As published in Toledo Business Journal - July 1, 2017
Port Authority headquarters in downtown Toledo
Cliffs Natural Resources (Cliffs) is planning to locate its first hot briquetted iron (HBI) production facility at Ironville Terminal in east Toledo. The project has the potential to create up to 130 permanent jobs, more than 1,200 construction jobs, and represents a $700 million investment in the region. This project resulted from partnerships between the Toledo-Lucas County Port Authority (TLCPA), JobsOhio and the Regional Growth Partnership, Midwest Terminals of Toledo, City of Toledo, Lucas County, and the Ohio Rail Development Commission.
2017 may be the year of the Toledo-Lucas County Port Authority. The $700M Cliffs facility is simply the latest project win for TLCPA. It follows a number of other major projects that include Tronair’s expansion in the former BAX Global facility at Toledo Express Airport; American Airline’s decision to add flights to and from Charlotte with significant connection capabilities; along with successful development efforts at Overland Industrial Park with Dana and Detroit Manufacturing Systems’ decisions to build new manufacturing facilities at this site of the former Jeep plant.
The new economic development project at Ironville is the result of the vision and discipline by the Port Authority to see the potential of this unique site on the Maumee River adjacent to the Port of Toledo, place significant investment in the site, and follow through on its development.
“A team effort was involved in winning this project. It represents a significant win and will have an important impact on Toledo and the region. ,” stated James Tuschman, chairman of the board, TLCPA.
Tuschman and Joe Cappel, vice president of business development, TLCPA further explained the significance of the new project. Raw materials being shipped to the plant through the Port of Toledo will add 2 million tons a year to levels at the Port of Toledo that currently range from 8 to 12 million tons annually. This represents a potential 20% increase in volume at the Port of Toledo. Outbound shipments from the new facility will go by rail and truck. The new plant represents an additional 16,000 rail cars a year in rail volume for the area.
“We are excited to add to the already substantial economic impact the Port of Toledo has on this region,” said Paul Toth, TLCPA president and CEO. “We acquired Ironville with the intention of locating a large-scale industrial user on the site who required marine and rail capabilities, and we truly feel this project is the perfect match for the remaining portion of the site.”
“The Regional Growth Partnership (RGP) has worked for quite a few years to market the Ironville site in east Toledo. When JobsOhio became involved with the possibility of Cliffs Natural Resources locating at the site, RGP placed significant efforts into structuring incentives that encouraged Cliffs to select the Ironville location,” stated Dean Monske, RGP’s president & CEO.
Cliffs put a great deal of effort into examining alternative sites for the large project and considered locations in Minnesota, Wisconsin, and Ohio. The incentive package offered by Ohio was a factor in the decision process by the company.
James Tuschman (left), chairman of the board, Toledo-Lucas County Port Authority; Pete Gerken (middle), president, Lucas County Commissioners; Toledo Mayor Paul Hicks (right) on-site at Ironville Terminal in east Toledo
Lourenco Goncalves, chairman, president and CEO of Cliffs Natural Resources Inc., said, “Today’s announcement marks a very important strategic milestone for Cliffs as we begin to implement our plans to be the sole producer of high-quality HBI for the EAF steel market in the Great Lakes region. We look forward to the strong margin and earnings potential this new product will generate for Cliffs shareholders.” Goncalves added: “We thank Governor John Kasich, JobsOhio, and a number of local partners in the Toledo community for their efforts to help advance this project, including an offer of approximately $30 million in grants and other financial incentives. We will continue to work closely with the State of Ohio through the environmental permitting process, and are excited to bring a significant number of high-paying jobs to Ohio.”
Cliffs Natural Resources Inc. will lease approximately 100 acres on the east side of the site from the terminal operator, Midwest Terminals of Toledo. Existing infrastructure and material handling capabilities on the site met the company’s requirements for its site selection process. Construction on this project is expected to begin in early 2018, with the production of commercial tonnage of HBI beginning in mid-2020. Cliffs Natural Resources Inc. will receive more than two million tons of product, delivered by vessel, for the production of HBI, and has the potential to add 100 new vessel calls per year at the Port of Toledo. The finished product will ship from the facility via truck and rail.
A significant amount of the raw materials to manufacture the HBI will come from Minnesota. Electric arc steel production furnaces located in Ohio, Michigan, and Indiana will receive the output of the facility.
“The structure of the deal let Cliffs control the Ironville land and location at the lowest possible cost and Midwest Terminals has a logistics contract for the life of the plant,” stated Fred Deichert, chief financial officer for Midwest Terminals.
Toledo Business Journal met with Ed Moore, director of public utilities for the City of Toledo. He shared that the Cliffs facility will need a significant amount of cooling water for the plant as opposed to potable drinking water. It will use 2,500 gallons a minute in its process.
A solution was presented by the City to provide Cliffs with a lower cost option for their operations. Toledo uses potable water to backwash their filters in the water treatment process resulting in a significant amount of backwash water that has to be placed in lagoons and stored. Toledo will build a pipeline to the Cliffs plant and provide this backwash water at a lower cost to Cliffs. This not only benefits Cliffs, but also provides Toledo with cost savings and environmental improvements as they no longer have to store the backwash water in lagoons.
The City of Toledo’s efforts in working with Cliffs to provide a unique solution and a chance for cost reduction assisted the decision by the company to select the Ironville site.
“The Lucas County Commissioners are excited to be a part of this opportunity for redevelopment of the Ironville site. This investment is a game changing opportunity for Lucas County and our workforce. Transportation is our most competitive advantage and this project proves it. The partnerships we have fostered over many years with the Port Authority and other public and private entities is the gold standard in Ohio and we look forward to working with Cliffs to ensure our workforce is ready for these exciting new jobs,” said the Lucas County Commissioners.
Toledo Business Journal met with Lucas County representatives to discuss the project. Commissioner Pete Gerken discussed the previous industrial use of the site. “The past has become our future. In the 50s, 60s, and 70s this area was about steel and rail. This is coming back to our roots. It returns us to the greatest days of our past,” Gerken stated.
Commissioner Tina Skeldon-Wozniak discussed the role that Toledo’s workforce played in Cliff’s decision process. “They recognized the success of workforce development efforts in our county. Cliffs recognized that we have the right place or location and we have the people” stated Wozniak.
“This is the gold standard of all parties working together,” stated Megan Vahey-Casiere, chief of planning and development for Lucas County as she discussed the level of cooperation between all of the parties involved.