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Item 1. Business

2025-02-25 compared with 2024-02-08 · 233 added, 226 removed, 342 unchanged (57% of the section changed)

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.

We are vertically integrated from mined raw materials, direct reduced iron, and ferrous scrap to primary steelmaking and downstream finishing, stamping, tooling and tubing.

We are the largest supplier of steel to the automotive industry in North America and serve a diverse range of other markets due to our comprehensive offering of flat-rolled steel products.

We are a leading North America-based steel producer with focus on value-added sheet products, particularly for the automotive industry.

We are vertically integrated from the mining of iron ore, production of pellets and direct reduced iron, and processing of ferrous scrap through primary steelmaking and downstream finishing, stamping, tooling and tubing.

Headquartered in Cleveland, Ohio, we employ approximately 30,000 people across our operations in the United States and Canada.

COMPETITIVE STRENGTHS

As the leading flat-rolled steel producer in North America, we benefit from having the size and scale necessary in a competitive, capital intensive business.

As a leading North America-based steel producer, we benefit from having the size and scale necessary in a competitive, capital intensive business.

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

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

One of our most critical strengths that differentiates us from others in our industry is a unique and powerful partnership with our unionized workforce, particularly the USW.

With over 20,000 employees subject to collective bargaining agreements, our strong and productive labor relationships are key to our long-term success and allow us to work together in achieving our goals.

A clear example of the strength of our relationship is how we partner together to fight against dumped and illegally subsidized imported steel products.

Our deep alignment with our represented employees is also recognized by our political leaders, who often publicly support us as a significant employer of a unionized workforce with a track record of working to maintain and increase middle class jobs.

Our primary competitive strength lies within our automotive steel business.

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

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

Demand for our automotive-grade steel is expected to be healthy in the coming years as a result of a low unemployment rate, declining interest rates and the replacement of older vehicles.

Our footprint provides us with a competitive advantage in supplying automotive and other highly demanding end markets, as we are able to produce a wide range of high-quality products.

Our integrated facilities utilize domestic internally sourced iron ore as the primary feedstock, which allows us to produce a high-quality product with low residual content.

We also possess the breadth and depth related to customer service, technical support, and research and development, which are necessary to supply the demanding needs of the automotive industry.

Since the acquisition of our steelmaking assets, we have dedicated significant resources to maintain and upgrade our facilities and equipment.

Our integrated facilities utilize domestic and primarily internally sourced iron ore as the primary feedstock, which allows us to produce a high-quality product with low residual content.

We also possess the breadth and depth of customer service, technical support, and research and development necessary to supply the demanding needs of the automotive industry.

Since becoming a steel company in 2020, 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.

After elevated spend in 2022 to perform overdue maintenance work at the facilities acquired as part of the 2020 acquisitions, we resumed normalized levels of maintenance capital and operating expense in 2023.

After elevated spend in 2022 to perform overdue maintenance work at the facilities acquired as part of our 2020 acquisitions, we resumed normalized levels of maintenance capital and operating expenses in 2023, which continued throughout 2024.

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

Our industry leading portfolio of fixed price contracts provides us a competitive advantage, as the steel industry is often viewed as volatile and subject to the market price of steel.

Our fixed price contracts mitigate pricing volatility and support us in achieving healthy margins through the cycle.

Our ability to source our primary feedstock domestically and internally is a competitive strength.

Our utilization 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 mitigate pricing volatility through the cycle.

Our ability to source our primary feedstock domestically and primarily internally is a competitive strength.

This model reduces our exposure to volatile pricing and unreliable global sourcing.

The ongoing conflict between Russia and Ukraine, along with other global tensions, has displayed the importance of our U.S.-centric footprint, as our competitors who primarily operate EAF facilities rely on imported pig iron to produce flat-rolled steel, the supply of which has been disrupted.

The ongoing conflict between Russia and Ukraine, along with other global tensions, and the new administration's focus on U.S.

manufactured products, has displayed the importance of our North American-centric footprint, as our competitors who primarily operate EAF facilities rely on imported pig iron to produce flat-rolled steel, the supply of which has been disrupted.

The best example is our legacy business of producing iron ore pellets.

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.

By internally sourcing the vast majority of our iron ore pellet requirements, 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.

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, 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.

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

In November 2021, the Infrastructure and Jobs Act was passed in the U.S., which provides funding to be used for the modernization of the electrical grid and the infrastructure needed to allow for increased EV adoption, both of which require electrical steels.

Our electrical steel business is expected to continue achieving strong profitability in the coming years.

During the second half of 2023, we commissioned our NOES expansion at our Zanesville facility, which increased our annual capacity by approximately 70,000 net tons.

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We are a leading producer of electrical steels referred to as GOES and NOES in the U.S., which we believe will be critical for the modernization of the electrical grid and the infrastructure needed to allow for increased EV adoption, both of which require electrical steels.

Distribution transformers are critical to the maintenance and expansion of America’s electric grid.

Transformers are in short supply, and that shortage stifles economic growth across the country.

The shortage will continue to be exacerbated by the widespread adoption of Artificial Intelligence in virtually all sectors of the economy, which will exponentially increase the consumption of electricity in the U.S.

and worldwide.

Because of these industry dynamics and our current customer base, our electrical steel business is expected to continue to achieve strong profitability in the coming years.

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 as a productivity enhancer, or in our BOFs and EAFs as a premium scrap alternative.

From our Toledo, Ohio facility, 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.

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We are a leading supplier to the automotive sector, where our portfolio of high-end products delivers a broad range of differentiated solutions for this highly sought after customer base.

As a result of our exposure to these high-end markets, we have the highest fixed price contractual volumes in our industry.

Approximately 40-45% of our volumes are sold under these contracts.

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

In addition to our fixed price contracts, we also sell significant volumes under index-linked contracts, which reduces our reliance on spot sales and allows 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.

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

During 2023, we introduced our C-STAR™ protection design, which was developed for the purpose of providing EV battery protection for improved safety purposes, but can be used in any type of light vehicle.

During 2023, we introduced our C-STAR™ protection design, which was developed for the purpose of providing EV battery protection for improved safety purposes and can be used in any type of light vehicle.

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

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

The ongoing 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, had 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 rely on suppliers who are subject to unpredictable disruptions in their ability to supply materials, we are able to take advantage of our vertically integrated footprint.

We began construction of our Toledo direct reduction 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, continues to be 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.

We are a fully-integrated steel enterprise with an expansive footprint providing the ability to achieve healthy margins for flat-rolled steel throughout the business cycle.

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

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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 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.

Our strategic use of HBI in our blast furnaces and maximizing scrap usage in our BOFs has allowed us to achieve the same steel production with one less blast furnace in our footprint.

During the second quarter of 2023, it was announced that we entered into long-term state mineral leases for more than 2,600 acres of iron ore at the Nashwauk mine site in Itasca County, Minnesota.

The award of these leases is expected to resolve years of uncertainty regarding Hibbing Taconite’s mine life.

This ore body is intended to serve as an extension of Hibbing Taconite, as the state’s mineral leases, combined with our own private mineral holdings at Nashwauk, are expected to provide more than two decades of additional ore reserves.

The necessary resources that we have invested in our footprint are expected to keep our assets at an automotive-grade level of quality and reliability for years to come, positioning us to benefit from operating efficiencies and improved capabilities in the coming years.

PURSUE VALUE-ENHANCING MERGERS AND ACQUISITIONS

We have a proven track record of successfully identifying undervalued assets and completing value-enhancing transactions through mergers and acquisitions.

With our proven ability to integrate acquired assets and capture synergies, along with our powerful partnership with our union and non-union employees, we are confident in our ability to identify and execute value-enhancing mergers and acquisitions.

On November 1, 2024, we completed the Stelco Acquisition.

The Stelco Acquisition confirms our commitment and leadership in integrated steel production in North America and strengthens our cost position by incorporating one of the lowest cost flat-rolled steelmaking assets in North America within our footprint.

The Stelco Acquisition expands our existing presence in Canada and diversifies our customer base across service centers, construction and other industrial end markets with higher volumes of spot sales.

As a result of the Stelco Acquisition, our exposure to the North American spot market has doubled, giving us further insight into spot market dynamics and diversifying our customer base toward spot customers.

Going forward, we will continue to be opportunistic in our pursuit of assets that would grow our business and offer opportunities to generate significant synergies.

Our strong partnership with our union-represented employees was crucial in prior mergers and acquisitions as well as with the Stelco Acquisition.

We remain the only domestic steel company in recent years to successfully acquire steel producing assets with USW-represented employees, which we view as a testament to the trust and mutual respect that we have developed with our union workforce.

EXPLORE ATTRACTIVE DOWNSTREAM OPPORTUNITIES

On July 22, 2024, we announced our investment plan for our new electrical distribution transformer production plant near our indefinitely idled Weirton, West Virginia facility.

We intend to invest approximately $150 million to repurpose a warehouse to commence production of distribution transformers used in electric power distribution.

We expect to receive $50 million in support

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ADVANCE OUR PARTICIPATION IN THE GREEN ECONOMY

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

At this time, we believe the North American automotive industry is at a structural inflection point, with the adoption of electrical motors in passenger vehicles.

from the West Virginia Economic Development Authority in relation to the project, which reduces our net capital investment to approximately $100 million.

Our planned Weirton distribution transformer production plant benefits from the ability to use existing building assets, infrastructure and re-employment opportunities for members of the workforce that were previously employed at our indefinitely idled Weirton tinplate mill.

This project is also expected to increase demand for American-made GOES produced at our Butler Works steel mill as well as for our carbon and stainless steel products used in the manufacturing of distribution transformers.

We believe that distribution transformers are critical to America’s electrical infrastructure maintenance and expansion, and we are strategically positioning ourselves to benefit from a market that is undersupplied in the U.S.

and currently experiencing extended lead times with a strong demand outlook.

This project is expected to be completed in the first half of 2026.

ADVANCE OUR PARTICIPATION IN THE ENERGY TRANSITION

We are seeking to expand our customer base with the EV market.

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

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ENHANCE OUR ENVIRONMENTAL SUSTAINABILITY

Our commitment to operating our business in a more environmentally responsible manner remains constant.

One of the most important issues impacting our industry, our stakeholders and our planet is climate change.

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

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.

Our 2022 absolute Scope 1 and Scope 2 GHG emissions were below our reduction goal well ahead of our 2030 target year.

Since 2017, we have reduced our absolute emissions by 32% from 44 million metric tons to 30 million metric tons of CO 2 e in 2022.

In May 2023, we completed a successful blast furnace hydrogen injection trial at Middletown Works.

During the trial, hydrogen gas was injected in all 20 tuyeres at the Middletown #3 blast furnace, facilitating the production of clean pig iron.

In this trial, hydrogen served as a partial substitute for the fossil fuels necessary for iron reduction, ultimately replacing the release of CO 2 with the release of H 2 O (water vapor) with no impact to product quality or operating efficiency.

In October 2023, the DOE announced the intention to award funding under the Infrastructure and Jobs Act for seven regional hydrogen hubs, including the Midwest Alliance for Clean Hydrogen.

We remain committed to operating our business in a more environmentally responsible manner.

In May 2024, we announced our commitment to achieve new GHG emissions reduction targets after we successfully achieved our prior commitment set in 2021 to reduce Scope 1 (direct emissions) and Scope 2 (indirect emissions from purchased electricity or other forms of energy) GHG emissions by 25% by 2030, relative to 2017 levels, well ahead of our 2030 target year.

Our new goals set forth below, relative to 2023 levels, are all supported by ongoing and planned technological developments with respect to our ironmaking and steelmaking practices:

▪ A target to reduce Scope 1 and 2 GHG emissions intensity per metric ton of crude steel by 30% by 2035;

▪ A target to reduce material upstream Scope 3 GHG emissions intensity per metric ton of crude steel by 20% by 2035;

▪ A long-term target aligned with the Paris Agreement’s 1.5 degrees Celsius scenario to reduce Scope 1, 2 and material upstream 3 emissions intensity per metric ton of crude steel to near net zero by 2050.

Additionally, we have made significant progress in reducing our emissions on a per ton basis.

Since 2020, we have reduced our average Scope 1 and 2 emissions of integrated mills from 1.82 to 1.54 metric tons of CO 2 e per metric ton of crude steel produced in 2023, which is 28% lower than the global industry average.

Our future GHG emissions reductions are expected to be primarily driven by the use of direct reduced iron in electric melting furnaces, direct reduced iron in blast furnaces, the stretching of hot metal with additional scrap, enhancing efficiency of blast furnaces, implementing hydrogen use where possible, evaluating carbon capture and utilization technologies, procuring more clean energy, electrification of process equipment and operating with higher energy efficiency.

In March 2024, we were selected by the DOE's OCED for award negotiations to receive up to $575 million in total funding for two projects to accelerate industrial decarbonization initiatives.

These fully obligated cooperative agreements provide up to a $500 million federal investment to replace our existing blast furnace at Middletown Works with a 2.5 million ton per annum hydrogen-ready direct reduced iron plant and two 120 megawatt electric melting furnaces to feed molten iron to the existing infrastructure already on site, including the BOF, caster, hot strip mill and various finishing facilities.

The project is designed so that Middletown Works would maintain its existing raw steel production capacity of approximately 3 million net tons per year and would no longer use coke for iron production.

We expect that the process would significantly reduce steel slab costs and dramatically reduce carbon emissions intensity with no adverse impact to product quality or capability and would make Middletown Works the most advanced, lowest GHG emitting integrated iron and steel facility in the world.

This project will also sustain and slightly increase over 2,500 American manufacturing jobs that support the domestic steel industry.

Following negotiations, in the third quarter of 2024, the OCED approved $19.1 million in spending to begin Phase 1 of the Middletown project, with the release of the remaining funding being subject to meeting certain project milestones for each project phase.

The Middletown project is expected to be completed during 2029.

Additionally, we would receive up to $75 million for our Butler Works facility to replace two existing natural gas fired high temperature slab reheat furnaces with four electrified induction slab reheat furnaces, to bring optimum efficiency to our production of electrical steel.

This project would reduce slab reheat energy use by over 70%, lower carbon emissions, and improve slab quality.

This project will also support approximately 1,500 union employees dedicated to the domestic production of electrical steel, a strategic component of the nation’s electrical supply system.

Following negotiations, in the third quarter of 2024, the OCED approved spending of $38 million to begin Phase 1 of the Butler project, with the remaining spending approvals contingent on

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meeting progress milestones at the end of each project phase.

The Butler project is expected to be completed by 2029.

As a result of both of these projects, we would anticipate generating in excess of $500 million in annual cost savings and yield improvements.

In October 2023, the DOE announced its intention to award funding under the Infrastructure and Jobs Act for seven regional hydrogen hubs, including the Midwest Alliance for Clean Hydrogen.

This hub, covering Illinois, Indiana and Michigan, was selected for $1 billion in funding and is near our two largest steel plants, Indiana Harbor and Burns Harbor.

We recently commissioned a pipeline and successfully completed a hydrogen injection trial at our Indiana Harbor blast furnace #7.

In January 2024, we commissioned a pipeline and successfully completed a hydrogen injection trial at our Indiana Harbor blast furnace #7.

This follows an initial similar trial of hydrogen at our blast furnace in Middletown earlier in 2023.

The use of hydrogen within our blast furnace is expected to partially reduce coke rate and displace the release of CO 2 with H 2 O, reducing our overall emissions.

Our future GHG emissions reductions are expected to be driven by the use of direct reduced iron in blast furnaces, the stretching of hot metal with additional scrap, driving more productivity out of fewer blast furnaces, implementing hydrogen use where possible, adopting carbon capture and utilization, procuring more clean energy and operating with higher energy efficiency.

The use of hydrogen within our blast furnaces, when economically available in sufficient amounts, is expected to partially reduce coke rate and displace the release of CO 2 with H 2 O, reducing our overall emissions.

IMPROVE FINANCIAL FLEXIBILITY

Given the cyclicality of our business, it is important to us to be in the financial position to easily withstand economic cycles and be opportunistic when attractive strategic opportunities arise.

Since the acquisition of our steelmaking assets in 2020, we have demonstrated our ability to generate healthy free cash flow and use it to reduce substantial amounts of debt, return capital to shareholders through our share repurchase program, and make investments to both improve and grow our business.

During 2023, we reduced the principal amount of outstanding long-term debt by $1.1 billion while returning $152 million in capital to shareholders via share repurchases.

We have also historically shown our ability to take advantage of volatility in the debt markets and repurchase notes at a discount.

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

It is also important for us to maintain sufficient liquidity.

Our liquidity as of December 31, 2023 of $4.5 billion is the highest in our Company’s history.

Since becoming a steel company in 2020, we have demonstrated our ability to generate healthy free cash flow and use it to reduce substantial amounts of debt, return capital to shareholders through share repurchases and make investments to both improve and grow our business.

We have a track record of demonstrating that we can quickly deleverage our balance sheet and have also historically shown our ability to take advantage of volatility in the debt markets and repurchase notes at a discount.

We expect to generate healthy free cash flow in the coming years and intend to utilize it to deleverage our balance sheet following the closing of the Stelco Acquisition.

We also maintain a long maturity runway with our outstanding debt, with our nearest maturities coming in 2027, which supports our flexibility to navigate varied economic environments for extended periods of time.

BUSINESS OPERATIONS

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We primarily operate through one reportable segment – the Steelmaking segment.

Our primary steel producing and finishing facilities are located across Illinois, Indiana, Michigan, Ohio, Pennsylvania and West Virginia.

We operate seven blast furnaces and five EAFs with the configured capability of producing approximately 20.5 million tons of raw steel annually.

Our primary steel producing and finishing facilities are located across Illinois, Indiana, Michigan, Ohio, Pennsylvania, and Ontario.

We operate eight blast furnaces and five EAFs with the configured capability of producing approximately 23.0 million net tons of raw steel annually.

Raw 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.

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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 Michigan, Ohio, Tennessee, Florida and Ontario.

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

Our Other Businesses primarily includes the Tubular Components and Tooling and Stamping operating segments that provide customer solutions with carbon and stainless steel tubing products, advanced-engineered solutions, tool design and build, hot- and cold-stamped steel components and complex assemblies.

Ferrous raw materials for the production of steel are primarily internally sourced from our iron ore mines in Michigan and Minnesota, our direct reduction plant in Ohio and our 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 Indiana, Ohio, Pennsylvania and Ontario.

Our Other Businesses primarily includes the Tubular 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.

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◦ Cast Ingots

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

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Direct automotive Cold-rolled, galvanized, aluminized, NOES and stainless 32 % 36 %

Infrastructure and manufacturing Hot-rolled, cold-rolled, galvanized, plate, GOES, stainless, tinplate and rail 26 % 26 %

Infrastructure and manufacturing Hot-rolled, cold-rolled, galvanized, plate, GOES, stainless and rail 27 % 26 %

Distributors and converters All grades of steel 28 % 25 %

Steel producers Slab, scrap, iron ore, HBI, coal and coke 13 % 13 %

The change in percentages of revenues to each market in 2023, compared to 2022, was driven primarily by the increase in volumes and in selling prices for our fixed price contracts to the direct automotive market, lower pricing on index-linked sales, and lower pricing on spot sales.

Additionally, our sales to the direct automotive market increased as prior supply chain issues eased and light vehicle production in North America reached the highest level since 2019.

The change in percentages of revenues to each market in 2024, compared to 2023, was driven primarily by the decrease in volumes for our fixed price contracts to the direct automotive market and improved diversification across end markets as a result of the Stelco Acquisition.

We sell our products principally to customers in North America.

Approximately 40-45% of our flat-rolled steel shipments are sold under fixed base price contracts.

As a result of the Stelco Acquisition, we now sell approximately 30-35% of our flat-rolled steel shipments under fixed price contracts.

These contracts are typically one year in duration and expire at various times throughout the year.

Some of these contracts have a surcharge mechanism that passes through certain changes in input costs.

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.

The remaining 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.

AUTOMOTIVE MARKET

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The largest end user for our steel products is the automotive industry in North America, which makes light vehicle production a key driver of demand.

During 2023, North American light vehicle production was 15.6 million units, up from 14.3 million units in 2022.

North American light vehicle production in 2024 is estimated to exceed 2023 units, indicating continued strength from the automotive industry.

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

reached an all-time high during 2023, surpassing the previous record set in 2022.

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During 2024, North American light vehicle production was 15.5 million units, down from 15.7 million units in 2023.

North American light vehicle production in 2025 and beyond is expected to remain above 15 million units annually.

Additionally, the average age of light vehicles on the road in the U.S.

is at an all-time high of 12.6 years, which should support demand as older vehicles need to be replaced.

We also expect that a declining interest rate environment would increase demand for vehicles in the U.S.

as buyers have been cautious due to elevated interest rates.

As a leading supplier of automotive-grade steel in North America, we expect to benefit from healthy vehicle production levels over the coming years.

Furthermore, during 2024, consumer demand for sport utility vehicles, trucks and crossovers continued to increase, while demand for smaller sedans and compact cars declined.

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As a leading producer in North America of high-efficiency NOES, which is a critical component of EV motors, we are positioned to potentially benefit from the growth of EVs going forward.

In 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.

Likewise, the growing customer adoption of EVs may also increase demand for improvements in the electric grid to support higher demand for more extensive battery charging, which our GOES could support.

Likewise, the growing customer adoption of EVs may also increase demand for improvements in the electric grid to support higher demand for more extensive battery charging infrastructure, which our GOES could support.

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

In 2024, we expect contract prices to be roughly similar when compared to the prior year.

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, railcars, wind towers, machinery parts, heavy equipment, military armor, food preservation and railway lines.

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

This market includes sales to manufacturers of HVAC, appliances, power transmission

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and distribution transformers, storage tanks, ships, railcars, wind towers, machinery parts, heavy equipment, military armor and railway lines.

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

Recent government legislation, including the Infrastructure and Jobs Act, the CHIPS Act and the Inflation Reduction Act, is expected to keep demand elevated for steel products related to renewable energy, as well as the modernization of the U.S.

Federal legislation, including the Infrastructure and Jobs Act, the CHIPS Act and the Inflation Reduction Act, is expected to elevate demand for steel products related to renewable energy, as well as the modernization of the U.S.

electrical grid.

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

We should also continue to benefit from a tax credit provided by the Inflation Reduction Act for consumers who buy new EVs, which should increase the demand for our electrical steel used in charging stations.

Sales to this end market are made under a combination of annual fixed price contracts and index-linked pricing arrangements.

Our selling prices under our annual fixed price contracts are expected to be roughly similar in 2024 when compared to the prior year.

Sales to this end market are made under a combination of annual fixed price contracts, index-linked pricing arrangements and spot sales.

DISTRIBUTORS AND CONVERTERS MARKET

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The price for domestic HRC, the most significant index in driving the revenues and profitability of our Steelmaking segment, averaged $772 per net ton for 2024, compared to $906 per net ton in 2023.

The main decline in pricing occurred in the third quarter of 2023 as demand from service centers was adversely impacted due to the anticipation of, and ultimate occurrence of, the UAW strike at certain domestic automotive producers.

The automotive strike concluded in the fourth quarter of 2023, resulting in increased demand from our automotive and service center customers.

This increased demand led to a sharp rebound in HRC pricing, which ended the year at approximately $1,100 per net ton.

The significant decline was a result of weaker than anticipated light vehicle production, the lowest domestic steel demand environment in 15 years, excluding the COVID-impacted year of 2020, and elevated import levels.

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, slab and other steel products.

FPT is one of the largest processors of prime scrap in the country.

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

FPT is one of the largest processors of prime scrap in the U.S.

Our scrap presence has developed further since acquiring FPT as we have leveraged our long-standing flat-rolled automotive and other customer relationships into recycling partnerships.

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steelmaking operations consume a large portion of the ferrous scrap processed by FPT.

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.

The price of busheling scrap, a necessary input for flat-rolled steel production in EAFs in the U.S., averaged $429 per long ton during 2024, a 12% decrease from the prior year, but remained well above the historical ten-year average of approximately $400 per long ton.

We expect the price of busheling scrap to remain elevated above historical averages in the coming years due to the continued decline of prime scrap generation and the growth of EAF capacity in the U.S., along with a push for expanded scrap use globally.

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.

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During 2024 and 2023, we sold 2 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.

The price of busheling scrap, a necessary input for flat-rolled steel production in EAFs in the U.S., averaged $488 per long ton during 2023, an 8% decrease from the prior year, but remained well above the historical ten-year average of approximately $390 per long ton.

The merchant portion of our iron ore pellet production is sold pursuant to long-term supply agreements or through spot contracts.

APPLIED TECHNOLOGY, RESEARCH AND DEVELOPMENT

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As part of our underlying strategy to maintain and improve our product, service and technical capabilities, research and innovation spend totaled $27 million and $30 million in 2024 and 2023, 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.

As a leading 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.

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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 also introduced an all steel battery box design utilizing various grades of AHSS for improved use for lower GHG emissions, to maintain light-weighting targets, and to gain cost benefits when compared to using alternative materials.

We expect our research and development capabilities to support us in efforts to remain a 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 automotive manufacturers in their continued development of all types of EVs to meet the growing consumer demand.

During 2023, we introduced our C-STAR™ protection design, which was developed for the purpose of providing EV battery protection for improved safety performance and can be used in any type of light vehicle.

We also introduced an all-steel battery box design utilizing various grades of AHSS for safety performance and lower GHG emissions, to maintain light-weighting targets,

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and to gain cost benefits when compared to using alternative materials.

We are also a leading producer in North America of high-efficiency NOES, which is a critical component of EV motors.

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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 ongoing innovation efforts showcase the advanced technical capabilities behind our world-class GOES products, which are essential in transformer production across North America.

As the only remaining supplier of GOES in the region, we are committed to enhancing our products and driving reductions in core energy losses of transformers and motors, which is critical for our customers to produce the most efficient transformers globally.

This leadership in GOES technology enables us to supply steel for domestically sourced transformers vital for large-scale power generation and electricity distribution.

Our Steelmaking segment primarily competes with domestic and foreign producers of flat-rolled carbon, plate, 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.

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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.

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

In many cases, we use fixed price contracts to reduce volatility from market pricing.

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

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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 an 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.

As a leading supplier of steel to the automotive industry in North America, we continue to meet all the requirements needed to serve the automotive industry and maintain our position as an industry leader going forward.

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

The steel industry has faced competition from aluminum manufacturers (and, to a lesser extent, other materials) as automotive manufacturers attempt to develop vehicles that are lighter in weight.

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

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body designs.

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.

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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.

Our integrated facilities utilize domestic internally sourced iron ore as the primary feedstock, which allows us to produce high-quality products with low residual content.

We also possess the breadth and depth related to customer service, technical support, and research and development necessary to supply the demanding needs of the automotive industry and other demanding end markets.

Additionally, the availability of these materials can be unreliable, as most of our competitors rely 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.

Our integrated facilities utilize domestic and primarily internally sourced iron ore as the primary feedstock, which allows us to produce high-quality products with low residual content.

We also possess the breadth and depth of customer service, technical support, and research and development necessary to supply the demanding needs of the automotive industry and other demanding end markets.

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

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and preferential trade practices in their home countries.

In 2023, finished steel imports decreased 14% compared to the prior year as imports were unattractive for the majority of 2023 due to low pricing spreads between the U.S.

and other regions.

However, a disparity between domestic and foreign steel prices or modifications to certain trade restrictions currently in place on imported steel by government authorities could directly or indirectly impact import levels in the future.

In 2024, finished steel imports increased 4% compared to the prior year as HRC price spreads between the U.S.

and other regions were elevated at certain points of the year.

Disparity between domestic and foreign steel prices or modifications to trade policies on imported steel 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.

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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.

However, we have taken a number of actions to reduce pension and healthcare benefits costs, including proactively renegotiating lower healthcare premiums, negotiating progressive labor agreements, transferring responsibility for healthcare benefits for various groups of retirees to VEBAs, offering voluntary lump-sum

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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.

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ENVIRONMENTAL MATTERS

Our operations are subject to various laws and regulations governing the protection of the environment.

Our operations are subject to various laws and regulations governing the protection of human health and the environment.

We monitor these laws and regulations, which change over time, to assess whether the changes affect our operations.

We conduct our operations in a manner that is protective of public health and the environment.

Environmental matters and their management continue to be an important focus at each of our operations.

From 2017 to 2021, we invested approximately $1 billion into our Toledo direct reduction plant, which provides a low carbon intensity raw material to our steelmaking operations.

The HBI produced from the plant requires less energy to produce compared to traditional feedstock and can be used in blast furnaces to reduce emissions by improving energy efficiency and reducing the amount of coke required for steel production.

We actively manage our operations in a manner that is protective of human health and the environment.

We implement our environmental programs in accordance with applicable laws, regulations, and permits.

We have implemented environmental management systems certified to ISO 14001:2015 standards as part of our environmental program, and 100% of our steelmaking facilities are certified.

In the construction and operation of our facilities, substantial costs have been and will continue to be incurred to comply with regulatory requirements and avoid undue effect on the environment.

In 2024, 2023 and 2022, our capital expenditures relating to environmental matters totaled $67 million, $66 million and $133 million, respectively.

Our current estimate for capital expenditures for environmental improvements in 2024 is approximately $75 million for various water treatment, air quality, dust control, tailings management and other miscellaneous environmental projects.

Additionally, we expect capital expenditures for environmental improvements for each of 2025 and 2026 to be generally in line with 2024's estimated spending.

Our current estimate for capital expenditures for environmental control facilities in 2025 is approximately $100 million for various water treatment, air quality, dust control, tailings management and other miscellaneous environmental projects.

Additionally, we expect capital expenditures for environmental control facilities for each of 2026 and 2027 to be generally in line with 2025's estimated spending.

REGULATORY DEVELOPMENTS

Various governmental bodies continually promulgate new or amended laws and regulations that affect us, our customers and our suppliers in many areas, including air and water discharges, waste management and disposal, the classification of materials and products and other environmental, health and safety matters.

Although we believe that our environmental policies and practices are sound and do not expect that the application of any current laws, regulations or permits would reasonably be expected to result in a material adverse effect on our business or financial condition, we cannot predict the collective potential adverse impact of the expanding body of laws and regulations.

Moreover, because all domestic steel, scrap and mining producers operate under the same federal environmental regulations, we do not believe that we are more disadvantaged than our domestic competitors by our need to comply with these regulations.

Various governmental bodies continually promulgate new or amended laws and regulations that affect us, our customers and our suppliers in many areas, including air emissions and water discharges, waste management and disposal, the classification of materials and products, and other environmental, health and safety matters.

Although we believe that our environmental policies and practices are sound and do not expect that the application of current laws, regulations or permits would reasonably be expected to result in a material adverse effect on our business or financial condition (except as noted below), we cannot predict the collective potential adverse impact of the expanding body of laws and regulations.

Moreover, because all U.S.

and Canadian steel, scrap and mining producers operate under similar environmental regulations, we do not believe that we are more disadvantaged than our competitors within the U.S.

and Canada by our need to comply with these regulations.

Some foreign competitors may benefit from less stringent environmental requirements in the countries where they produce, resulting in lower compliance costs for them and providing those foreign competitors with a cost advantage on their products.

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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:

There are, however, several notable proposed or recently promulgated rulemakings or activities that could have a material adverse impact on our facilities in the future depending on their ultimate outcome:

changes to National Emission Standards for Hazardous Air Pollutants in the taconite, integrated iron and steel, and coke sectors;

climate change and GHG regulations;

changes to the National Ambient Air Quality Standard for particulate matter;

changes to ozone transport regulations;

changes to the National Ambient Air Quality Standards for particulate matter;

changes to ozone regulations;

selenium discharge regulation;

Minnesota's sulfate wild rice water quality standard;

Minnesota's mercury TMDL and mercury reduction rules;

and changes to National Emission Standards for Hazardous Air Pollutants in the taconite, iron and steel, and coke sectors.

Minnesota's mercury reduction rules;

and efforts to reduce SO 2 levels at steel plants in Canada.

NESHAPS FOR TACONITE, INTEGRATED IRON AND STEEL, AND COKE CATEGORIES

Under the Clean Air Act, within eight years after promulgating National Emissions Standards for Hazardous Air Pollutants (NESHAPS) in industry-specific categories, the EPA must review the standards to determine whether they continue to protect human health with an ample margin of safety and protect against adverse environmental 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, integrated iron and steel, and coke 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.

The EPA determined that the risk from the sources in these categories was acceptable.

However, in response to a court order, the EPA then issued revisions to the rulemakings for numerous source categories, including taconite and integrated iron and steel.

In January 2024, the EPA finalized amendments to the taconite sector rule that contain new limits for mercury and acid gases (hydrogen chloride and hydrogen fluoride).

In March 2024, the EPA finalized amendments to the integrated iron and steel sector rule that contain numerous new emission limits and work practices for blast furnaces, BOF operations, slag processing and sintering operations.

In August 2024, the EPA granted partial reconsideration of the final integrated iron and steel sector rule and expressed its intent to issue technical corrections.

Lastly, for the coke sector, the EPA finalized new limits and other requirements in May 2024.

We have filed Petitions for Administrative Reconsideration and Stay to the EPA and Petitions for Judicial Review and Stay of each of these rules.

If the EPA or the courts uphold any of the rules in their current form, the impact could be material.

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.

Policymakers are evaluating or developing carbon regulation at all levels of government.

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 reporting obligations, such as the climate accountability package enacted in California in late 2023, mandatory carbon reductions, carbon pricing mechanisms and trade policies, such as the European Union's Carbon Border Adjustment Mechanism, which entered into its transitional phase late in 2023, 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.

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pricing mechanisms and trade policies, such as the federal and provincial carbon pricing programs in Canada, the European Union's Carbon Border Adjustment Mechanism (which entered into its transitional phase late in 2023), and climate-related procurement and product labeling requirements.

The dynamic outlook for these potential regulations limits our ability to quantify the long-term net impacts of potential carbon compliance costs to our 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 limitations, potential carbon pricing and climate-related procurement activities.

We intend to remain active in the discussions related to these legislative and regulatory changes.

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.

We periodically 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, mobile equipment, EAFs and integrated steelmaking facilities, among others.

As such, among our most significant regulatory risks are:

As such, our potential regulatory risks include:

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

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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.

However, some foreign competitors outside of the U.S.

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

Due to potential carbon restriction schemes, our businesses 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;

emissions reduction opportunities, such as energy efficiency, industrial electrification of process heating, 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 sought comment on lowering the primary annual fine particulate matter (PM 2.5 ) level from 12 micrograms per cubic meter (ug/m 3 ) of air to 9 – 10 ug/m 3 while taking comment on alternative annual standard levels down to 8 ug/m 3 and up to 11 ug/m 3 .

The EPA also proposed to retain the current primary 24-hour PM 2.5 standard of 35 ug/m 3 while soliciting comments on revising the level as low as 25 ug/m 3 .

The lower the standard, the greater potential effect on our operations.

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

On February 7, 2024, the EPA issued a final rule lowering the primary annual PM 2.5 standard to 9.0 ug/m 3 .

This standard will be final 60 days after publication in the Federal Register and will affect permitting for new or modified sources after that date.

States will have three and a half years to submit State Implementation Plans to the EPA detailing how they intend to address existing sources that affect any nonattainment areas in the state.

The EPA retained the current primary 24-hour PM 2.5 standard of 35 ug/m 3 .

The potential changes to air pollution control equipment or operations needed at our plants to comply with the new particulate matter standard are not known at this time, and the potential cost is not estimable but could be material.

It is highly likely that the revised standard will be appealed, and a stay of the standard could be issued, but is uncertain.

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).

Although there were changes in the final rule that resulted in less impact to our operations, we are appealing the final rule as it applies to reheat furnaces and boilers.

If the appeal is unsuccessful, then we will have to invest in new or revised air pollution control equipment, for which the actual cost is unknown but could be material.

In February 2024, the EPA finalized an amendment to the National Ambient Air Quality Standard for particulate matter.

The final rule lowers the primary annual fine particulate matter (PM 2.5 ) level from 12 micrograms per cubic meter (ug/m 3 ) of air to 9 ug/m 3 .

This standard became effective in May 2024, potentially impacting air permitting and requiring additional emission reductions for existing operations.

The potential changes to air pollution control equipment or operations needed to comply with the new particulate matter standard at our operations are not known at this time, and the potential cost is not estimable but could be material.

Many entities appealed the final rule, and a decision is pending.

CHANGES TO OZONE REGULATIONS

In 2023, the EPA finalized new standards under its ozone transport authority 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, Ohio, Pennsylvania and West Virginia).

In June 2024, the U.S.

Supreme Court granted a stay of the ozone transport rule and further judicial review is expected in 2025.

Our Middletown, Cleveland, Indiana Harbor and Burns Harbor facilities are located in counties designated as not attaining the ozone ambient air quality standard.

We are working with the state regulatory agencies to assess if there are any reasonably available and economically feasible emission control technologies for applicable emission sources, including boilers, reheat furnaces and other large fuel combustion sources.

The potential changes to air pollution control equipment or operations are not known at this time, and the potential cost is not estimable until the nitrogen oxide regulations are promulgated.

SELENIUM DISCHARGE REGULATION

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As of December 31, 2024, included within our Empire asset retirement obligation is a discounted liability of approximately $138 million, which includes the estimated costs associated with the construction of Empire's portion of the required infrastructure and expected future operating costs of the treatment facilities.

Additionally, included within our Tilden future

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capital plan is approximately $32 million for the construction of Tilden's portion of the required infrastructure.

Additionally, included within our Tilden future capital plan is approximately $32 million for the construction of Tilden's portion of the required infrastructure.

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

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MINNESOTA'S SULFATE WILD RICE WATER QUALITY STANDARD

The Minnesota Governor established a Wild Rice Task Force by Executive Order in May 2018 that provided recommendations on wild rice restoration and regulation.

The existing sulfate water quality standard for lakes and streams that contain wild rice has not been applied to any of our discharge permits or enforced historically by Minnesota.

Further, the standard may be unenforceable because of legislation that prohibits the MPCA from enforcing it until the obsolete standard is updated based on modern science.

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

In 2021, the EPA disapproved of Minnesota’s draft list and subsequently announced its proposed list of wild rice water bodies that were impaired due to sulfate under the Clean Water Act’s Section 303(d) process, which resulted in the addition of 32 waters in November 2021.

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

For these reasons, the impact of potential obligations to address sulfate concentrations in certain water discharges from our Minnesota iron ore mining and pelletizing operations is not estimable at this time, but it could have a material adverse impact if we are required to significantly reduce sulfate in certain discharges.

MINNESOTA'S MERCURY TMDL AND MERCURY REDUCTION RULES

Upon future reissuance of NPDES renewal permits for our mining and pelletizing operations in Minnesota, we might be required to address sulfate concentrations in discharges to certain waterbodies.

The impact of these potential obligations is currently not estimable.

However, if we are required to significantly reduce sulfate concentrations in any discharges, financial impacts could be material.

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MINNESOTA'S MERCURY REDUCTION RULES

In September 2014, Minnesota promulgated the Mercury Air Emissions Reporting and Reduction Rules, mandating mercury air emissions reporting and reductions from certain sources, including taconite facilities.

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.

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.

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

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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 within 180 days of the effective date of the forthcoming Taconite National Emission Standards for Hazardous Air Pollutants rule.

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, INTEGRATED IRON AND STEEL, AND COKE CATEGORIES

Under the Clean Air Act, within eight years after promulgating National Emissions Standards for Hazardous Air Pollutants in industry-specific categories, the EPA must review the standards to determine whether they continue to protect public health with an ample margin of safety and protect against adverse environment effects.

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 2023, the EPA determined that several HAPs are emitted from the sectors that are not yet regulated, so the EPA proposed new standards for those specific HAPs.

In addition, the EPA based some proposed regulatory changes on what it deemed technological developments in the sectors.

Several trade organizations commented on the proposed rules with our input, and the rules are expected to be finalized in 2024.

Some proposed changes, if finalized as proposed and if upheld on appeal, could result in significant expenditures for our taconite, iron and steel, or coke oven assets.

At this time the exact expenditures are unknown.

We intend to use all available tools to ensure that the regulations are based on sound science and feasible technology.

In 2023, the EPA likewise determined that the residual risk from coke ovens and from coke pushing, quenching, and battery stacks were low, and that no new technology developments justified changes to the regulations.

However, the EPA proposed new limits on formerly unregulated HAPs and other requirements that, taken together, could require investments at our coke facilities.

At this time, the amount of anticipated expenditures is unknown.

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

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

REDUCTION OF SO 2 LEVELS AT STEEL PLANTS IN CANADA

A federal pollution prevention notice issued under subsection 56(1) of the Canadian Environmental Protection Act, 1999 requires prescribed persons to prepare and implement pollution prevention plans addressing specified air emissions released from the iron and steel sector, including SO 2 .

The notice applies to all Canadian steel mills, including Stelco, other integrated mills and EAF mills, and requires these mills to prepare and implement plans to achieve specified air emission targets for SO 2 .

In parallel, the provincial Ontario Ministry of the Environment, Conservation and Parks is in the process of developing an integrated steel sector technical standard for several air parameters, including SO 2 .

Discussions are underway with both the federal and provincial regulators to harmonize the timing and required technology to reduce SO 2 emissions.

Potential impacts of implementation are not estimable at this time, pending details on SO 2 reduction requirements by the provincial regulator, but could be material.

OTHER GOVERNMENT LAWS AND REGULATIONS

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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.

We comply with complex foreign and U.S.

laws and regulations, which may include the Foreign Corrupt Practices Act and other anti-bribery laws, the European Union’s General Data Protection Regulation and other U.S.

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RAW MATERIALS AND ENERGY

Our steelmaking operations require iron ore, HBI, coke, coal, ferrous and carbon and stainless scrap, chrome, nickel, zinc and other alloys as primary raw materials.

Our steelmaking operations require iron ore, HBI, coke, coal, steel scrap, chrome, nickel, zinc and other alloys as primary raw materials.

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

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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.

13 | CLF 2024 FORM 10-K

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.

Based on our ownership in these mines, our share of annual rated iron ore production capacity is approximately 29 million long tons, which supplies the vast majority of the iron ore needed for our steelmaking operations.

Additionally, Stelco has a multi-year supply agreement to meet its iron ore pellet requirements and is party to an option agreement providing it with the ability to purchase a 25% ownership interest in the MinnTac iron ore mine, located in Mt.

Iron, Minnesota, at any time through January 31, 2027.

Refer to Part I - Item 2.

Properties for additional information.

Properties for additional information regarding our active iron ore mines.

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

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are traditionally sourced from regions of the world that have historically experienced greater political turmoil and have lower pollution standards than the U.S.

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.

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

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

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

COKE AND COAL

We own three active cokemaking facilities, including one coke plant located within our Burns Harbor facility.

These facilities currently provide approximately half of the coke requirements for our steelmaking operations and have an annual rated capacity of 2.6 million net tons.

We own five active cokemaking facilities, three of which are located within our Burns Harbor, Lake Erie and Hamilton facilities.

These facilities currently provide more than half of the coke requirements for our steelmaking operations and have an annual rated capacity of 4.0 million net tons.

Additionally, we have coke supply agreements with suppliers that provide our remaining requirements.

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This access is critical, because prime scrap demand is expected to grow as new flat-rolled EAF capacity has started to come online and is expected to increase in the coming years.

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

13 | CLF 2023 FORM 10-K

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.

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Some of our operations also use self-generated coke oven gas and/or blast furnace gas to produce electricity, which is an environmentally-friendly practice that also reduces our need to purchase electricity from external sources.

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

Additionally, we 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 also are currently contracting for the increased use of renewable energy to complement our existing supply, which is anticipated to reduce our emissions profile.

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

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

14 | CLF 2024 FORM 10-K

HUMAN CAPITAL

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We believe our employee-centric management philosophy is the key to our success.

As of December 31, 2023, we employed approximately 28,000 people, with approximately 27,000 employed in the U.S.

Approximately 26,000 employees were employed at production facilities, with the balance employed in corporate support roles.

The vast majority of our approximately 22,000 hourly employees were subject to collective bargaining agreements (approximately 20,000) with various labor unions.

As of December 31, 2024, we employed approximately 30,000 people, with approximately 90% located within the U.S.

Over 70% of our workforce are hourly employees, with the vast majority subject to collective bargaining agreements with various labor unions.

LABOR RELATIONS

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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 90% of Cliffs’ hourly workforce are represented by three prominent unions — USW, UAW and IAM.

More than 90% of Cliffs’ hourly workforce is represented by three prominent unions — USW, UAW and IAM.

The hardworking union-represented men and women of Cliffs are the lifeblood of our Company.

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We are proud to report that we successfully renegotiated all of our open labor agreements during 2024 without any difficulty or disruption.

Our hourly employees at our Northshore Mining operation also elected to unionize in 2023, and we successfully negotiated a new labor agreement there with the USW on an expedited basis.

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.

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These tools have enabled us to increase the retention of key personnel, including our corporate and site leadership teams and critical technical talent.

14 | CLF 2023 FORM 10-K

ROBUST EMPLOYEE BENEFITS PROGRAMS

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Through our OneCliffs Way of Doing Business (our Code of Business Conduct and Ethics), we outline our Core Values, which include Trust, Respect and Open Communication.

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

To us, this means encouraging and accepting different views and supporting an inclusive workplace.

Further, our OneCliffs Way of Doing Business provides that we will not make employment-related decisions nor will we discriminate based on race, color, religion, national origin, age, military or veteran status, disability, sex (including sexual orientation and gender identity), pregnancy, genetic information, ethnicity or any other characteristic protected by applicable law.

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During 2024, our Total Reportable Incident Rate (including contractors) was 0.9 per 200,000 hours worked.

Refer to Exhibit 95 Mine Safety Disclosures (filed herewith) for mine safety information required in accordance with Section 1503(a) of the Dodd-Frank Act.

Refer to Exhibit 95 Mine Safety Disclosures for mine safety information required in accordance with Section 1503(a) of the Dodd-Frank Act.

15 | CLF 2024 FORM 10-K

AVAILABLE INFORMATION

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In addition, our website allows investors and other interested persons to sign up to receive automatic email alerts when we post news releases and financial information on our website.

We also make available, free of charge, the charters of the Audit Committee, Strategy and Sustainability Committee, Governance and Nominating Committee, and Compensation and Organization Committee, as well as the Corporate Governance Guidelines, and the Code of Business Conduct and Ethics adopted by our Board of Directors.

We also make available, free of charge, the charters of the Audit Committee, Strategy and Sustainability Committee, Governance and Nominating Committee, and Compensation and Organization Committee, the Corporate Governance Guidelines adopted by our Board of Directors, as well as the Code of Business Conduct and Ethics.

These documents are available through our investor relations page on our website at www.clevelandcliffs.com .

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and Chairman, President and Chief Executive Officer of Metals USA Holdings Corp., an American manufacturer and processor of steel and other metals (May 2006 – April 2013).

Clifford Smith 64 Executive Vice President & President, Cleveland-Cliffs Steel (September 2021 – present);

Executive Vice President, Chief Operating Officer (January 2019 – September 2021);

and Executive Vice President, Business Development (April 2015 – January 2019).

Clifford Smith 65 Executive Vice President, Chief Operating Officer (April 2024 – present);

Executive Vice President & President, Cleveland-Cliffs Steel (September 2021 – April 2024);

and Executive Vice President, Chief Operating Officer (January 2019 – September 2021).

Keith Koci 60 Executive Vice President & President, Cleveland-Cliffs Services (September 2021 – present);

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Executive Vice President, Chief Operating Officer, Steel Mills (March 2020 – September 2021);

Executive Vice President, Operations (February 2019 – March 2020);

and Executive Vice President, U.S.

Iron Ore (January 2014 – February 2019).

and Executive Vice President, Operations (February 2019 – March 2020).

Traci Forrester 53 Executive Vice President, Environmental & Sustainability (May 2021 – present);

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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