NEW YORK (S&P Global Ratings) Oct. 13, 2021--S&P Global Ratings said today it views Cleveland-Cliffs Inc.'s (Cliffs; B/Positive/--) definitive agreement to acquire Ferrous Processing and Trading Co. (FPT) for $775 million in total consideration as credit neutral. The proposed transaction would secure approximately 3 million tons of scrap metal processing capacity, which is strategically important and geographically complementary for Cliff's internal scrap consumption. Higher-quality prime scrap, which makes up about half of FPT's annual output, is an essential input for Cliff's blast furnace and electric arc furnace (EAF) operations. Considering the announced EAF capacity additions (about 13 million tons) over the next four years by S&P Global Ratings-rated issuers, Cliffs could secure access to a potentially scarcer prime scrap metal.
