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Company to invest $700M in E. Toledo

Project to create facilities at former Ironville Terminal

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    Toledo City Councilman Peter Ujvagi speaks as, from left, Lucas County Commissioners Tina Skeldon-Wozniak and Carol Contrada, Toledo-Lucas County Port Authority vice president of business development Joe Cappel, Commissioner Pete Gerken, and port authority board of trustees chairman James Tuschman listen.

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Bringing new heavy manufacturing to East Toledo, an iron ore company on Thursday announced plans for a $700 million plant on a vacant former industrial site that will employ at least 130 people in making a product used in steel mills.

Cliffs Natural Resources Inc., based in Cleveland, will construct facilities, including electric furnaces, on the Ironville Terminal site on Front Street owned by the Toledo-Lucas County Port Authority, the company said, ending months of closely guarded negotiations over site incentives.

“This is a unbelievably huge project. There’s going to be a tower that’s going to sit on this property that’s going to be so tall that you’re going to be able to see it from downtown,” James Tuschman, chairman of the Port Authority board of trustees, said at a news conference on the site. “This is a strategic location.”

He said Toledo beat out other competitors because of the size of its port and the availability of land, rail, and highway access, natural gas, and water.

VIDEO: $700 million iron ore plant coming to East Toledo

The product to be made by Cliffs is hot-briquetted iron, made from iron ore pellets. A company spokesman said the briquettes are used in electric arc furnace mills, also called minimills. Currently, electric arc furnace mills — unlike blast furnace mills — use scrap steel or imported products to make steel. Cliffs’ product replaces both of those sources, spokesman Patricia Persico said.

“There’s a market opportunity for us to enter and to diversify our customer base,” Ms. Persico said.

The company, with annual revenues of $2.1 billion, operates iron ore mines in Minnesota and Michigan. Cliffs intends to break ground in early 2018, with the plant becoming operational in 2020.

Jobs to be created will range in salary from $40,000 to $140,000, with average total compensation in salary and benefits for hourly workers of $90,000, said Joe Cappel, vice president for business development for the port authority.

The site is now 100 acres of vacant land that at one time supported oil refineries and homes known as Ironville. The land is part of 180 acres straddling Front Street that the port authority bought in 2008 for $3.4 million and developed, at a total cost of about $20 million. That figure includes an investment by the port authority’s docks contractor, Midwest Terminals.

Some 1,200 construction jobs are expected to be involved over two years.

Once the plant is in operation, Cliffs Natural Resources will receive 2 million tons of raw materials annually via an estimated 100 ships to the Ironville Docks operated by Midwest Terminals. The finished product will be shipped out on 16,000 rail cars and trucks a year to plants in Ohio, Michigan, and Indiana.

Cliffs company President and Chief Executive Officer Lourenco Goncalves, who did not attend the news conference, met on Tuesday with Gov. John Kasich to discuss the deal, which still has to be approved at the state and local levels.

Mr. Goncalves said in prepared remarks that the state incentives’ offer is for approximately $30 million in grants and other incentives. He said the project has to go through environmental permitting process.

“We look forward to the strong margin and earnings potential this new product will generate for Cliffs shareholders,” said Mr. Goncalves, who is also company chairman.

A spokesman for JobsOhio, which is packaging the incentives, declined to detail the package.

Kasich spokesman Jim Lynch said, “JobsOhio has been working closely with them, helped bring this project to Toledo when it was at risk of going to another state, and they’ve kept our office closely updated.”

“The governor was excited to have a chance to meet with the CEO and his senior team two days ago, congratulate them on their expansion, and thank them for putting their trust in the Toledo work force and Ohio,” Mr. Lynch said.

The property is the former Gulf Oil refinery purchased by Chevron after the refinery closed in 1982. Chevron spent $19 million on pollution cleanup before selling it to the port authority.

A news conference held Thursday on the site, on the east side of Front Street, drew representatives of the port authority, the city of Toledo, JobsOhio, Lucas County, and Midwest Terminals.

The package includes a 30 percent tax incentive from the city over 10 years estimated at $1,046,654, and with annual tax revenue of $315,000, according to Toledo officials. The city will also supply water in what was described as a unique arrangement in which “wash” water used in the process of treating drinking water for the city will be recycled by being supplied to Cliffs to cool its machinery.

VIDEO: Jeff Schmucker on the coming iron ore plant

Toledo is expected to provide about 3.6 million gallons of water per day, according to Ed Moore, director of public utilities for the city.

Mayor Paula Hicks-Hudson said the deal shows that, “we are able to partner and provide the support necessary.”

“Our people came to the table nimble and ready to work with Cliffs. We are committed to continuing to work with this company to move the project forward,” Ms. Hicks-Hudson said.

Involved in bringing the project to fruition over the last few months also were Regional Growth Partnership, Ohio Rail Development Commission, and U.S. Rep. Marcy Kaptur (D., Toledo).

“A big Toledo welcome to Cleveland-based Cliffs Natural Resources as it embarks on new corporate investment to serve the American steel-making market,” Miss Kaptur said.

Pete Gerken, president of the Lucas County Commission, said the development vindicates the region’s determination not to give up on its industrial history.

“If you look back in the ’50s, ’60s, and ’70s, this was about steel, this was about shipping, and this was about rail,” Mr. Gerken said. “Those people that scoff our past, scoff our pride of manufacturing, of transportation, guess what, it’s back and we’re working it.”

The county will provide job training, said Lucas County Commissioner Carol Contrada.

Contact Tom Troy: tomtroy@theblade.com or 419-724-6058 or on Twitter @TomFTroy.

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