Cleveland-Cliffs, Inc. on Thursday reported a lower profit in 2019 compared to 2018.

The major Iron Range mining company ended 2019 with a profit of $293 million, down from a $1.1 billion profit recorded in 2018.

In a news release, the company noted 2018 profits were boosted by a $461 million release of a tax valuation allowance and a one-time gain of $228 million after “historical changes in foreign currency translation.”

The company reported a 2019 fourth-quarter profit of $63.2 million, or 23 cents per share, down from a profit of $609.5 million, or $1.98 per share, in the same quarter last year.

Fourth-quarter mining and pelletizing pellet sales volumes fell 10% to 5.8 million long tons, down 10% from the same quarter in 2018.

“The decrease was a result of reduced customer demand, partially offset by intercompany sales to the Toledo HBI plant,” Cliffs said in a news release Thursday morning.

On Minnesota’s Iron Range, Cliffs mines taconite and produces iron ore pellets at Northshore Mining in Babbitt and Silver Bay and at United Taconite in Eveleth and Forbes. Cliffs also owns and operates the Tilden mine in Michigan’s Upper Peninsula.

In January, U.S. Steel, which runs Minnesota’s Keetac and Minntac mines, taconite plants in Keewatin and Mountain Iron, and owns a stake in Hibbing Taconite, reported a loss of $642 million in 2019.

Earlier this month, ArcelorMittal, which owns and operates Virginia’s Minorca Mine taconite plant while also operating and owning the largest stake in Hibbing Taconite, reported a loss of more than $2.4 billion in 2019.

The companies faced a difficult 2019 due to a slowdown in steel.

AK Steel purchase moving along

Cliffs CEO Lourenco Goncalves kept the focus of a call with investors Thursday morning largely on the company’s planned acquisition of steelmaker AK Steel, which was announced in December.

Cliffs, currently only a mining and pellet-producing company, will then become a “vertically integrated steel company” that extracts the minerals it will later produce into steel. It’s a model already used by U.S. Steel and ArcelorMittal.

“We will be totally self-sufficient in pellets and rely only on ourselves to get our iron ore feedstock, while preserving our ability to supply customized pellets to other steel mills, as we have been doing so successfully for a long time,” Goncalves said, adding that it will help the company weather changes in commodity prices as it will be more reliant on contracts with fixed prices.

Cliffs’ acquisition of AK Steel has been approved by the U.S. and Canada and is expected to be approved by Mexico later this month, Goncalves said.

Shareholders must also still approve the purchase of AK Steel.

Toledo HBI ready in June

Cliffs’ new hot briquetted iron, or HBI, plant in Toledo, Ohio will be open in June, Goncalves said.

It will be fed direct-reduced iron, or DR-grade, pellets produced at Cliffs’ Northshore Mining processing facility in Silver Bay after a $100 million upgrade wrapped up last summer.

Those pellets will be shipped to Toledo and the HBI produced there will then be mixed with scrap metal in an electric arc furnace to make steel.

Electric arc furnaces are becoming the new normal, while the blast-furnace steel mills that the Minnesota taconite industry has traditionally supplied are aging.

“With both the upcoming completion of the acquisition of AK Steel and the Toledo HBI plant coming online, 2020 will be a transformational year for us, and we can't wait to deliver on all of the potential Cleveland-Cliffs has in store,” Goncalves said.