for further information on our long-term debt and interest. LEASE OBLIGATIONS We have future minimum lease payments under noncancellable finance and operating leases.
As of December 31, 2022, we were in compliance with all of our ABL Facility covenants. We have the capability to issue additional unsecured notes and, subject to the limitations set forth in our existing senior notes indentures, additional secured debt, if we elect to access the debt capital markets.
We have the capability to issue additional unsecured notes and, subject to the limitations set forth in our existing senior notes indentures and ABL Facility, additional secured notes, if we elect to access the debt capital markets. However, our ability to issue additional notes could be limited by market conditions.
Our extensive portfolio of products should result in increased steel demand from some of our end markets. The CHIPS Act promotes semiconductor manufacturing in the U.S., which should help support non-residential construction. Additionally, on-shoring manufacturing in the U.S. should reduce risk of supply chain issues in the future.
The CHIPS Act promotes semiconductor manufacturing in the U.S., which should help support non-residential construction as well as machinery and equipment. Additionally, the on-shoring of manufacturing in the U.S. should reduce risk of supply chain issues in the future.
The losses were partially offset by the net gain on extinguishment for the repurchase of $417 million aggregate principal amount of our outstanding IRBs and senior notes of various series.
The losses were partially offset by the net gain on extinguishment for the repurchase of $417 million aggregate principal amount of our outstanding industrial revenue bonds and senior notes of various series. INCOME TAXES Our effective tax rate is impacted by state income tax expense and permanent items, primarily depletion.
INTEREST RATE RISK Interest payable on our senior notes is at fixed rates. Interest payable under our ABL Facility is at a variable rate based upon the applicable base rate plus the applicable base rate margin depending on the excess availability. As of December 31, 2022, we had $1,864 million outstanding under our ABL Facility.
Interest payable under our ABL Facility is at a variable rate based upon the applicable base rate plus the applicable base rate margin depending on the excess availability. As of December 31, 2023, we had no outstanding borrowings under our ABL Facility. For a discussion of the attendant risk, see Part I - Item 1A. Risk Factors - III.
The estimated obligations for our active mine sites are particularly sensitive to the impact of changes in mine lives given the difference between the inflation and discount rates.
The estimated obligations for our active mine sites are particularly sensitive to the impact of changes in mine lives given the difference between the inflation and discount rates. Asset retirement obligations at our steelmaking operations primarily include the closure and post-closure care for on-site landfills and other waste containment facilities.
The ultimate impact of U.S. income tax reform legislation may differ from our current estimates due to changes in the interpretations and assumptions made as well as additional regulatory guidance that may be issued. 55 | CLF 2022 FORM 10-K Table of Contents Accounting for uncertainty in income taxes recognized in the financial statements requires that a tax benefit from an uncertain tax position be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on technical merits.
Accounting for uncertainty in income taxes recognized in the financial statements requires that a tax benefit from an uncertain tax position be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on technical merits.
ADJUSTED EBITDA Adjusted EBITDA from our Steelmaking segment for the year ended December 31, 2022, decreased by $2,191 million, as compared to 2021, primarily due to the decreased gross margin from our operations.
ADJUSTED EBITDA Adjusted EBITDA from our Steelmaking segment for the year ended December 31, 2023, decreased by $1,216 million, as compared to 2022, primarily due to the decreased gross margin from our operations. Additionally, our Steelmaking Adjusted EBITDA included $549 million and $439 million of Selling, general and administrative expenses for the years ended December 31, 2023 and 2022, respectively.
The increase was primarily due to the increase in the average steel product selling price of $173 per net ton and the inclusion of full-year results from the FPT Acquisition, partially offset by the decrease of 1.1 million net tons of steel shipments from our Steelmaking segment.
The decrease was primarily due to the decrease in the average steel product selling price of $189 per net ton, partially offset by the increase of 1.7 million net tons of steel shipments from our Steelmaking segment. During the year ended December 31, 2023, our consolidated gross margin decreased by $1,127 million, as compared to 2022.
During 2022, we initiated hedging programs for electricity and tin. Our hedging strategy is designed to protect us from excessive pricing volatility. However, since we do not typically hedge 100% of our exposure, abnormal price increases in any of these commodity markets might still negatively affect operating costs.
However, since we do not typically hedge 100% of our exposure, abnormal price increases in any of these commodity markets might still negatively affect operating costs.
SUMMARIZED COMBINED FINANCIAL INFORMATION OF THE ISSUER AND GUARANTOR SUBSIDIARIES The following table is summarized combined financial information from the Statements of Condensed Consolidated Financial Position of the obligated group: December 31, (In millions) 2022 2021 Current assets $ 7,063 $ 6,539 Non-current assets 9,935 12,693 Current liabilities (3,866) (3,222) Non-current liabilities (6,630) (9,081) 51 | CLF 2022 FORM 10-K Table of Contents The following table is summarized combined financial information from the Statements of Condensed Consolidated Operations of the obligated group: Year Ended (In millions) December 31, 2022 Revenues $ 21,376 Cost of goods sold (19,008) Income from continuing operations 1,107 Net income 1,109 Net income attributable to Cliffs shareholders 1,109 As of December 31, 2022 and 2021, the obligated group had the following balances with non-Guarantor subsidiaries and other related parties: December 31, (In millions) 2022 2021 Balances with non-Guarantor subsidiaries: Accounts receivable, net $ 163 $ 199 Accounts payable (527) (186) Balances with other related parties: Accounts receivable, net $ 8 $ 3 Accounts payable (13) (7) Additionally, for the year ended December 31, 2022, the obligated group had Revenues of $133 million and Cost of goods sold of $103 million, in each case with other related parties.
SUMMARIZED COMBINED FINANCIAL INFORMATION OF THE ISSUER AND GUARANTOR SUBSIDIARIES The following table is summarized combined financial information from the Statements of Condensed Consolidated Financial Position of the obligated group: December 31, (In millions) 2023 Current assets $ 7,150 Non-current assets 10,111 Current liabilities (4,283) Non-current liabilities (5,463) The following table is summarized combined financial information from the Statements of Condensed Consolidated Operations of the obligated group: Year Ended (In millions) December 31, 2023 Revenues $ 21,694 Cost of goods sold (20,263) Income from continuing operations 531 Net income 532 Net income attributable to Cliffs shareholders 532 As of December 31, 2023 and 2022, the obligated group had the following balances with non-Guarantor subsidiaries and other related parties: December 31, (In millions) 2023 Balances with non-Guarantor subsidiaries: Accounts receivable, net $ 743 Accounts payable (1,004) Balances with other related parties: Accounts receivable, net $ 5 Accounts payable (11) Additionally, for the year ended December 31, 2023, the obligated group had Revenues of $110 million and Cost of goods sold of $81 million , in each case with other related parties.
During the year ended December 31, 2022, our consolidated gross margin decreased by $2,016 million, as compared to 2021. See "— Steelmaking Results" above for further detail on our operating results. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Selling, general and administrative expenses increased by $43 million during the year ended December 31, 2022, as compared to 2021.
See "— Steelmaking Results" above for further detail on our operating results. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Selling, general and administrative expenses increased by $112 million during the year ended December 31, 2023, as compared to 2022. The increase primarily relates to employment-related costs, including higher incentive compensation, and external service costs.
Changes in the base estimates of legal and contractual closure costs due to changes in legal or contractual requirements, available technology, inflation, overhead or profit rates also could have a significant impact on the recorded obligations. Refer to NOTE 13 - ASSET RETIREMENT OBLIGATIONS, for further information. ENVIRONMENTAL REMEDIATION COSTS We have a formal policy for environmental protection and remediation.
Asset retirement obligations have been recorded at present values using settlement dates based on when we expect these facilities to reach capacity and close. Changes in the base estimates of legal and contractual closure costs due to changes in legal or contractual requirements, available technology, inflation, overhead or profit rates also could have a significant impact on the recorded obligations.
Contributions in future years can significantly change and will depend on the actual returns on assets, discount rates, government regulations, changes to employee benefits through labor agreements and other demographic factors. The cash requirements for our OPEB plans consist of VEBA contributions and direct payments from corporate assets primarily for medical and drug costs.
Contributions and payments in future years can significantly change and will depend on the actual returns on assets, discount rates, actual health care trend rates, government regulations, changes to employee benefits through labor agreements and other demographic factors. Refer to NOTE 9 - PENSIONS AND OTHER POSTRETIREMENT BENEFITS for further information.
FINANCIAL SUMMARY Total Revenue Net Income (Loss) Adjusted EBITDA Diluted EPS See "— Non-GAAP Financial Measures" below for a reconciliation of our Net income (loss) to Adjusted EBITDA.
FINANCIAL SUMMARY The following is a summary of our consolidated results for the years ended December 31, 2023, 2022 and 2021 (in millions, except for diluted EPS): Total Revenue Net Income Adjusted EBITDA Diluted EPS See "— Non-GAAP Financial Measures" below for a reconciliation of our Net income to Adjusted EBITDA.
In addition, the Inflation Reduction Act provides incentives for the use of domestic steel for investments in clean energy projects, including wind and solar projects, which consume a substantial amount of steel. Additional projects from the legislation could create incremental demand for our galvanized, GOES, NOES and other steel products.
The Inflation Reduction Act also provides incentives for the use of domestic steel for investments in clean energy projects, including wind and solar projects, which consume a substantial amount of steel. We expect to benefit from the spending related to this legislation for years to come.
The combination of cash and availability under our ABL Facility gives us $2.5 billion in liquidity as of December 31, 2022. We believe our liquidity and access to capital markets will be adequate to fund our cash requirements for the next 12 months and for the foreseeable future.
We believe our liquidity and access to capital markets will be adequate to fund our cash requirements for the next 12 months and for the foreseeable future. Our ABL Facility, which now matures in June 2028, has a maximum borrowing base of $4.75 billion.
FINANCING ACTIVITIES Year Ended December 31, (In millions) 2022 2021 Variance Series B Redeemable Preferred Stock redemption $ — $ (1,343) $ 1,343 Net repayments of debt (1,358) (372) (986) Net borrowings under credit facilities 255 73 182 Net issuance (repurchase) of common shares (240) 322 (562) Other (166) (150) (16) Net cash used by financing activities $ (1,509) $ (1,470) $ (39) The variance was driven by: • A $1,343 million decrease in cash used in 2022 resulting from the Series B Redeemable Preferred Stock redemption in 2021. • A $804 million increase in cash used resulting from higher net repayments of debt in 2022, partially offset by increased borrowings on our ABL Facility, as compared to the prior-year. • A $562 million increase in cash used to repurchase 12.5 million common shares in 2022, compared to 20.0 million common shares issued in 2021. 48 | CLF 2022 FORM 10-K Table of Contents LIQUIDITY AND CAPITAL RESOURCES Our primary sources of liquidity are Cash and cash equivalents, cash generated from our operations, availability under the ABL Facility and access to capital markets.
FINANCING ACTIVITIES Year Ended December 31, (In millions) 2023 2022 Variance Net borrowings (repayments) of debt $ 750 $ (1,358) $ 2,108 Net borrowings (repayments) under credit facilities (1,864) 255 (2,119) Repurchase of common shares (152) (240) 88 Other (238) (166) (72) Net cash used by financing activities $ (1,504) $ (1,509) $ 5 48 | CLF 2023 FORM 10-K Table of Contents LIQUIDITY AND CAPITAL RESOURCES Our primary sources of liquidity are Cash and cash equivalents, cash generated from our operations, availability under the ABL Facility and access to capital markets.
MINERAL RESERVES We regularly evaluate, and engage QPs to review and validate, our mineral reserves and update them as required in accordance with Subpart 1300 of Regulation S-K. We perform an in-depth evaluation of our mineral reserve estimates by mine on a periodic basis, in addition to routine annual assessments.
We perform an in-depth evaluation of our mineral reserve estimates by mine on a periodic basis, in addition to routine annual assessments.
There is a risk, however, that the variable-price mechanisms in the sales contracts may not necessarily change in tandem with the variable-price mechanisms in our purchase agreements, negatively affecting our results of operations and cash flows. 52 | CLF 2022 FORM 10-K Table of Contents Our strategy to address volatile natural gas rates and electricity rates includes improving efficiency in energy usage, identifying alternative providers and utilizing the lowest cost alternative fuels.
There is a risk, however, that the variable-price mechanisms in the sales contracts may not necessarily change in tandem with the variable-price mechanisms in our purchase agreements, negatively affecting our results of operations and cash flows.
Refer to NOTE 8 - DEBT AND CREDIT FACILITIES for further details. INCOME TAXES Our effective tax rate is affected by permanent items, primarily depletion. It also is affected by discrete items that may occur in any given period but are not consistent from period to period.
It also is affected by discrete items that may occur in any given period but are not consistent from period to period.
INVESTING ACTIVITIES Year Ended December 31, (In millions) 2022 2021 Variance Purchase of property, plant and equipment $ (943) $ (705) $ (238) Acquisitions, net of cash acquired (31) (707) 676 Other 38 33 5 Net cash used by investing activities $ (936) $ (1,379) $ 443 The variance was driven by: • A $238 million increase in cash used for capital expenditures primarily relating to sustaining capital expenditures, including the completion of a reline of blast furnace #5 at Cleveland Works during the third quarter of 2022.
INVESTING ACTIVITIES Year Ended December 31, (In millions) 2023 2022 Variance Purchase of property, plant and equipment $ (646) $ (943) $ 297 Acquisitions, net of cash acquired — (31) 31 Other 55 38 17 Net cash used by investing activities $ (591) $ (936) $ 345 The variance was driven by: • A $297 million decrease in cash used for capital expenditures.
Increases or decreases in mineral reserves or mine lives could significantly affect these items. ASSET RETIREMENT OBLIGATIONS The accrued closure obligation is predominantly related to our indefinitely idled and closed iron ore mining operations and provides for contractual and legal obligations associated with the eventual closure of those operations.
ASSET RETIREMENT OBLIGATIONS The accrued closure obligation is related to our indefinitely idled and closed iron ore mining operations and provides for contractual and legal obligations associated with the eventual closure of our active operations. We perform an in-depth evaluation of the liability every three years in addition to our routine annual assessments.
The consolidated asset retirement obligation balance was $520 million as of December 31, 2022, of which $196 million related to active iron ore mine operations. The total goodwill balance associated with our Steelmaking reportable segment was $956 million as of December 31, 2022.
The consolidated asset retirement obligation balance was $459 million as of December 31, 2023, of which $171 million related to active iron ore mine operations. Refer to NOTE 13 - ASSET RETIREMENT OBLIGATIONS for further information.
These arrangements include minimum "take or pay" purchase commitments, such as minimum electric power demand charges, minimum coal, diesel and natural gas purchase commitments, minimum railroad transportation commitments and minimum port facility usage commitments. Refer to NOTE 20 - COMMITMENTS AND CONTINGENCIES for further information. DEBT We have principal long-term debt of $4,306 million with maturities starting in 2025.
These arrangements include unconditional purchase obligations, surety bonds and letters of credit. Our unconditional purchase obligations include minimum "take or pay" commitments, such as minimum electric power demand charges, minimum coal, diesel and natural gas purchase commitments, minimum railroad transportation commitments and minimum port facility usage commitments.
At December 31, 2022 and 2021, our U.S. deferred tax assets were $48 million and $70 million, respectively, and our foreign deferred tax assets were $342 million and $339 million, respectively. Our losses in Luxembourg in recent periods represent sufficient negative evidence to require a full valuation allowance against the deferred tax assets in that jurisdiction.
We intend to maintain a valuation allowance against these deferred tax assets, unless and until sufficient positive evidence exists to support the realization of such assets. Our losses in Luxembourg in recent periods represent sufficient negative evidence to require a full valuation allowance against the deferred tax assets in that jurisdiction.
If we are unable to align fixed and variable components between customer contracts and supplier purchase agreements, we use cash-settled commodity price swaps to hedge the market risk associated with the purchase of certain of our raw materials and energy requirements. Additionally, we routinely use these derivative instruments to hedge a portion of our natural gas and zinc requirements.
Our strategy to address volatile natural gas rates and electricity rates includes improving efficiency in energy usage, identifying alternative providers and utilizing the lowest cost alternative fuels. If we are unable to align fixed and variable components between customer contracts and supplier purchase agreements, we routinely evaluate the use of derivative instruments to hedge market risk.
During 2022, we experienced higher costs than the prior year due to inflationary pressures on input and energy costs, as well as lower production volume and higher repair and maintenance spending. We expect to benefit from lower costs in 2023 and beyond as most inflationary items have started to ease, production volume improves, and repair and maintenance expenses normalize.
During 2023, we significantly reduced costs compared to the prior year as we had higher production volume, normalized repair and maintenance spending, and inflationary pressures on input and energy costs eased.
Our obligations for known environmental matters at active and closed operations have been recognized based on estimates of the cost of investigation and remediation at each facility. If the obligation can only be estimated as a range of possible amounts, with no specific amount being more likely, the minimum of the range is accrued.
If the obligation can only be estimated as a range of possible amounts, with no specific amount being more likely, the minimum of the range is accrued. Management reviews its environmental remediation sites quarterly to determine if additional cost adjustments or disclosures are required.
The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations in various jurisdictions across our global operations.
The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations in various jurisdictions across our global operations. The ultimate impact of U.S. income tax reform legislation may differ from our current estimates due to changes in the interpretations and assumptions made as well as additional regulatory guidance that may be issued.
No impairment charges were identified in connection with our annual goodwill impairment test with respect to our identified reporting units. However, our Tooling and Stamping reporting unit fair value was not substantially in excess of its carrying values as of December 31, 2022.
The decline in the fair value of our Tooling and Stamping reporting unit below its carrying value during 2023 resulted from forgoing previous investment and capital plans in favor of other opportunities and an increase in the discount rate. No impairment charges were identified in connection with our annual goodwill assessment with respect to our other identified reporting units.
These actions give us additional financial flexibility and will better prepare us to navigate more easily through potentially volatile industry conditions in the future, while also prudently reducing our common share count. 47 | CLF 2022 FORM 10-K Table of Contents OPERATING ACTIVITIES Year Ended December 31, (In millions) 2022 2021 Variance Net income $ 1,376 $ 3,033 $ (1,657) Non-cash adjustments to net income 1,218 1,949 (731) Income taxes (22) (136) 114 Pension and OPEB payments and contributions (204) (343) 139 Working capital (receivables, inventories, payables and other liabilities) 55 (1,718) 1,773 Net cash provided by operating activities $ 2,423 $ 2,785 $ (362) The variance was driven by: • A $1,657 million increase in net income after adjustments for non-cash items due to lower gross margins from lower steel sales volume and higher costs.
CASH FLOWS OPERATING ACTIVITIES Year Ended December 31, (In millions) 2023 2022 Variance Net income $ 450 $ 1,376 $ (926) Non-cash adjustments to net income 1,125 1,218 (93) Income taxes 122 (22) 144 Pension and OPEB payments and contributions (94) (204) 110 Working capital (receivables, inventories, payables and other liabilities) 664 55 609 Net cash provided by operating activities $ 2,267 $ 2,423 $ (156) The variance was driven by: • A $1,019 million decrease in net income after adjustments for non-cash items due to lower gross margins resulting from a decrease in selling prices for our steel products, which was partially offset by an increase in sales volumes and a decrease in costs of production.
Additionally, our Steelmaking Adjusted EBITDA included $439 million and $392 million of Selling, general and administrative expenses for the years ended December 31, 2022 and 2021, respectively. 45 | CLF 2022 FORM 10-K Table of Contents CONSOLIDATED RESULTS COMPARISON OF 2022 TO 2021 REVENUES & GROSS MARGIN During the year ended December 31, 2022, our consolidated Revenues increased by $2,545 million, compared to 2021.
CONSOLIDATED RESULTS COMPARISON OF 2023 TO 2022 REVENUES AND GROSS MARGIN During the year ended December 31, 2023, our consolidated Revenues decreased by $993 million, compared to 2022.

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