Cleveland Cliffs, U. S, Steel and Zug Island

Cleveland Cliffs purchased Henry Ford's Dearborn steel mill
from AK steel fairly recently. I now see that Cleveland Cliffs
is trying to purchase U. S. Steel.

U. S. Steel had a plant on Zug Island but announced in 2019
that they would soon shut that plant. However, U. S steel
continued to operate that plant after 2019.

Is U. S. Steel producing steel on Zug Island. What would
happen if Cleveland Cliffs purchased U. S. Steel? I suspect
the plant on Zug Island is only and not nearly as efficient
and cost effective as the recently modernized steel plant
in Dearborn.

The very name, "Zug", is as ugly as the island. Just sayin'.

Quote:

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Originally Posted by Ray1936

The very name, "Zug", is as ugly as the island. Just sayin'.

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I keep having to look up the history. I can never remember it.

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The island is named after Samuel Zug, who came to Detroit from Pennsylvania in 1836 as a 20-year-old. He went into the furniture-making business with a Detroit investor named Marcus Stevenson with money he had saved as a bookkeeper in Pittsburgh. The substantial forests and convenient access to East Coast markets by way of the Detroit River, Great Lakes and the Erie Canal made Detroit an ideal place for a young man seeking a fortune making furniture.

After 23 years in the furniture business, his partnership with Stevenson dissolved in 1859, leaving Zug a wealthy man. He purchased 325 acres of land at the confluence of the Rouge and Detroit rivers from Michigan’s second territorial governor, General Lewis B. Cass. It was a marshy peninsula that was three-quarters wetlands. Another attractive feature was that it had a natural sulfur spring that was providing, at that time, 1,200 barrels of mineral water per day.

Zug and his wife had hoped to build a mansion on the island, but after ten years they decided that the wetlands and the mosquitos breeding there were just too much to endure.

In 1888, Samuel Zug authorized the River Rouge Improvement Company to cut a small canal 60 feet wide and eight feet deep along the south end of his land, essentially converting his natural peninsula into a human-made island and making a new river mouth south of where the Rouge River used to empty into the Detroit River. This reversed the flow of the Old Channel. Detroit River water now flowed into the Old Channel, around the island, and then mixed with Rouge River water before emptying again into the Detroit River.

In 1889, Samuel Zug died, leaving this land to his wife, who died in 1891. The Zug heirs sold the island for $300,000 to George Brady and Charles Noble, who wanted to use it for industrial development. Today, it is called Zug Island and has a more-than-100-year history as part of the epicenter of the industrial revolution in Detroit. Several blast furnaces for steel production were built on the island beginning in 1902.

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To early to speculate,CC offered $17 per share,plus stock in their existing company,puts it at a 46% ratio, but it has stalled because they refuse to sign a NDA for U.S. steel.

Esmark offered $35 a share all cash,Esmark CEO is X U.S. steel executive.

If CC ends up with it they will be the largest steel holdings and in a position to directly compete with China ,but they will dominate the market ,which could put Canada in a bit of a fix.

Because Canada buys cheap steel from China then resells it to the U.S. in order to circumvent tariffs.

If the deal with CC goes through,will not need Canada,they will increase production here and not be dependent on China.

It all may be a pump and dump scheme because U.S. Steel has been consistently dropping and CC stock jumped along with U.S. steels.

Cleveland cliffs steel was founded in 1847,if they can pull this off they will control 100% of iron ore in this country and over 45% of the roll steel supplies to auto manufacturers and they will rank on the global market and will be the only U.S. steel manufacturer to be in that ranking.

On one hand it is the best thing that could happen in this country in order to compete against the Chinese but it comes at a price because they would dominate the steel industry in the U.S. and other parts of the world.

So there are anti trust hurdles that will have to be overcome,no point in even thinking of what comes next until or even if it happens.

2022 Canadian steel exports to America $9.7 billion,that number would be drastically reduced,not to beat a dead horse but that also equates to less traffic across the bridge in steel alone because Canada would not be able to compete against CC in the global or local market.

U.S. steel has had a dismal 5 year run,stock holders are itchy and CC is trying to appeal to the stockholders more so then U.S. steel corporation,Kinda like a hostile takeover but not really hostile in that sense.

A German company built a plant in the south in order to supply rolled steel to the auto manufacturers based there.

On the global aspect,in order to meet demand,it may be more feasible for CS to revamp Zug island,easier to do now that most of that production was moved to another state.

The three blast furnaces on Zug island are still there, overshadowed by the new Gordie Howe bridge now, but they are dormant. The EES DTE coke battery still operates on Zug Island. It looks like the Harvest Spirit takes the finished coke to places in Canada. There is still some activity at the steel mill in Ecorse. However, the rail cars of molten iron are no longer running from Zug to the steel mill. There is a "Help wanted" sign outside the steel mill but it could be that they only need short term help because they are nearing closure.

Most of that production was moved to Gary Indiana,but if this buyout becomes a reality,it’s expensive to ship the products back to Detroit region,in order to remain competitive they would most likely have to fire those furnaces back up.

The German factory in the south supplies those manufacturers and in the north because of EPA there are only so many spots where steel production can take place.

The reason they were mothballing Zug was because of foreign competition reduced the demand stateside for production,if this happens the demand increases they will need ramp up production.

But they will also be in a position to invest the billions and justify it in order to make Zug more efficient which in turn makes it less “dirty”.

It would actually be a win for Detroit because you get the jobs back,plus more in a cleaner environment.

Its easier to revamp an idle plant then one already in full production.