Cleveland-Cliffs says it’s abandoning plans for a new electrical distribution transformer production plant in Weirton, part of several cost-cutting moves the steelmaker is undergoing up against millions of dollars in losses across the company.
The move affecting Weirton was announced Wednesday evening. In an earnings call today, company officials elaborated on their reasoning, saying abandonment of the project would result in a capital expenditure reduction of $50 million.
Lourenco Goncalves, chief executive officer, said the project had required a partner that could supply the technology and licensing required to produce transformers.
But he said the project partner, which was not named, had been unwilling to make necessary commitments to a properly scaled plant. Cleveland-Cliffs officials said this is a logical time to withdraw from the project because no federal grant money to support it has been received.
“With our partner currently having second thoughts about the Weirton location and also considering a smaller plant than the one we had originally envisioned. We have made the decision to no longer pursue this investment,” Goncalves said.
Goncalves later described disappointment that the project had not come together. He said the project for transformers had potential, but fell apart based on differing viewpoints.
“That plant will be built somewhere by the partner alone — because what I don’t like about joint ventures is that when you have a joint venture, the partner has a say, particularly in a 50-50 joint venture. And I can’t build the plant alone. I don’t have the licensing and I don’t have the IP,” he said, referring to intellectual property.
“But if the partner wants to retreat deals, then I’m out. And the location and size for me are very important.”
Goncalves suggested that Cleveland-Cliffs could still be a supplier to the company that had previously been its partner in the Weirton development.
“I’m going to supply when they go ahead by themselves with a project, hopefully in Weirton. I’m in if it’s Weirton. I’m out if it’s not Weirton. They are fully committed to build a plant,” he said.
“And if they want to go to Weirton, the plant is still available and we’ll transact in a very friendly way with the partner and have them build a plant there. But they say they plan to build; they’re just having second thoughts about location size. So I don’t believe size is an issue because you start small and then you grow. The location for me is sacred.”
Cleveland-Cliffs had announced the transformer production plant for Weirton last summer. West Virginia political leaders hailed the announcement at the time.
The plan had been for Cleveland-Cliffs to repurpose its Half Moon Warehouse in Weirton to start production of three-phase distribution transformers used in electric power distribution systems. Cliffs had expected the new plant to come online in the first half of 2026.
The total capital investment had been $150 million, with one-third granted by the state of West Virginia to Cliffs through a forgivable loan of $50 million.
Senator Shelley Moore Capito, R-W.Va., in a conference call with West Virginia reporters today expressed disappointment.
“I’m sorry that Cleveland-Cliffs decided to make an exit,” she said. “It’s very hurtful.”
She said it’s important for West Virginia to maintain control of the $50 million that had been made available for state support.
“They obviously had an obligation with the state of West Virginia, I think, to a tune of about $50 million. I’m sure they will be returning that money,” Capito said.
“But those would have been good, solid jobs for the city of Weirton that suffered so much great job loss over the last decade. So hopefully, working with them, we can, we can find another way.”
The senator called the location in Weirton prime property “and I’m sure the state’s looking at it now to remarket it. I don’t think that Cleveland-Cliffs — I don’t think that pursuing them is probably the right strategy. At this point, they’ve made clear their intentions.”
Weirton has a historic reputation as a steel town, but that sector has fallen on hard times. Weirton Steel Corp. was, at one time, one of the world’s largest manufacturers of tin plate products. The steel company declared bankruptcy and then went through several changes of ownership and consolidations.
By 2020, the plant was part of the Cleveland-Cliffs organization — but Cleveland Cliffs announced in February 2024 that it would shut down the plant over international trade conditions.
Officials then expressed optimism last summer during the announcement to turn the Weirton site into a distribution transformers production plant, resulting in reemployment opportunities for hundreds of steelworkers.
Now, said state Senator Ryan Weld, who represents the district, “obviously there’s a lot of disappointment in the fact that this won’t be happening. But not many people are surprised by the announcement, unfortunately.”
Weld, R-Brooke, said there had been skepticism locally for a long time “because of Cleveland-Cliffs track record, quite frankly, in the Northern Panhandle.”
He said the blame going to an unnamed partner is hollow.
“That’s what people are just tired of. That’s what people see. It’s the double speak from an economic opportunity and a CEO that says they’re going to deliver for this area and then don’t. Time after time after time, Cliffs let down the people of this area and didn’t do what they said they were going to do,” Weld said on MetroNews’ “Talkline.”
Mark Glyptis, president of the United Steelworkers Local 2911, said the announcement of the project’s abandonment came as a shock.
“We’ve been working on this transformer plant for about a year. Our goal was to make the most efficient transformer plant anywhere in the country. The union was working along with management, and we were laying out the plan on how we were going to do work,” Glyptis said on MetroNews Midday.
“We were expecting perhaps to get people starting to work on the plant within the next month — three weeks to a month — when senior management came down from Cleveland and said ‘We’ve got some bad news.'”
Glyptis said he still has hope that the transformer production facility will happen somehow.
“I think it’s gonna happen. Might be a little different than we thought, but that’s OK. Sometimes there’s detours out there and how you react to those detours are important.”