Cleveland-Cliffs Inc. is investing $1 billion to upgrade its Middletown operations by incorporating AI and cogeneration technologies. is investing $1 billion to upgrade its Middletown operations, incorporating artificial intelligence and cogeneration technologies.
This four-year optimisation project sees a $500 million grant from the U.S. Department of Energy (DOE) matching Cleveland-Cliffs’ own $500 million commitment. The decision, however, moves away from a 2024 plan that would have used the same federal funds to construct a direct reduced iron (DRI) plant, a proposal environmental groups had previously supported.
Cleveland-Cliffs embraces AI and energy efficiency
The revised investment strategy centres on refurbishing and upgrading the existing blast furnace instead of replacing it. Construction is set to begin in the coming weeks, according to Cleveland-Cliffs. The company aims to improve operational reliability, productivity, energy efficiency, and cost competitiveness at the plant, which produces approximately 3 million tons of raw steel annually for the automotive sector.
A core component of the upgrade involves installing an advanced cogeneration facility. This system will capture blast furnace gas to generate electricity and steam for on-site consumption. Cleveland-Cliffs says this will improve overall energy efficiency and reduce the plant’s reliance on externally supplied power.
The project also includes significant technological advancement through the integration of Artificial Intelligence. AI-powered control technologies will be deployed to optimise the upgraded furnace and its advanced material handling infrastructure. This aligns with a wider industry trend towards data-driven manufacturing processes.
The comprehensive blast furnace rebuild is slated for completion in the first quarter of 2030, which should ensure Middletown Works remains a premier steelmaking facility in North America for decades. The project expects to create more than 1,500 jobs at its peak construction phase, drawing heavily on local union building trades, further bolstering manufacturing skills in the region.
pivoting from decarbonisation to domestic steelmaking
Overhauling the existing blast furnace represents a notable change from the original vision for the Middletown plant. In 2024, the Biden administration awarded Cleveland-Cliffs up to $500 million through its Industrial Demonstrations Program. That funding was initially designated for a project replacing the furnace with a hydrogen-ready DRI plant and two electric melting furnaces.
That original project would have eliminated roughly 1 million tons of carbon emissions annually and projected production cost savings of $150 per net ton of liquid steel, totalling $450 million annually. Environmental groups considered it a crucial part of the Biden administration’s decarbonisation efforts.
However, market conditions have shifted, according to both Cleveland-Cliffs and the DOE. The Trump administration has rolled back federal decarbonization projects and cancelled billions of dollars in clean energy grants. This, coupled with tariffs that have disrupted the global trade landscape and made U.S. steel prices more competitive, created a favourable backdrop for domestic producers.
The Energy Department stated in a news release that “Cleveland-Cliffs determined that the business case for the original project scope no longer made sense given customers’ unwillingness to pay a ‘green premium’ for steel.” Working with the DOE, Cleveland-Cliffs then identified the current alternative, which focuses on upgrading the existing coal-fired blast furnace and capturing co-product blast furnace gas.
official support and environmental pushback
Vice President J.D. Vance and U.S. Secretary of Energy Christopher Wright attended the announcement in Middletown on August 21, 2026, highlighting the investment as a significant achievement for American manufacturing. Vice President Vance declared, “This is a great day to be a resident of Middletown, Ohio.” He added, “The future of America… is going to be built right here in Middletown, Ohio.”
Lourenco Goncalves, Cleveland-Cliffs’ Chairman and Chief Executive Officer, emphasised the project’s goal of ensuring Middletown Works remains a leading facility. The focus is firmly on productivity, operational reliability, and cost-competitiveness through advanced technologies and process controls.
This pivot has drawn criticism from environmental groups, who see it as a step backward. The Sierra Club, a California-based environmental organisation, pushed back on the revised project, claiming Cleveland-Cliffs had abandoned its “clean steel” plans. The group argues the funding now prolongs the life of a coal-fired facility.
Elena Saxonhouse, Sierra Club’s managing attorney, stated: “DOE is redirecting half a billion taxpayer dollars away from Congress’s intended purpose. Using this massive amount of money to reinvest in out-of-date production methods proven to cause harm to people and the environment is bad business and bad policy.” Critics warned the cogeneration plant would increase pollution and health risk impacts.
The Sierra Club also noted that the cogeneration plant was standard efficiency technology already in use at other Cleveland-Cliffs blast furnace operations, suggesting it’s not a significant environmental upgrade. The steelmaker is seeking an air permit for the cogeneration plant, which critics warned could increase pollution and health risk impacts, as reported by the Ohio newspaper the Journal-News.
Furthermore, analysis by environmental think tank Industrious Labs, drawing data from the U.S. Environmental Protection Agency, indicates the Middletown facility is ranked among Ohio’s top 10 industrial polluters for carbon monoxide, lead, and other pollutant emissions.
the outlook for heavy industry
The Cleveland-Cliffs investment at Middletown Works offers a clear perspective on the challenges and priorities within heavy industry. It highlights the tension between immediate economic stability, job preservation, and the long-term imperative of industrial decarbonisation.
The project shows that traditional manufacturing processes can be significantly modernised through AI and advanced control systems. These upgrades will undoubtedly lead to gains in efficiency and productivity. Yet, they also reinforce a carbon-intensive production model at a time when many global competitors are heavily investing in green steel and hydrogen-based technologies.
The Middletown project suggests that while a cleaner industrial future remains the goal, the path to achieving it is complex. For now, factors such as economic viability, shifting political priorities, and customer demand for cost-effective steel appear to have taken precedence over a more ambitious technological transformation towards lower emissions.
