What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2023-02-14 compared with 2022-02-11 · 318 added, 333 removed, 241 unchanged (73% of the section changed)

Cliffs is the largest flat-rolled steel producer in North America.

We are the largest flat-rolled steel producer in North America.

Founded in 1847 as a mine operator, we are also the largest manufacturer of iron ore pellets in North America.

2 unchanged sentences

Headquartered in Cleveland, Ohio, we employ approximately 27,000 people across our operations in the United States and Canada.

On November 18, 2021, we completed the acquisition of FPT, a leading prime ferrous scrap processor in the U.S.

These operations consist of 22 scrap processing facilities, primarily in the Midwest region of the United States.

The FPT Acquisition bolsters our raw materials position by securing access to prime scrap, which will allow us to optimize productivity at our existing EAFs and BOFs.

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, flexibility and cost performance to achieve competitive margins throughout the business cycle.

Our sizeable operating footprint provides us with the operational leverage and flexibility to achieve competitive margins throughout the business cycle.

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 both lower and more predictable costs throughout the supply chain and more control over both our manufacturing inputs and our end product destination.

Our legacy business of producing iron ore pellets, which is our primary steelmaking raw material input, is another competitive advantage.

This positioning gives more predictable costs throughout our supply chain and more control over both our manufacturing inputs and our end product destination.

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.

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.

Due to its demanding nature, the automotive steel business typically generates higher through-the-cycle margins, making it a desirable end market.

Over the past two years, we have been able to increase the fixed prices for our automotive contracts significantly.

Demand for our automotive-grade steel is expected to increase in the coming years as a result of pent-up automotive demand arising out of supply chain issues and the replacement of older vehicles.

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.

We also operate EAF facilities, which gives us insight into their limitations.

Companies that are primarily EAF producers are limited in their product range as their equipment is designed to utilize scrap as the main feedstock, which often contains high residual or impure content, such as copper, limiting their ability to meet certain high grades of steel that demand virgin iron.

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.

The quality of our assets gives us a unique advantage in product offerings and operational efficiencies.

In 2022, we brought our facilities and equipment up to the standard required to maintain and improve the quality and reliability of our supply to the automotive industry, as well as other end markets.

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.

Our fixed price contracts allowed us to achieve a higher average selling price in 2022 compared to 2021 despite the price of domestic spot HRC falling approximately $562 per net ton during that time period.

We also expect to benefit from improved fixed price contracts in 2023.

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.

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 best example is our legacy business of producing iron ore pellets, which is our primary steelmaking raw material input.

By controlling our iron ore pellet supply, our primary steelmaking raw material feedstock can be secured at a stable and predictable cost and not be subject to as many factors outside of our control.

The FPT Acquisition gives us a competitive advantage in sourcing prime scrap, as we expect to leverage our long-standing flat-rolled automotive and other customer relationships into recycling partnerships to further grow our prime scrap presence.

Additionally, FPT has 22 facilities located primarily in the Midwest near our steel facilities, which gives us an increased advantage in logistics.

We are also the largest supplier of automotive-grade steel in the U.S.

Compared to other steel end markets, automotive steel is generally higher quality and more operationally and technologically intensive to produce.

As such, it often generates higher through-the-cycle margins, making it a desirable end market for the steel industry.

Given the strong demand and market environment in 2021, we were able to significantly improve our fixed price contracts, which should benefit us throughout 2022.

Demand for our automotive-grade steel is expected to increase with pent-up automotive demand as a result of the semiconductor shortage.

Automotive customers have requested higher volumes in contract negotiations compared to the prior year, which we believe is a sign of the semiconductor shortage easing.

With our continued technological innovation, as well as leading delivery performance, we expect to remain the leader in supplying this industry.

We are the only producers of both GOES and NOES in the U.S.

The recently passed Infrastructure and Jobs Act of 2021 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 our electrical steels.

As a result, with increased demand for both transformers and motors for EVs, we expect to benefit from this position in what is currently a rapidly growing market.

We believe we offer the most comprehensive flat-rolled steel product selection in the industry, along with several complementary products and services.

A sampling of our offering includes AHSS, hot-dipped galvanized, aluminized, galvalume, electrogalvanized, galvanneal, HRC, cold-rolled coil, plate, tinplate, GOES, NOES, stainless steels, tool and die, stamped components, rail, slab and cast ingot.

A sampling of our offering includes advanced high-strength steel, hot-dipped galvanized, aluminized, galvalume, electrogalvanized, galvanneal, HRC, cold-rolled coil, plate, tinplate, GOES, NOES, stainless steels, tool and die, stamped components, rail, slab and cast ingot.

Across the quality spectrum and the supply chain, our customers can frequently find the solutions they need from our product selection.

Our broad range of product offerings also gives us a competitive advantage in commercial negotiations as our customers can source the majority, if not all, of their steel product needs from us.

4 | CLF 2022 FORM 10-K

We are currently the only producer of both electrical steels referred to as GOES and NOES in the U.S.

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.

As a result, with increased demand for both transformers and motors for EVs, we expect to benefit from this position in what is currently a rapidly growing market.

We are the first and the only producer of HBI in the Great Lakes region.

Construction of our Toledo direct reduction plant was completed in the fourth quarter of 2020 and reached full run-rate nameplate annual capacity of 1.9 million metric tons during the middle of 2021.

From this modern plant, we produce a high-quality, low-cost and low-carbon intensive HBI product that can be used in our blast furnaces and as a productivity enhancer in our BOFs and EAFs as a scrap alternative.

We can use HBI to stretch our hot metal production, lowering carbon intensity and reliance on 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 we intend to permanently idle our Mountain State Carbon coke plant in the second quarter of 2022.

With increasing tightness in the scrap market and our own internal needs for scrap and metallics, we expect our Toledo direct reduction plant to support healthy margins for us going forward.

From this modern plant, we produce a high-quality, low-cost and low-carbon intensive HBI product that can be used in our blast furnaces as a productivity enhancer, or in our BOFs and EAFs as a premium scrap alternative.

We use HBI to stretch our hot metal production, lowering carbon intensity and reliance on 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.

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.

MAXIMIZE OUR COMMERCIAL STRENGTHS

3 unchanged sentences

Approximately 45% of our volumes are sold under these contracts.

These contracts reduce volatility and allow for more predictable through-cycle margins.

Our fixed contract values are expected to dramatically improve in 2022 compared to 2021.

We are also proponents of the “value over volume” approach in terms of steel supply.

We take our leadership role in the industry very seriously and intend to manage our steel output in a responsible manner.

In the fourth quarter of 2021, we elected to pull forward repairs and maintenance to match automotive demand that was negatively impacted by the semiconductor shortage.

Going forward, we will continue to use our operational flexibility to align with our “value over volume” approach in terms of steel supply.

These contracts reduce volatility and allow for more predictable through-the-cycle margins.

Our fixed contract values are expected to significantly improve in 2023 compared to 2022.

In addition to our fixed price contracts, we anticipate having more volumes under index-linked contracts in 2023 and beyond, which should reduce our reliance on spot sales and allow us to improve our efficiency with increased volumes.

Our unique capabilities, driven by our portfolio of assets and technical expertise, give us an advantage in our flat-rolled product offering.

We offer products that have superior formability, surface quality, strength and corrosion resistance for the automotive industry.

We are also the only producer of GOES and NOES in the U.S.

In addition, our state-of-the-art Research and Innovation Center in Middletown, Ohio gives us the ability to collaborate with our customers and create new products and develop new and efficient steel manufacturing processes.

During 2022, we introduced our MOTOR-MAX™ product line of NOES for high frequency motors and generators.

These unique product offerings and customer service capabilities enable us to remain the leading steel supplier to the automotive industry.

TAKE ADVANTAGE OF OUR U.S.-CENTRIC, INTERNALLY SOURCED SUPPLY CHAIN

The conflict between Russia and Ukraine has reinforced the unique advantage of our vertically integrated business model.

Two-thirds of U.S.

imports of pig iron, a critical raw material for flat-rolled EAFs, has historically been sourced from Russia and Ukraine.

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.

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.

We began construction of our HBI plant in 2017, in part because of the uncertainty of the industry sourcing metallics from Russia and Ukraine.

Russia had previously invaded the Crimea peninsula in 2014, and we saw a need for more on-shore metallics capacity in the U.S.

HBI, which is a lower-carbon alternative to imported pig iron, has now become a critical component of our decarbonization strategy.

OPTIMIZE OUR FULLY-INTEGRATED STEELMAKING FOOTPRINT

We are a fully-integrated steel enterprise with the size and scale to achieve margins above industry averages for flat-rolled steel.

Our focus remains on both maintaining and enhancing our cost advantage while also lowering carbon emissions.

Our focus remains on realizing our inherent cost advantage in flat-rolled steel while also lowering carbon emissions.

The combination of our ferrous raw materials, including iron ore, scrap and HBI, allows us to do so relative to peers who must rely on more unpredictable and unreliable raw material sourcing strategies.

In 2022, we intend to use more scrap and HBI in our melting processes to stretch our production of liquid pig iron from traditional inputs.

The use of higher amounts of these raw materials in our blast furnaces ultimately boosts liquid steel output, which will reduce coke needs and lower carbon emissions from our operations.

With our acquisition of FPT, we have ample access to scrap along with internally sourced HBI.

Expand our Ferrous Scrap Recycling Presence

Throughout our entire footprint, we consume a very significant amount of scrap in our EAFs and BOFs, more than half of which can now be obtained through internal sources.

Prime scrap is a byproduct of industrial manufacturing.

As manufacturing in the U.S.

has moved offshore and yields have improved, prime scrap supply has been shrinking for the last 50 years.

As the steel industry continues to increase its focus on decarbonization and brings new flat-rolled EAF capacity online over the next five years, securing additional access to prime scrap will continue to be an important strategic initiative.

Our expansion in this area began with the FPT Acquisition and will continue to grow by pairing FPT's processing capabilities with our long-standing customer relationships.

As the largest supplier of flat-rolled steel in North America, we are the largest source of the steel that generates prime scrap in manufacturing facilities.

Based on this, we seek to leverage our long-standing flat-rolled automotive and other customer relationships into recycling partnerships to grow our prime scrap presence.

The FPT Acquisition allows us to optimize productivity at our existing EAFs and BOFs, as we have no current plans to add additional steelmaking capacity.

We have ample access to scrap along with internally sourced HBI.

Our ability to optimize use of these raw materials in our blast furnaces and BOFs ultimately boosts liquid steel output, reduces coke needs and lowers carbon emissions from our operations.

As a result of the successful operational improvements, we announced the indefinite idle of the Indiana Harbor #4 blast furnace in the first quarter of 2022.

The indefinite idle reduced our operational blast furnaces from eight to seven.

We used 2022 as an opportunity to optimize our steelmaking footprint by dedicating significant resources to bring our facilities and equipment up to the standard required to maintain and improve our supply to the automotive industry.

The necessary resources that we have invested in our footprint are expected to keep our assets at automotive-grade quality and reliability for years to come.

With our facilities and equipment in the best shape since the acquisition of our steelmaking assets and no major investments expected until at least 2025, we are well positioned to benefit from operating efficiencies and improved capabilities in the coming years.

5 | CLF 2022 FORM 10-K

ADVANCE OUR PARTICIPATION IN THE GREEN ECONOMY

We are seeking to expand our customer base with the rapidly growing and desirable electric vehicle market.

We are seeking to expand our customer base with the rapidly growing and desirable EV market.

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 electric vehicle producers and consumers.

As this market grows, it will require more advanced steel applications to meet the needs of EV producers and consumers.

These features include the strength and formability of our flat-rolled steel used for battery enclosures in EVs.

With our unique technical capabilities and leadership in the automotive industry, we believe we are positioned better than any other North American steelmaker to supply the steel and parts necessary to fill these needs.

6 unchanged sentences

electrical grid.

Along with charging networks, electrical steels are also needed in the motors of electric vehicles.

Along with charging networks, electrical steels are also needed in the motors of EVs.

ENHANCE OUR ENVIRONMENTAL SUSTAINABILITY

2 unchanged sentences

In early 2021, we announced our commitment to reduce GHG emissions 25% from 2017 levels by 2030.

This goal represents combined Scope 1 (direct) and Scope 2 (indirect) GHG emission reductions across all of our operations.

Prior to setting this goal with our newly acquired steel assets, we exceeded our previous GHG reduction target at our legacy facilities six years ahead of our 2025 goal.

In 2019, we reduced our combined Scope 1 and Scope 2 GHG emissions by 42% on a mass basis from 2005 baseline levels.

Our goal is to further reduce those emissions in coming years.

Additionally, many of our steel assets have improved plant and energy efficiency through participation in programs like the U.S.

Department of Energy’s Better Plants program, including their Better Climate Challenge and the EPA’s Energy Star program.

With our longstanding focus on plant and energy efficiency, we aim to build on our previous successes across our newly integrated enterprise.

Our GHG reduction commitment is based on executing the following five strategic priorities:

• Developing domestically sourced, high quality iron ore feedstock and utilizing natural gas in the production of HBI;

• Implementing energy efficiency and clean energy projects;

• Investing in the development of carbon capture technology;

• Enhancing our GHG emissions transparency and sustainability focus;

• Supporting public policies that facilitate GHG reduction in the domestic steel industry.

Improve Financial Flexibility

Given the cyclicality of our business, it is important to us to be in the financial position to easily withstand any negative demand or pricing pressure we may encounter.

During the early stages of the COVID-19 pandemic, we were able to issue secured debt to provide insurance capital through the uncertain industry conditions caused by the pandemic.

Now that business conditions have improved, allowing us to generate a healthy free cash flow during 2021 that is expected to continue into 2022, we have the ability to reduce debt, return capital to shareholders through our share repurchase program and make investments to both improve and grow our business.

We have also been able to reduce our diluted share count and effectively return capital to shareholders via the cash redemption of our Series B Participating Redeemable Preferred Stock during the third quarter of 2021.

We anticipate that a strong market environment and significantly improved fixed price contracts will provide us ample opportunities to reduce our debt with our own free cash flow generation in the coming years.

We will also continue to review the composition of our debt, as we are interested in both extending our average maturity profile and increasing our ratio of unsecured debt to secured debt, which we demonstrated by executing a series of favorable debt and equity capital markets transactions during February 2021.

In addition, in June 2021, we redeemed all $396 million aggregate principal amount outstanding of our 5.750% 2025 Senior Notes.

In December 2021, we increased our liquidity by amending our ABL Facility to increase the aggregate revolver commitments from $3.5 billion to $4.5 billion.

These actions give us additional financial flexibility and will better prepare us to navigate more easily through

potentially volatile industry conditions in the future.

In January 2022, we redeemed all $294 million aggregate principal amount outstanding of our 1.500% 2025 Convertible Senior Notes.

This goal represents combined Scope 1 (direct emissions) and Scope 2 (indirect emissions from purchased electricity or other forms of energy) GHG emission reductions across all of our operations.

On a per ton basis, we reduced our integrated Scope 1 and Scope 2 GHG intensity from 1.82 per metric ton of crude steel produced in 2020 to 1.67 in 2021.

We plan to achieve our GHG emissions reduction goal by focusing on actionable, commercially viable technologies and solutions while supporting research for breakthrough technologies for the primary iron and steel sector.

In an effort to build on our GHG emissions reduction progress, we have continued our partnership with the DOE as part of the Better Climate Challenge initiative, which was established in December 2021.

Throughout 2022, we further pursued opportunities such as carbon capture and the use of hydrogen within our facilities.

Additionally, we have started forming partnerships to develop alternative energy sources - such as wind, solar and hydrogen - which will benefit our own environmental footprint while combating the global impacts of climate change.

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.

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.

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.

We have also been able to take advantage of volatility in the debt markets to repurchase notes in the open market at a discount.

Throughout 2022, we made open market repurchases of $351 million aggregate principal amount of assorted series of notes at an average price of 92% of par.

We expect to have ample opportunities to reduce our debt with our own free cash flow generation in the coming years.

During 2022, we reduced outstanding debt by approximately $1.1 billion while returning $240 million in capital to shareholders via share repurchases.

BUSINESS OPERATIONS

1 unchanged sentence

We have the unique advantage as a steel producer of being fully or partially self-sufficient with our production of raw materials for steel manufacturing, which includes iron ore pellets, HBI, scrap and coking coal.

We operate iron ore mines in Michigan and Minnesota, which produce iron ore pellets, and a direct reduction plant in Ohio that produces HBI.

Additionally, with our recently completed FPT Acquisition, we now operate scrap facilities in Michigan, Ohio, Tennessee, Florida and Ontario.

We also operate a coal mining complex in West Virginia and produce coke from our facilities in Ohio, Pennsylvania, Indiana and West Virginia.

We believe such vertical integration represents a sustainable business model that is in the best interest of all stakeholders and the surest way to secure a long-term competitive advantage.

We are focused on securing additional access to prime scrap as the steel industry continues to increase its focus on decarbonization and with demand coming from new flat-rolled EAF capacity set to come online over the next five years.

We continue to strive to operate responsibly and produce cleaner steel, which is the most recycled material on the planet.

Additionally, our investment in the Toledo direct reduction plant, which was completed in the fourth quarter of 2020, also helps to support environmental stewardship, as the increased use of HBI in our blast furnaces stretches liquid steel output, which reduces coke needs and emissions.

From a focus on key environmental processes, such as steel recycling and reduction of carbon emissions, to corporate and social responsibility, sustainability is central to our values and operations.

The following table lists our steel producing and finishing properties, their location and their products and services:

Property Segment State/ Province Products and Services

Burns Harbor Steelmaking Indiana Hot-rolled, cold-rolled, and hot-dipped galvanized sheet and coke

Burns Harbor Plate and Gary Plate Steelmaking Indiana Carbon steel plate, high-strength low alloy steel plate, ASTM grades steel plate

Butler Works Steelmaking Pennsylvania Flat-rolled electrical and stainless steel, stainless and carbon semi-finished slabs

Cleveland Steelmaking Ohio Hot-rolled and hot-dipped galvanized sheet

Coatesville Steelmaking Pennsylvania Steel plate - carbon, high-strength low-alloy, commercial allow, military alloy, flame-cut

Columbus Steelmaking Ohio Hot-dipped galvanized steel

Conshohocken Steelmaking Pennsylvania Coiled and discrete plate, military alloy, commercial alloy, heat-treated carbon

Coshocton Works Steelmaking Ohio Flat-rolled stainless steel

Dearborn Works Steelmaking Michigan Carbon semi-finished slabs, hot-dipped galvanized, AHSS

Indiana Harbor Steelmaking Indiana Carbon semi-finished slabs, hot-rolled, cold-rolled and hot-dipped galvanized sheet

Kote and Tek Steelmaking Indiana Cold-rolled, hot-dipped galvanized and galvannealed, electrogalvanized coil

Mansfield Works Steelmaking Ohio Semi-finished hot bands, high chrome ferritic and martensitic stainless steels

Middletown Works Steelmaking Ohio Hot-rolled, cold-rolled, hot-dipped galvanized, aluminized sheet and coke

Piedmont Steelmaking North Carolina Plasma - cuts plate steel products into blanks

Riverdale Steelmaking Illinois Hot-rolled sheet

Rockport Works Steelmaking Indiana Cold-rolled carbon, coated and stainless steels

Steelton Steelmaking Pennsylvania Railroad rails, specialty blooms, flat bars and cast ingots

Weirton Steelmaking West Virginia Tinplate, cold-rolled sheet

Zanesville Works Steelmaking Ohio Electrical steels

Our Other Businesses primarily includes the Tubular Components and Tooling and Stamping properties 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.

We are organized into four operating segments based on the differentiated products – Steelmaking, Tubular, Tooling and Stamping and European Operations.

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.

Raw crude steel is generally cast into slabs and finished based on customer specifications.

Finishing is completed on site at our integrated operations or at one of our standalone finishing facilities.

Ferrous raw materials for the production of steel are internally sourced from our iron ore mines in Michigan and Minnesota, our direct reduction plant in Ohio and our scrap facilities in Florida, Michigan, Ohio, Ontario and Tennessee.

We also operate a coal mining complex in West Virginia and produce coke from our facilities in Ohio, Pennsylvania and Indiana.

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.

Properties for additional information.

Customers and Markets

6 | CLF 2022 FORM 10-K

PRODUCTS AND MARKETS

2022 Product Mix (By Revenue) Primary Products

◦ STAINLESS AND ELECTRICAL

◦ COLD-ROLLED

◦ Electrogalvanized

◦ Auto Chrome

◦ SLAB AND OTHER STEEL PRODUCTS

◦ NON-STEELMAKING

◦ Hot-dipped Galvanized

◦ Stamped Components

◦ Tool and Die

As a fully integrated steel enterprise, we have a comprehensive portfolio of steel solutions.

We primarily sell our products to customers in four broad market categories.

infrastructure and manufacturing, which includes electrical power;

distributors and converters;

and steel producers, which consume iron ore and metallics and further process semi-finished materials.

The following table presents the percentage of our net revenues to each of these markets during the year:

Market 2021 2020

Automotive 25 % 45 %

Infrastructure and manufacturing 27 % 15 %

Distributors and converters 38 % 13 %

Steel producers 10 % 27 %

The change in percentages of net revenues to each market in 2021 compared to 2020 was driven primarily by the AM USA Transaction, which increased overall sales to automotive customers, but reduced the total percentage exposure, increased exposure to infrastructure and manufacturing and distributors and converters customers, and drove more in-house iron ore sales, which reduced the percentage of sales to steel producers.

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.

We sell our products principally to customers in North America.

Approximately 45% of our flat-rolled steel shipments are sold under fixed base price contracts.

2 unchanged sentences

A certain portion of our flat-rolled steel shipments are sold based on the spot market at prevailing market prices or under contracts that involve variable pricing that is tied to an independently published steel index.

We sell our steel products principally to customers in North America.

For the vast majority of international sales, we are not the importer of record and do not bear the responsibility for paying any applicable tariffs.

AUTOMOTIVE MARKET

We specialize in manufacturing difficult-to-produce, high-quality steel products, combined with demanding delivery performance, customer technical support and collaborative relationships, to develop breakthrough steel solutions that help our customers meet their product requirements.

In addition, many of our competitors do not have the capability to supply the full portfolio of products that we make for our automotive customers, such as steel for exposed automotive applications, the most sophisticated grades of AHSS and value-added stainless steel products.

The exacting requirements for servicing the automotive market generally allows for higher selling prices for products sold to that market than for the commodity types of carbon and stainless steels sold to other markets.

We specialize in manufacturing difficult-to-produce and high-quality steel products with demanding delivery performance and first-class customer technical support.

Through our collaborative relationships with automotive producers, we develop breakthrough steel solutions that help our customers meet their product requirements.

The quality of our steel is appealing to end users because of its strength, surface quality, and formability.

EAF producers’ equipment is designed to utilize scrap as their main feedstock, which often contains high residual or impure content, limiting their product capabilities.

The exacting requirements for servicing the automotive market generally allows for higher selling prices for products sold to that market than for the commodity types of steel sold to other markets.

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 2021, North American light vehicle production was 13 million units, the same as the prior year.

Production each of the past two years was down 3 million units compared to the prior ten-year average primarily due to the global semiconductor shortage, as well as other material shortages and supply chain disruptions resulting from the COVID-19 pandemic.

This has caused several outages amongst light vehicle manufacturers despite strong consumer demand.

In light of these production outages, we have been able to redirect certain volumes originally intended for this end market to the spot market, where demand has been strong and pricing has reached all-time highs.

During 2022, North American light vehicle production was 14.3 million units, up from 13.0 million units in both 2020 and 2021.

While production improved from the prior year, it remained below the prior ten-year average of approximately 16.0 million units primarily due to the global semiconductor shortage, as well as other material shortages and supply chain disruptions.

The long-term outlook for the automotive industry remains positive as pent-up demand remains strong, inventory levels are significantly below historical averages and the average age of vehicles on the road in the U.S.

reached an all-time high during 2022.

Furthermore, during 2022, consumer demand for sport utility vehicles, trucks and crossovers continued to increase while demand for smaller sedans and compact cars declined.

We benefit from intentionally targeting larger vehicle platforms to take advantage of consumer preferences, and we have focused on and have been successful in getting sourced on numerous sport utility vehicle, truck, crossover and larger vehicle platforms.

As a result, a significant portion of the carbon automotive steel that we sell is used to produce these popular larger vehicles.

In addition to benefiting from our exposure to consumers’ strong demand for larger vehicles, these vehicles also typically contain a higher volume of steel than smaller sedans and compact cars, providing us the opportunity to sell a greater proportion of our steel products to our automotive customers.

Automotive manufacturers are under pressure to achieve heightened federally mandated CAFE standards.

The CAFE standards generally require automobile manufacturers to meet an average fuel economy goal across the fleet of vehicles they produce with certain milestone dates.

As a result, our automotive customers continue to explore various avenues for achieving the standards, including light weighting components and developing more fuel-efficient engines.

Light weighting efforts include the use of alternatives to traditional carbon steels, such as AHSS and other materials.

While this could reduce the aggregate volume of steel consumed by the automotive industry, we expect

that demand will increase for current and next-generation AHSS and that our AHSS and other innovative steels will command higher margins.

We are collaborating 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.

As a result, a significant portion of the automotive steel that we sell is used to produce these popular larger vehicles.

Automotive manufacturers continue to explore opportunities to develop vehicles that are lighter in weight.

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

making capabilities.

We are also working with our customers to develop steels with greater heat resistance for exhaust systems that support new, fuel-efficient engines that run at higher temperatures.

Automotive manufacturers have also been increasing their development of EVs and battery electric vehicles in order to meet the CAFE standards and growing customer adoption of EVs.

We believe we offer steel products that are stronger, less expensive, have competitive weight savings, are easier to repair and are more environmentally friendly than alternative materials.

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.

1 unchanged sentence

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.

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.

1 unchanged sentence

The majority of our sales to the automotive market are under annual fixed price contracts.

In 2022, our selling prices to this end market will be substantially higher as a result of favorable renewals.

The improved prices in our fixed price contracts were driven by stronger market conditions and our unique product offering of automotive grade steel.

In 2023, our selling prices to this end market will be significantly higher than 2022 as a result of favorable contract renewals.

INFRASTRUCTURE AND MANUFACTURING MARKET

We sell a variety of our steel products, including plate, carbon, stainless, electrical, tinplate and rail, to the infrastructure and manufacturing market.

We sell a variety of our steel products, including hot-rolled, cold-rolled, galvanized, plate, stainless, electrical, tinplate and rail, to the infrastructure and manufacturing market.

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 affects sales of steel to this market.

Residential construction spending surged in 2021 due to overwhelming demand for new houses.

Nonresidential construction spending was slightly down in 2021;

however, the sector saw a surge in spending in the second half of the year and will likely continue into 2022 with the passing of the Infrastructure and Jobs Act of 2021.

The Infrastructure and Jobs Act of 2021 will likely also increase demand for steel products related to renewable energy, as well as the modernization of the U.S.

Domestic construction activity and the replacement of aging infrastructure directly affect sales of steel to this market.

Nonresidential construction spending was strong in 2022 and will likely continue in 2023 supported by the Infrastructure and Jobs Act of 2021 and the CHIPS Act.

The Infrastructure and Jobs Act of 2021 will likely increase demand for steel products related to renewable energy, as well as the modernization of the U.S.

electrical grid.

1 unchanged sentence

Additionally, we estimate solar panels consume 40 metric tons of steel per megawatt of electrical generating capacity.

We also expect to see an increase in charging stations for EVs which we will benefit from as we are the sole producer of electrical steel in the U.S.

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.

Our selling prices under our annual fixed price contracts will be substantially higher in 2022 as a result of favorable renewals.

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

1 unchanged sentence

This market generally represents downstream steel service centers, which source various types of steel from us and fabricate it according to their customers' needs.

Our steel is typically sold to this market on a spot basis or under short-term contracts linked to steel pricing indices.

Demand and pricing for this market can be highly dependent on a variety of factors outside our control, including global and domestic commodity steel production capacity, the relative health of countries’ economies and whether they are consuming or exporting excess steel production, the provisions of international trade agreements and fluctuations in international currencies and, therefore, are subject to market changes in steel prices.

The price for domestic HRC, the most significant index in driving our revenues and profitability of our Steelmaking segment, averaged $1,573 per net ton for 2021, a record year that was also 174% higher than 2020.

The record prices for steel products in 2021 was a result of both supply and demand factors, each driven by a rapid recovery since the onset of the COVID-19 pandemic in 2020.

Our steel is typically sold to this market on a spot basis or under contracts linked to steel pricing indices.

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.

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 main decline in pricing occurred in the second half of 2022 as service centers destocked inventory, interest rate hikes drove caution on new business and pricing for metallics declined.

STEEL PRODUCERS MARKET

The steel producers market represents third-party sales to other steel producers, including those who operate blast furnaces and EAFs.

It includes sales of raw materials and semi-finished and finished goods, including iron ore pellets, coal, coke, HBI, scrap and steel products.

The largest component of sales to this market during the year ended December 31, 2021 was third-party slab sales, which are primarily made under a long-term supply agreement that was initiated in connection with the closing of the AM USA Transaction.

Following the 2020 Acquisitions, production from our iron ore mines is predominantly consumed by our steelmaking operations.

On a full-year basis, we would expect between 22 million and 24 million long tons of our iron ore pellets to be consumed by our steelmaking operations.

During 2021, 2020 and 2019, we sold 4 million, 12 million and 19 million long tons of iron ore product, respectively, to third parties from our share of production from our iron ore mines.

It includes sales of raw materials and semi-finished and finished goods, including iron ore pellets, coal, coke, HBI, scrap, slab and other steel products.

The inclusion of full-year results for the FPT Acquisition in 2022 was the main driver in the year-over-year increase in revenues to the steel producers market.

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.

Third-party slab sales are also a large component of sales to this market, which are primarily made under a long-term supply agreement that was initiated in connection with the closing of the AM USA Transaction.

Production from our iron ore mines is predominantly consumed by our steelmaking operations.

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.

We also entered into the scrap business with the FPT Acquisition in 2021.

FPT is one of the largest processors of prime scrap in the country, representing approximately 15% of the entire U.S.

merchant market.

We believe this acquisition is a complementary addition to our footprint as prime scrap demand is expected to grow as new flat-rolled EAF capacity is set to come online over the next five years, and the worldwide focus on decarbonization continues.

We expect to be able to leverage our long-standing flat-rolled automotive and other customer relationships into recycling partnerships to further grow our prime scrap presence.

The price of busheling scrap, a necessary input for flat-rolled steel production in EAFs in the U.S., averaged $602 per long ton during 2021, a 97% increase from the prior year.

We expect the price of busheling scrap to remain elevated throughout 2022 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.

The expected rising price of busheling scrap was a key strategic rationale for the FPT Acquisition.

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.

We expect the price of busheling scrap to remain elevated above historical averages throughout 2023 due to the

8 | CLF 2022 FORM 10-K

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.

APPLIED TECHNOLOGY, RESEARCH AND DEVELOPMENT

We have an extensive history of being an innovator dating back more than a century.

From upstream research and development, to downstream applications, we have dedicated technical and engineering resources that begin with improving customers' production and manufacturing performance to applications for their end product use.

We have a world-class research and development team expanding our capabilities to bring new steel products to the marketplace.

Rapidly evolving and highly competitive markets for our steel products require our customers to seek new, comprehensive steel solutions, and we believe we are well positioned to deliver the most robust solutions through our broad portfolio of offerings.

Collaboration across our research groups and operations generates innovative and comprehensive solutions for our customers, which we believe enhances our competitive advantage.

Our ongoing efforts to enhance technical collaboration at our state-of-the-art Research and Innovation Center in Middletown, Ohio, have increased the introduction of new steel solutions to the marketplace.

Creating innovative products and breakthrough solutions is a strategic priority, as we believe differentiation through producing higher value steels to meet challenging requirements enables us to maintain and enhance our margins.

We conduct a broad range of research and development activities aimed at improving existing products and processes and developing new ones.

Our innovation of steel has produced a highly diversified steel product portfolio.

As part of our underlying strategy to focus on higher-value materials and minimize exposure to commodity products, we have invested in research and innovation totaling $17 million and $15 million in 2021 and 2020, respectively.

We have also been a leader in iron ore mining and processing technology through the application of new technology to the centuries-old business of mineral extraction.

We have also been a pioneer in iron ore pelletizing with over 60 years of experience.

We are able to produce customized, environmentally-friendly pellets to meet blast furnace specifications and produce standard, fluxed and DR-grade pellets.

We are a pioneer in the development of emerging reduction technologies, a leader in the extraction of value from challenging resources and a front-runner in the implementation of safe and sustainable technology.

We are also devoted to promoting environmental sustainability, evidenced with the development of our direct reduction plant in Toledo, Ohio.

Construction of our Toledo direct reduction plant was completed in the fourth quarter of 2020, and the

plant reached full run-rate nameplate annual capacity of 1.9 million metric tons of HBI per year in 2021.

From this modern plant, we produce a high-quality, low-cost and low-carbon intensive HBI product that can be used throughout our footprint.

We intend to use more HBI in our melting process to stretch our production of liquid pig iron from traditional inputs.

The use of higher amounts of HBI in our blast furnaces ultimately stretches liquid steel output, which reduces coke needs and lowers carbon intensity.

We focus much of our research and innovation efforts on carbon steel applications for automotive manufacturers and their suppliers.

We are particularly focused on AHSS for the automotive market, and we produce virtually every AHSS grade currently used by our customers.

Our AHSS grades, such as Dual Phase 590, 780, 980 and 1180, have been adopted by our customers for both stamped and roll-formed parts, and our TRIP and NEXMET® products have demonstrated enhanced strength, formability and opportunities for automotive light weighting in cold-stamped applications.

We are also pursuing application of NEXMET 490EX in surface-critical, exposed auto body panels as an alternative to aluminum.

Third Generation Advanced High-Strength Steel

Our third generation NEXMET AHSS products enable our customers to achieve significant light weighting in the unexposed structural components of their vehicles.

NEXMET 1200, for example, offers superior formability similar to conventional Dual Phase 600 steel, but at twice the strength level.

We have expanded the application of the NEXMET technology to our tubular products and stamped components businesses.

These AHSS products allow automotive engineers to design lightweight parts that meet rigorous service and safety requirements.

The NEXMET family of steels helps our customers achieve vehicle weight savings for ambitious fuel efficiency standards while avoiding significant capital costs required to re-design production facilities to use alternative materials.

Both galvanized and cold-rolled NEXMET AHSS are progressing through product qualification with several original equipment manufacturer customers.

A number of stamping and component assembly trials have been completed successfully, with more planned and underway.

Because the timing of automotive design and production cycles spans several years, widespread automotive customer adoption of revolutionary new material such as NEXMET AHSS may also extend over several years.

We expect that other automotive vehicle platforms will incorporate NEXMET AHSS in their designs and that NEXMET AHSS will become a strong differentiator for us going forward.

Downstream Steel Applications

Our portfolio of steel solutions includes the operations of Tooling and Stamping, which provides advanced-engineered solutions, tool design and build, hot and cold-stamped components and complex assemblies for the automotive market.

In addition to Tooling and Stamping, our downstream operations include Tubular Components, which manufactures advanced tubular products for automotive and other applications using carbon and stainless steels.

We believe that collaboration among our steelmaking operations and our downstream businesses can accelerate the adoption of our innovative steel products by automotive manufacturers and their first tier suppliers.

Our research and technical experts have undertaken numerous collaborative projects that are generating robust solutions for our customers.

Our expertise in tool design and stamping capabilities has allowed us to create prototype components using our innovative new sheet materials and present customers with new potential steel solutions.

This approach has and, we expect, will continue to demonstrate to customers that they can significantly light weight automotive parts on an accelerated timeline and in a cost-effective manner by using our highly formable grades of AHSS in place of traditional material types.

In addition, our collaborative projects are enhancing our collective knowledge and experience in the stamping of new, advanced grades of steel, advanced engineered solutions, and tool design and build.

For example, our Tooling and Stamping segment specializes in hot-stamping PHS for automotive applications.

Our experience as a leader in PHS and expertise in hot-stamping has enabled us to have greater insight into these high-growth areas and has accelerated product development and customer adoption of these automotive light weighting solutions.

Likewise, collaboration with the Tubular segment strategically advances our mission to innovate in AHSS for the automotive industry, as we have been at the forefront of producing tubular products from PHS and third-generation AHSS.

We believe the combination of our stamping and advanced die-making capabilities, leading tube making capabilities and breakthrough material introductions will enhance our ability to deliver innovative, steel solutions to our customers.

We have recently been awarded contracts with several customers to supply complex assemblies and stamped automotive parts.

In winning these contracts, we have been able to leverage our hot-stamping tooling

leadership, in addition to our innovative hot-stamping process, to capture new strategic opportunities and demonstrate that we are one of the few businesses in North America that has the technical capabilities to produce a major complex assembly and stamping work of this nature.

Our Steelmaking segment principally competes with domestic and foreign producers of flat-rolled carbon, plate, tinplate, stainless, rail and electrical steel, carbon and stainless tubular products, aluminum, carbon fiber, concrete and other materials that may be used as a substitute for flat-rolled steels in manufactured products.

Our Tooling and Stamping and Tubular Components businesses both compete against other niche companies in highly fragmented markets.

Price, quality, on-time delivery, customer service and product innovation are the primary competitive factors in the steel industry and vary in importance according to the product category and customer requirements.

Steel producers that sell to the automotive market face competition from aluminum manufacturers (and, to a lesser extent, other materials) as automotive manufacturers attempt to develop vehicles that will enable them to satisfy more stringent, government-imposed fuel efficiency standards.

To address automotive manufacturers’ light weighting needs that the aluminum industry is targeting, we and others in the steel industry have developed AHSS grades that we believe provide weight savings similar to aluminum, while being stronger, less costly, easier to repair, more sustainable and more environmentally friendly.

The utilization of our research and development capabilities has allowed us to introduce new steel products to the marketplace.

Our research and development activities provide us the ability to offer a broad range of steel products, improve existing products and processes and develop new ones.

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 the largest supplier of steel to the automotive industry in North America, it is important that we maintain our world-class research and development team to expand our capabilities and bring new steel products to the marketplace.

Our ongoing efforts begin at our state-of-the-art Research and Innovation Center in Middletown, Ohio, where we collaborate with our automotive customers and their suppliers to develop products that meet their needs.

We have a customer technical support team that is dedicated to understanding customers’ current and long-term requirements and translating them into product designs.

The dedication and resources we allocate toward our research and development help us maintain our extensive product offering and provide our automotive customers with solutions to meet their steel needs.

Our research and development capabilities will support us in efforts to remain the leading supplier to the automotive industry as automotive manufacturers continue to pursue EVs, lighter weight vehicles and other advancements in vehicle capabilities.

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.

During 2022, we introduced our MOTOR-MAX™ product line of NOES for high frequency motors and generators.

Our Steelmaking segment primarily competes with domestic and foreign producers of flat-rolled carbon, plate, tinplate, stainless, rail and electrical steel, carbon and stainless tubular products, aluminum, carbon fiber, concrete and other materials that may be used as a substitute for flat-rolled steels in manufactured products.

Our Tooling and Stamping and Tubular Components businesses both compete against other niche downstream business in highly fragmented markets.

The steel industry is often viewed as volatile and is subject to the market price of steel.

Market pricing can be adversely impacted from foreign competition selling steel products into the U.S.

at discounts and the oversupply of steel products within the domestic market from both domestic and foreign competition.

To limit our exposure to volatility from market pricing, we have structured our business to have an industry leading portion of fixed price contracts.

Our fixed price contracts provide us stability on a large portion of our business when market pricing is volatile.

Price, quality, on-time delivery, customer service, technical expertise and product innovation are the primary competitive factors in the steel industry and vary in importance according to the product category and customer requirements.

Steel producers that sell to the automotive market are required to meet strict and high-quality product specifications that demand strong technical capabilities, investment in capital and other resources to manage inventory, customer service and research and development.

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.

Significant capital investments in equipment, technology and other resources that would effectively replicate our processes, at a likely higher cost than ours, would be required for certain competitors to meet all the demands required of the automotive industry.

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.

To address automotive manufacturers’ light weighting needs that the aluminum industry is targeting, we have developed AHSS grades that we believe provide weight savings similar to aluminum, while being stronger, less costly, easier to repair, more sustainable and more environmentally friendly.

Aluminum penetration has been primarily limited to specific automotive applications, such as outer panels and closures, rather than entire body designs.

In addition, our automotive customers who continue to use steel, as opposed to aluminum and other alternative materials, are able to avoid the significant capital expenditures required to re-tool their manufacturing processes to accommodate the use of non-steel materials.

Mini-mills (producers using EAFs) comprise about 70% of steel production and 42% of flat-rolled steel production in the U.S.

Their primary raw material is scrap metal, which has unpredictable and often volatile pricing.

Due to the announced flat-rolled mini-mill 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 advantage.

Mini-mills also generally offer a narrower range of products than integrated steel mills, but the increasing use of pig iron and direct reduced iron have enabled them to modestly expand their product capabilities in recent years.

However, we believe mini-mills often do not have the equipment capabilities to produce the product range that integrated facilities offer, nor do we believe they possess our depth of customer service, technical support, and research and innovation.

Domestic steel producers, including us, face significant competition from foreign producers.

For many reasons, these foreign producers often are able to sell products in the U.S.

We do not expect the use of aluminum in vehicles to pose a significant threat as a replacement to steel.

EAFs comprise over 70% of steel production and more than 40% of flat-rolled steel production in the U.S.

The primary raw materials used by EAFs include scrap metal and ore based metallics, which have unpredictable and often volatile pricing.

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.

Companies who primarily operate EAFs also generally offer a narrower range of products than integrated steel mills and are limited in their product quality as their equipment is designed to utilize scrap as the main feedstock, which often contains high residual content, such as copper, limiting their ability to meet certain high grades of steel that demand virgin iron feedstock.

We also believe companies who primarily operate EAFs often do not have the equipment capabilities to produce the product range that integrated facilities offer, nor do we believe they possess our depth of customer service, technical support, and research and innovation.

The additional capacity from domestic EAF competition could displace imports as the U.S.

9 | CLF 2022 FORM 10-K

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.

In certain instances, these foreign producers are often able to sell products in the U.S.

at prices substantially lower than domestic producers.

5 unchanged sentences

and preferential trade practices in their home countries.

In 2021, finished steel imports increased 48% compared to the prior year, as a result of a larger disparity between foreign and domestic prices, but still remain below levels seen between 2013 and 2018.

We believe this is at least partially attributable to the implementation of certain trade restrictions on imported steel over the past five years, including both targeted trade cases and the more broad Section 232 tariffs.

Modifications to these trade restrictions by government authorities could directly or indirectly impact import levels in the future.

In 2022, finished steel imports increased 11% compared to the prior year as a result of less onerous trade restrictions for certain foreign competition and, at times, a disparity between foreign and domestic prices.

Imports still remain below levels seen between 2013 and 2018, which we believe is at least partially attributable to the implementation of certain trade restrictions on imported steel, including both targeted trade cases and the more broad Section 232 tariffs.

Further modifications to these trade restrictions by government authorities could directly or indirectly impact import levels in the future.

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.

1 unchanged sentence

Imports of finished steel into the U.S.

accounted for approximately 22% of domestic steel market consumption in 2021.

We continue to provide significant pension and healthcare benefits to a greater number of our retirees compared to certain other domestic and foreign steel producers that do not provide such benefits to any or most of their retirees, which increases our overall cost of production relative to certain other steelmakers.

However, we have taken a number of actions to reduce pension and healthcare benefits costs, including negotiating progressive labor agreements that have significantly reduced total employment costs at our union-represented facilities, transferring all responsibility for healthcare benefits for various groups of retirees to VEBAs, offering voluntary lump-sum settlements to pension plan participants, lowering retiree benefit costs for salaried employees, and transferring pension obligations to highly rated insurance companies.

These actions have not only reduced some of the risks associated with our pension funding obligations, but more importantly have reduced our risk exposure to performance of the financial markets, which are a principal driver of pension funding requirements.

accounted for 24% of domestic steel market consumption in 2022.

We continue to provide significant pension and healthcare benefits to a greater number of our retirees compared to certain other domestic and foreign steel producers that do not provide such benefits to any or most of their retirees, which impacts our overall cost of production relative to certain other steelmakers.

However, we have taken a number of actions to reduce pension and healthcare benefits costs, including using our size and scale to proactively renegotiate lower healthcare premiums, negotiating progressive labor agreements, transferring responsibility for healthcare benefits for various groups of retirees to VEBAs, offering voluntary lump-sum settlements to pension plan participants and lowering retiree benefit costs for salaried employees.

These actions have not only reduced some of the risks associated with our pension funding obligations, but more importantly have reduced our risk exposure to performance of the financial markets, which is a principal driver of pension funding requirements.

We continue to actively seek opportunities to reduce pension and healthcare benefits costs.

16 unchanged sentences

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 regulation;

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 the regulation of discharges to groundwater.

Climate Change and GHG Regulation

With the complexities and uncertainties associated with the U.S.

and global navigation of the climate change issue as a whole, one of our potentially significant risks for the future is mandatory carbon pricing obligations, whether it be in the form of additional costs for emission allowances or restriction of production, as examples.

Policymakers are in the design process of carbon regulation at the state, regional, national and international levels.

The current regulatory variety of carbon compliance schemes presents a challenge for multi-facility entities to identify their near-term risks.

Amplifying the uncertainty, the dynamic forward outlook for carbon pricing obligations presents a challenge to large industrial companies to assess the long-term net impacts of carbon compliance costs on their operations.

and Minnesota's mercury TMDL and mercury reduction rules.

CLIMATE CHANGE AND GREENHOUSE GAS REGULATIONS

Continued attention to issues concerning climate change, the role of human activity in affecting climate change, and potential mitigation through regulation and legislation may have a material impact on our customers and suppliers, our operations and financial results in the future.

Policymakers are evaluating or developing carbon regulation at the state, regional, national and international levels.

Additionally, international treaties or agreements such as the Paris Agreement may influence legislative and regulatory decisions in the U.S.

Potential climate-related regulations and legislation that could impact our business include

10 | CLF 2022 FORM 10-K

reporting obligations, mandatory carbon reductions, carbon pricing mechanisms and trade policies, and climate-related procurement and product labeling requirements.

The dynamic forward outlook for these potential regulations presents a challenge to large industrial companies to assess the long-term net impacts of carbon compliance costs on their operations.

In the absence of comprehensive federal carbon legislation, numerous state, regional and federal regulatory initiatives are under development or are becoming effective, thereby creating a disjointed approach to GHG emissions control, potential carbon pricing and climate-related procurement activities.

We intend to remain active in the discussions related to legislative and regulatory changes at the federal and state levels.

Our exposure on this issue includes both the direct and indirect financial risks associated with the regulation of GHG emissions, as well as potential physical risks associated with climate change adaptation.

We are continuing to review the physical risks related to climate change.

As an energy-intensive business, we have a broad range of GHG emissions sources, such as iron ore furnaces and kilns, diesel mining equipment and integrated steelmaking facilities, among others.

As an energy-intensive business, we have a broad range of GHG emissions sources, such as iron ore furnaces and kilns, mobile equipment, EAFs and integrated steelmaking facilities, among others.

As such, among our most significant regulatory risks are:

(1) the costs associated with on-site emissions levels (direct impacts);

and (2) indirect costs passed through to us from power and fuel suppliers (indirect impacts).

Internationally, mechanisms to reduce emissions are being implemented in various countries, with differing designs and stringency, according to resources, economic structure and politics.

The Paris Agreement to reduce global GHG emissions and limit global temperature increases to 2 degrees Celsius compared to pre-industrial temperatures became effective in November 2016 with 196 signatory countries.

became a signatory to the Paris Agreement with a pledge to reduce its GHG emissions by 26% to 28% from 2005 levels by 2025.

withdrew from the treaty in November 2020 and then subsequently rejoined the Paris Agreement in February 2021.

Continued attention to issues concerning climate change, the role of human activity in it and potential mitigation through regulation may have a material impact on our customer base, operations and financial results in the future.

In the U.S., future federal and/or state carbon regulation potentially presents a significantly greater impact to our operations.

To date, the U.S.

Congress has not legislated carbon constraints.

We intend to remain active in the discussions related to legislative and regulatory changes at the federal and state levels.

Due to the potential variety of federal, state or regional carbon restriction schemes, our business and customer base could suffer negative financial impacts over time as a result of increased energy, environmental and other costs to comply with the limitations that would be imposed on GHG emissions.

We believe our exposure can be reduced substantially by numerous factors, including currently contemplated regulatory flexibility mechanisms, such as allowance allocations, fixed process emissions exemptions, offsets and international provisions;

emissions reduction opportunities, including energy efficiency, biofuels and fuel flexibility;

and business opportunities associated with pursuing combined heat and power partnerships and new products, including DR-grade pellets, HBI, fluxed pellets and other efficiency-improving technologies.

(1) the costs associated with on-site emissions levels (direct impacts) or the reduction thereof;

and (2) indirect costs passed through to us from energy providers and other suppliers (indirect impacts).

Internationally, mechanisms to require or incentivize emissions reductions are being implemented in various countries, with differing designs and stringency, according to resources, economic structure and politics.

However, some foreign competitors may benefit from less stringent climate-related requirements, providing those foreign competitors with a cost advantage on their products.

Due to the potential variety of federal, state or international carbon restriction schemes, our business and customer base could suffer negative financial impacts over time as a result of increased energy, environmental and other costs to comply with the limitations that could be imposed on GHG emissions.

We believe our exposure can be reduced by numerous factors, including engaging with relevant stakeholders and policymakers on potential GHG regulation and legislation;

emissions reduction opportunities, such as energy efficiency, industrial electrification, carbon capture, utilization and sequestration, renewable energy and fuel flexibility, such as hydrogen;

and other efficiency-improving material inputs, products and technologies.

CHANGES TO NATIONAL AMBIENT AIR QUALITY STANDARDS FOR PARTICULATE MATTER

On January 6, 2023, the EPA proposed changes to the National Ambient Air Quality Standards for particulate matter.

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 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.

We are actively engaged with various experts and trade associations to provide legal and technical comments on the proposal.

The rule is expected to be finalized in 2023, after which each state will have three years to submit a State Implementation Plan to the EPA detailing how it intends to address any nonattainment areas in the state.

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.

CHANGES TO OZONE TRANSPORT REGULATIONS

In 2022, the EPA proposed to impose new standards for nitrogen oxide (an ozone precursor) on various industries (including the steel and iron ore sectors) that operate in specific states, including numerous states where we operate (Illinois, Indiana, Michigan, Minnesota, Ohio, Pennsylvania and West Virginia).

While we participated in commenting on the proposed rule, pointing out its technical and legal flaws, a final rule is expected to be issued in the first six months of 2023 that could affect our facilities in the listed states.

Since the technology originally proposed by the EPA is infeasible at our sites, any potential changes at our facilities that may be required to comply with the final rule are not known and not estimable at this time but could be material.

SELENIUM DISCHARGE REGULATION

In Michigan, the Empire and Tilden mines have implemented compliance plans to manage selenium according to applicable permit conditions.

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.

1 unchanged sentence

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 cost effective and sustainable selenium treatment technologies.

In July 2016, the EPA published new selenium fish tissue limits and lower lentic and lotic water column concentration criteria, which may someday increase the cost for treatment should EGLE adopt these new standards in lieu of the existing limits required by the Great Lakes Water Quality Initiative.

We are continuing to assess and develop potential cost effective and sustainable selenium treatment technologies.

In July 2016, the EPA published new selenium fish tissue limits and lower lentic and lotic water column concentration criteria, which may someday increase the cost for treatment should the Michigan Department of Environment, Great Lakes and Energy adopt these new standards in lieu of the existing limits required by the Great Lakes Water Quality Initiative.

Accordingly, we cannot reasonably estimate the timing or long-term impact of these water quality criteria on our business.

4 unchanged sentences

Minnesota submitted a list of impaired water revisions to the EPA in 2020.

In 2021, the EPA disapproved of Minnesota’s draft impaired waters 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.

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

Act’s Section 303(d) process, which resulted in the addition of 32 waters in November 2021.

At this time, it is unknown how the MPCA intends to implement requirements to address sulfate impaired waters.

3 unchanged sentences

The rules apply to all of our Minnesota iron ore mining and pelletizing operations and required submittal of a Mercury Reduction Plan to the MPCA in 2018 with plan implementation requirements becoming effective on January 1, 2025.

In the Mercury Reduction Plan, facilities evaluated if available control technologies can technically achieve a 72% mercury reduction rate.

If available control technologies cannot technically achieve a 72% mercury reduction rate, the facilities must propose alternative mercury reduction measures.

One of the main tenets agreed upon for evaluating potential

mercury reduction technologies during TMDL implementation and 2014 rule development proceedings was that the selected technology must meet the following “Adaptive Management Criteria”:

In the Mercury Reduction Plan, facilities evaluated if available control technologies could technically achieve a 72% mercury reduction rate.

If available control technologies could not technically achieve a 72% mercury reduction rate, the facilities must propose alternative mercury reduction measures.

One of the main tenets agreed upon for evaluating potential mercury reduction technologies during TMDL implementation and 2014 rule development proceedings was that the selected technology must meet the following “Adaptive Management Criteria”:

the technology must be technically feasible;

3 unchanged sentences

The Mercury Reduction Plans for our Minnesota facilities were submitted to the MPCA in December 2018.

In 2020, the MPCA requested additional information on certain plans, and we responded in a timely manner.

There is currently no proven technology to cost effectively reduce mercury emissions from taconite furnaces to achieve the targeted 72% reduction rate, while satisfying all four Adaptive Management Criteria.

The Mercury Reduction Plans that were submitted to the MPCA include documentation that describes the results of detailed engineering analysis and research testing on potential technologies to support this determination.

The results of this analysis will continue to guide dialogue with the MPCA.

Potential impacts to us are not estimable at this time because the revised Mercury Reduction Plans and additional technical information are currently being reviewed by the MPCA.

Regulation of Discharges to Groundwater

In general, states traditionally have regulated discharges of pollutants to groundwater through various programs such as wellhead protection programs and regulations related to remediation.

In April 2020, the U.S.

Supreme Court held in County of Maui v.

Hawaiʻi Wildlife Fund that the EPA (and delegated states) have jurisdiction under the NPDES program if a point source discharges to groundwater and is the “functional equivalent” of a discharge to Waters of the United States.

Until now, the NPDES program in the states we operate in has regulated only direct discharges to surface waters that constitute Waters of the United States from point sources.

Although we do not anticipate that broadening EPA jurisdiction over groundwater discharges will materially adversely affect our operations, the impact to our operations is not reasonably estimable at this time.

The plans determined that there are currently no proven technologies to cost effectively reduce mercury emissions from taconite furnaces to achieve the targeted 72% reduction rate, while satisfying all Adaptive Management Criteria.

This determination was based on detailed engineering analysis and research testing.

In January 2023, MPCA responded that certain technologies may be appropriate, and MPCA requested submission of revised Mercury Reduction Plans from the facilities.

Potential impacts to us are not estimable at this time because the revised Mercury Reduction Plans remain under development.

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.

In addition, the EPA is required to review and revise the standard every eight years to account for improvements in HAP control technology or methods.

The EPA has worked with the taconite and integrated iron and steel industries for years to collect data in order to recalculate the risk from HAP emissions from each category and to address whether new technologies existed in those sectors.

In 2020, the EPA determined that the risk from the sources in both of those categories was acceptable and adopted new rules for both sectors in 2020.

However, also in 2020, a court ruled that the EPA must address all HAPs in its National Emissions Standards for Hazardous Air Pollutants Risk and Technology Reviews.

See Louisiana Environmental Action Network, et al.

Environmental Protection Agency and Andrew Wheeler 955 F.3d 1088 (D.C.

The EPA then reopened the rulemakings for numerous source categories, including taconite and integrated iron and steel, to confirm that all HAPs had been addressed in the updates to those rules.

In 2022, the EPA sent us information collection requests related to the emission of HAPs from taconite and integrated iron and steel sources, and we have fulfilled or are fulfilling those requests in the time prescribed by the EPA.

The EPA is required by court order to issue a final rule by October 26, 2023 for the integrated iron and steel category and November 16, 2023 for the taconite category.

Because the EPA has yet to propose revised rules, the impacts are not estimable at this time but could be material in future years.

OTHER GOVERNMENT LAWS AND REGULATIONS

1 unchanged sentence

For example, changes in trade regulations, including tariffs or other import or export restrictions, could lead to lower or more volatile global steel prices, impacting our profitability.

In addition, health and safety regulations, including laws or regulations promulgated in response to the ongoing COVID-19 pandemic, and OSHA and MSHA regulations, have necessitated, and may continue to necessitate, increased operating costs or capital investments to promote a safe working environment.

In addition, health and safety regulations, including OSHA and MSHA regulations, have necessitated, and may continue to necessitate, increased operating costs or capital investments to promote a safe working environment.

We are also required to comply with complex foreign and U.S.

6 unchanged sentences

We also consume natural gas, electricity, industrial gases and diesel fuel at our operations.

As a vertically integrated steel company, we are able to internally supply a majority of our raw materials needed for our steelmaking operations.

As a vertically integrated steel company, we are able to internally supply a majority of our ferrous raw materials needed for our steelmaking operations.

We also attempt to reduce the risk of future supply shortages and price volatility in other ways.

If multi-year contracts are available in the marketplace for those raw materials that we cannot supply internally, we may use these contracts to secure sufficient supply to satisfy our key raw material needs.

When multi-year contracts are not available, or are not available on acceptable terms, we purchase the remainder of our raw materials needs under annual contracts or conduct spot purchases.

We 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.

12 | CLF 2022 FORM 10-K

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.

2 unchanged sentences

For example, generally, in our integrated steelmaking facilities, we consume approximately 1.4 net tons of coal to produce one net ton of coke.

The process to produce one ton of raw steel generally requires approximately 1.4 net tons of iron ore pellets, 0.4 net tons of coke and 0.3 net tons of steel scrap.

At normal operating levels, we also consume approximately 6 MMBtu’s of natural gas per net ton of raw steel produced.

Additionally, on average, our EAFs require 1.1 net tons of ferrous or stainless scrap to produce one net ton of high quality steel.

We consume approximately 420 kilowatt-hours of electricity per net ton of steel produced.

While these estimated consumption amounts are presented

to give a general sense of raw material and energy consumption used in our steel production, substantial variations may occur.

The process to produce one ton of raw steel (generally defined as a carbon slab) requires approximately 1.4 net tons of iron ore pellets and/or HBI pellet equivalents, 0.3 to 0.4 net tons of coke and 0.3 net tons of steel scrap or scrap substitutes.

At normal operating levels, we also consume approximately 5 to 6 MMBtu’s of natural gas per net ton of raw steel produced, prior to rolling, finishing and further processing.

Additionally, on average, our EAFs require 1.1 net tons of ferrous scrap, stainless scrap or scrap substitutes to produce one net ton of steel.

While these estimated consumption amounts are presented to give a general sense of raw material and energy consumption used in our steel production, substantial variations may occur.

We own or co-own five active iron ore mines in Minnesota and Michigan.

Based on our ownership in these mines, our share of annual rated iron ore production capacity is approximately 28 million long tons, which supplies all of the iron ore needed for our steelmaking operations.

Refer to Part I - Item 2.

Properties for additional information.

Our investment into HBI production provides us access, when needed, to clean iron units in order to make advanced steel and stainless products.

3 unchanged sentences

Our investment demonstrates our raw material and company strategy in responsibly managing the risks of pricing, availability and overall carbon footprint of our critical inputs.

Our acquisition of FPT provides us sourcing and processing capabilities for both prime and obsolete scrap.

This access is critical as prime scrap demand is expected to grow as new flat-rolled EAF capacity is set to come online over the next five years.

The FPT Acquisition included 22 facilities that are primarily located in the Midwest near our steel facilities.

We plan to pair the operational footprint of FPT with our long-standing flat-rolled automotive and other customer relationships to develop recycling partnerships that will further grow our prime scrap presence.

Additionally, the FPT Acquisition furthers our commitment to being an environmentally-friendly, low-carbon intensity steelmaker with a cleaner materials mix as we are able to better optimize productivity at our existing EAFs and BOFs.

Our investment in FPT further demonstrates our commitment to a vertically integrated business model.

We own or co-own five active iron ore mines in Minnesota and Michigan.

Refer to Part I - Item 2.

Properties for additional information.

We have an annual capacity of 1.9 million metric tons of HBI per year.

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.

COKE AND COAL

We own five cokemaking facilities, including two coke batteries located within our steelmaking facilities, one of which is temporarily idled.

These facilities currently provide over half of the coke requirements for our steelmaking operations and have an annual rated capacity of 3.9 million net tons.

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.

Our purchases of coke are made under annual or multi-year agreements with periodic price adjustments.

We typically purchase most of our metallurgical coal under annual fixed-price agreements.

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.

We believe there are adequate external supplies of coke and coal available at competitive market prices to meet our needs.

1 unchanged sentence

Properties for additional information.

Steel Scrap and Other Materials

Following the FPT Acquisition, the majority of our scrap requirements are generated or processed from internal sources, including scrap generated at our steel production facilities.

We believe that supplies of additional steel scrap, chrome, nickel and zinc adequate to meet the needs of our steelmaking operations are readily available from outside sources at competitive market prices.

We own the assets of FPT, which provide us sourcing and processing capabilities for both prime and obsolete scrap.

This access is critical, because prime scrap demand is expected to grow as new flat-rolled EAF capacity is set to come online over the next five years.

FPT includes 22 facilities that are primarily located in the Midwest near our steel facilities.

Additionally, our access to scrap furthers our commitment to being an environmentally-friendly, low-carbon intensity steelmaker with a cleaner materials mix as we are able to better optimize productivity at our existing EAFs and BOFs.

The majority of our scrap requirements can be generated or processed from internal sources, including scrap generated at our steel production facilities.

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.

We consume a large amount of natural gas, electricity, industrial gases and diesel fuel, which are significant costs to our operations.

3 unchanged sentences

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

We purchase electricity for all of our operations in either regulated or deregulated markets.

2 unchanged sentences

We also closely monitor developments at the state and federal levels that could impact electricity availability or cost and incorporate such changes into our electricity supply strategy in order to maintain reliable, low-cost supply.

We are currently evaluating the use of renewable energy to complement our existing supply.

We also are currently contracting for the increased use of renewable energy to complement our existing supply, which will reduce our emissions profile.

We believe there is an adequate supply of competitively priced electricity to fulfill our requirements.

We purchase industrial gases under long-term contracts with various suppliers.

We believe we have access to adequate supplies of industrial gases to meet our needs.

We predominantly purchase diesel fuel for our mining operations under long-term contracts with various suppliers.

We believe we have access to adequate supplies of diesel fuel to meet our needs.

We purchase industrial gases and diesel fuel under long-term contracts with various suppliers.

We believe we have access to adequate supplies of industrial gases and diesel fuel to meet our needs.

HUMAN CAPITAL

2 unchanged sentences

Even though many other employers are facing unprecedented labor shortages, we continued to grow during 2022.

As of December 31, 2021, we employed approximately 26,000 people.

Approximately 25,500 were employed in the U.S.

As of December 31, 2022, we employed approximately 27,000 people, with approximately 26,000 employed in the U.S.

Approximately 25,000 employees were employed at production facilities, with the balance employed in corporate support roles.

4 unchanged sentences

We recognize and respect the right of our employees to freely associate and collectively bargain, and we do not engage in harassment, intimidation or retaliation for their efforts to bargain collectively.

More than three-quarters of Cliffs’ workforce are represented by three prominent unions—USW, UAW and IAM.

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 to our customers.

Our employees operate and maintain our facilities and are, ultimately, responsible for safely delivering a quality product internally and to our customers.

Therefore, we engage with our unions as business partners, and together we have achieved a number of successes that benefit our business and our people alike.

In 2021, labor contracts for workers represented at our Rockport, Dearborn, Mansfield and Monessen facilities were successfully ratified.

2022 HIGHLIGHTS

• On October 12, 2022, a new 4-year labor agreement with the USW was ratified.

The contract covers approximately 12,000 USW-represented employees at 13 operating locations, and is effective from September 1, 2022 through August 31, 2026.

• On September 30, 2022, a new 47-month labor agreement with the USW was ratified.

The contract covers approximately 2,000 USW-represented employees at our legacy mining operations, and is effective from October 1, 2022 through August 31, 2026.

• Additionally, on June 24, 2022, a new 3-year labor agreement with the UAW was ratified.

The contract covers approximately 1,100 UAW-represented employees at our Butler Works facility, and is effective June 15, 2022 through June 15, 2025.

We are proud to report we did not experience any strikes or lockouts last year.

We expect to continue productive dialogue with our labor partners into 2022 as a number of other site agreements reach expiration and will be renegotiated.

This positive partnership with our unions helps us remain competitive for talent and protects our customers and their supply chains from disruptions due to labor disagreements.

1 unchanged sentence

We believe that our future success largely depends upon our continued ability to attract and retain a highly skilled workforce.

We provide our employees with competitive salaries, incentive-based bonus programs that provide above-market compensation opportunities when our Company performs well, development programs that enable continued learning and growth, and a robust benefit package that promotes well-being across all aspects of their lives, including health care, retirement planning and paid time off.

We provide our employees with competitive salaries, incentive-based bonus programs that provide above-market compensation opportunities when our Company performs well, development programs that enable continued learning and growth, and a robust benefits package that promotes well-being across all aspects of their lives, including health care, retirement planning and paid time off.

In addition to these programs, we have used targeted, equity-based grants with vesting conditions to facilitate retention of key personnel.

5 unchanged sentences

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 where possible so they can customize their benefits to meet their needs and the needs of their families.

Diversity, Equity & Inclusion

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

DIVERSITY, EQUITY AND INCLUSION

We continue to foster a culture of diversity, equity and inclusion at Cliffs.

1 unchanged sentence

To us, this means encouraging and accepting different views and supporting and advancing gender and racial diversity.

Further, our OneCliffs Way of Doing Business provides that we will not make employment-related decisions nor will we discriminate based on race, color, national origin, gender, age, religion, mental or

physical disability, veteran status, sexual orientation 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), genetic information or any other characteristic protected by applicable law.

We strive to make Cliffs a safe place to work for all.

Harassment and/or intimidation are not tolerated anywhere in our Company, and we hope our people make a career at Cliffs doing meaningful and challenging work.

In response to the COVID-19 pandemic, we implemented significant changes in our operations and workplaces in the best interest of our employees, as well as the communities in which we operate, which exceeded government regulations.

This includes having all employees who could perform their work remotely work from home when necessary, while implementing numerous safety measures for employees continuing critical on-site work at our operations.

Additionally, in an effort to best protect our workforce and the Company, we launched a vaccine incentive program in July 2021 that was developed in partnership with our labor unions.

Throughout the 45 days the program was in place, the vaccination rate more than doubled and we achieved a vaccination rate of over 75% throughout our workforce.

The initiative resulted in a payout of $45 million in total cash incentive to our vaccinated workforce.

The successful vaccination program allowed us to operate efficiently and safely throughout the remainder of 2021 and into 2022.

Safe production is our primary core value as we continue toward achieving a zero injury culture at our facilities.

We constantly monitor our safety performance and make continuous improvements to affect change.

Best practices and incident learnings are shared globally to ensure each facility can administer the most effective policies and procedures for enhanced workplace 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.

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.

19 unchanged sentences

Cleveland, OH 44114-2315

15 | CLF 2022 FORM 10-K

INFORMATION ABOUT OUR EXECUTIVE OFFICERS

15 unchanged sentences

and Assistant Treasurer (September 2016 – January 2018).

Terry Fedor 57 Executive Vice President, Operations, East (September 2021 – present);

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);

5 unchanged sentences

Vice President, Deputy General Counsel & Assistant Secretary (January 2018 – May 2019);

and Deputy General Counsel & Assistant Secretary (January 2017 – May 2019).

James Graham 56 Executive Vice President, Chief Legal Officer & Secretary (November 2014 – present).

Maurice Harapiak 60 Executive Vice President, Human Resources & Chief Administration Officer (January 2018 – present);

and Executive Vice President, Human Resources (March 2014 – January 2018).

and Deputy General Counsel & Assistant Secretary (January 2017 – January 2018).

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).

Kimberly Floriani 40 Senior Vice President, Controller & Chief Accounting Officer (August 2021 – present);

5 unchanged sentences

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

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business