Cleveland-Cliffs redirects $500 million DOE grant to blast furnace reline and 70 MW cogeneration unit at Middletown Works

Cleveland-Cliffs announced on 21 August 2026 that it will deploy a $1 billion investment at its Middletown Works steel mill in Ohio - half funded by a $500 million Department of Energy grant - to reline an existing coal-fired blast furnace and install a cogeneration unit capable of generating roughly 70 MW of net electricity for on-site use, abandoning a previously approved plan to replace the furnace with hydrogen-ready direct reduced iron technology^[1].

What changed

The original award, made in 2024 under DOE's Industrial Demonstrations Program, was structured to replace the Middletown blast furnace with a 2.5-million-tonne hydrogen-ready DRI plant and two 120 MW electric melting furnaces^[1]. DOE projected the project would cut roughly one million tonnes of greenhouse gas emissions annually and create 170 permanent jobs and up to 1,200 construction jobs^[1].

Cleveland-Cliffs began signalling a change of direction in summer 2025, telling investors it was negotiating with DOE to "explore changes to the scope to better align with the administration's energy priorities"^[1]. The company filed an air-permit application with Ohio's environmental regulator in February 2026 outlining the revised plan before any public announcement^[1].

The rescoped project now covers:

• Blast furnace reline and inner-lining replacement on the 73-year-old No. 3 furnace
• Advanced material handling infrastructure and AI-enabled process control
• A cogeneration facility burning blast furnace waste gas to produce steam and approximately 70 MW of net electricity for on-site consumption

Cleveland-Cliffs already operates cogeneration at Burns Harbor and Indiana Harbor, where by-product gases supply 75% and 100% of each site's electricity needs, respectively. The company says the Middletown unit will self-generate nearly 50% of the mill's electricity requirements, reducing its draw on the local grid^[1].

The DOE funding framework

The grant survived the Trump administration's sweeping cancellations of OCED awards last year, even as DOE terminated 24 other OCED awards totalling more than $3.7 billion and eventually shut down the office itself^[1]. The OCED funding model requires the government to match what the company contributes; the total project cost - $500 million from DOE, $500 million from Cleveland-Cliffs - is the same figure attached to the original green-steel version^[1].

The revised scope requires Ohio EPA approval of an air permit. The agency said it expects to make a final determination within the next few months. Cleveland-Cliffs said the blast furnace rebuild is planned for completion in the first quarter of 2030, with investment deployed over the next four years while maintaining uninterrupted steel production.

What to watch

The Ohio EPA air-permit decision is the immediate gate. If approved as submitted, analysts and environmental groups warn the reline could lock the mill into coal-based ironmaking for the next two decades - a material constraint on any future decarbonisation pathway for one of the largest integrated steel facilities in the US Midwest. The question for grid operators in the AEP Ohio service territory is narrower: whether 70 MW of new behind-the-meter generation at a major industrial load changes local capacity accounting in the next PJM planning cycle.