You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. 
Text: Life at Cleveland-Cliffs has been intense, and we have a number of developments to discuss today.
We completed the acquisition of ArcelorMittal USA on December 9, 2020.
And a couple of weeks earlier, we completed the construction and begun operating our direct reduction plant in Toledo, Ohio.
We have also, one more time, with our financial expertise to good use and took advantage of opportunities presented by the capital markets to improve our balance sheet.
And last but not least, we have recently announced our public commitment to aggressively reduce our greenhouse gas emissions 25% by 2030.
I will begin with the most transformational theme, the acquisition of ArcelorMittal USA including the totality of INtech and INCoats, which ArcelorMittal previously shared ownership with Nippon Steel.
The very first point I would like to make is the most important part of the acquisition, and that is the people that are now working for Cleveland-Cliffs.
I could not be more pleased with the buy-in we have received from the workforce previously working for ArcelorMittal.
Not just from the leadership team, but also from the employees at the shop floor.
If there is a single reason why we are doing so well as we integrate the new assets to our existing footprint, that is the buy-in from these new Cleveland-Cliffs employees.
That came also with the normal support and help coming from the employees that were it does before, included the ones that joining Cliffs from AK Steel.
It is fair to say that the entire workforce and that includes our union partners, all recognize that Cleveland-Cliffs' unique business model is now the envy of the steel industry, and they seem to be proud of that.
We have proof ideas without strategy are nothing.
And strategy without execution is irrelevant.
But one can only execute if the people involved believe and buy in.
Our great workforce, integrated and unified under a common strategy and disciplined execution, is the reason why we have been so successful.
Our competitive advantage is also predicated on a few things.
We operate the entire production flow from the extraction of iron ore out of the ground all the way to manufacturing of complex auto parts and components.
Said another way, Cleveland-Cliffs has reinvented the meaning of the word integrated, as in integrated steel mill.
The word now includes mines, pellet plants, direct reduction, blast furnaces, DOFs DAFs, ALDs, hot strip mills, plate mill, cold rolling mills, electrolytic thinning lines hot-dip galvanizing lines, electro galvanizing lines, cold and hot stamping, precision welding, laser manufacturing, and complex tooling.
All these resources give Cleveland-Cliffs full control on costs and quality, and results includes having a tangible competitive advantage over our competitors.
Also, as we process in our downstream facilities is still produced by other companies, we have a window into what others are actually capable or not capable to do in automotive.
Such insights was a determinant factor in guiding our decision to acquire AM USA.
The assets we acquired from AM USA are complementary to the ones we already had from AK Steel, and that will save us from spending a significant amount in capex to make the AK Steel assets able to produce certain grades that we can produce in Indiana Harbor or Cleveland works.
For the ones I would like to talk about who is gaining market share from him in the steel business, let me remind you one thing.
One year ago, Cleveland-Cliffs was producing fairly zero tons of steel.
And we are now, one year later, the largest flat-rolled steel company in North America.
That is a pretty sizable gain in market share, I believe.
Even more importantly, in comparing what we have at Cleveland-Cliffs with what we see from others, we feel extremely comfortable that our leadership position in automotive is very solid.
The acquisition of AM USA elevated our participation in automotive to five million tons per year.
On top of that, we also supply 1.5 million tons of automotive-grade blast to ArcelorMittal Nippon Steel in Calvert, Alabama.
Even with increasing tons from 3 million to 5 million, we actually reduced our percentage of participation in the auto sector from 70% as AK Steel stand-alone to 40% as the combined Cleveland-Cliffs, allowing us to benefit faster from higher market prices for steel.
We also supply 100% of our iron ore needs in-house, and that is extremely important.
The steelmaking assets we acquired both from AM USA and from AK might have been historically at a competitive disadvantage on that regard, due to having to purchase pellets from us.
But now, the advantage is kept all within Cleveland-Cliffs.
Another point to consider.
Differently from the scrap-based nonunion shops, we do not pay our employees based on tons produced.
Unlike these other steel producers, our business model does not prioritize the production of tons.
And we are not in the pursuit of capacity utilization either.
We prioritize value over volume.
We prioritize delivering on time, and we accommodate the demands of our clients, particularly automotive clients.
We, in 2021, are applying to the newly acquired assets the same methodology we applied to AK Steel in 2020.
And that will bring the new assets to the same high level of delivery performance we have established at AK Steel since we implemented our way of doing business last year.
Our clients know that and appreciate the changes and improvements we have been implementing.
Our asset optimization process is off to a great start as well.
We have already started moving slabs and coils between the former AK former AM facilities to reduce logistics costs and to improve our customers' delivery requirements.
This material movement continues to be optimized and we should increase over time.
With that and several other initiatives, we are well on the way to reach our synergy target of $150 million by the end of this year.
Next, on to our Toledo plant.
We are delighted to have completed construction of the most modern direct reduction plant in the world and to begin production of HBI late last year.
Those who have been following us are well aware of the value proposition this product brings to both Cleveland-Cliffs and to the entire industry.
Our natural gas-based HBI is not only a cost-competitive premium alternative to imported [Inaudible] and scrap but will also reduce Scope two greenhouse gas emissions in our industry as a whole.
Additionally, once hydrogen becomes commercially available, our plant is already capable of using up to 30% of hydrogen as a partial replacement for natural gas with no equipment modification needs, and up to 70% with minor modifications, which would even further reduce emissions from the baseline.
We are progressing through our planned ramp-up period, steering through a cold winter and making the appropriate adjustments to bring the plant up to its full production level by the second quarter.
We are currently making HBI exclusively for our own internal use, and we will start to ship product to third-party customers later in March.
The timing of the start-up of HBI plant is extraordinarily positive for us with the obvious scarcity of domestic prime scrap in the marketplace.
This scarcity of scrap should only grow as new EAFs start up in the United States, and we will have more bias for the same scrap.
Good for our HBI and good for Cleveland-Cliffs.
We are also benefiting from a favorable steel price environment.
This is particularly true since we acquired AM USA.
This latter acquisition has given us more exposure to spot HRC prices.
Then when we only owned AK Steel, with a case outsized percentage of fixed price automotive contract sales in the product mix.
With our very relevant position as a player in the newly consolidated U.S. domestic market, we are taking a disciplined approach to supply.
We will continue to manage our customer needs and will not restart capacity on a whim just to add tonnage to the spot market.
That would not be good for anyone, including Cliffs' business and our workforce.
As I said, we don't pay our people based on tons produced with the practice that has impacted this industry.
We let our order book guide our production levels.
Right now, the order book is in a good place, particularly for consumer goods, as well as from stainless steel clients and service centers in general.
Demand from automotive remains strong, and auto OEMs continue to struggle to keep up with resilient consumer demand.
So far, we have seen only minor short-term demand impact from a widely publicized cheap shortage, all of which, as we have been told by our automotive clients, will be made up for during the year.
In the meantime, we have been selling more steel to select service centers and manufacturing clients outside the automotive sector, enhancing our presence with these clients.
This is actually a very positive demand development for these select clients.
Because they are increasing their business with Cleveland-Cliffs, a company that is very accustomed with producing high-quality steel and delivering on time, and also very good for us because we are accelerating the benefit from higher steel market prices ahead of annual contract renewals with automotive clients.
The value over volume philosophy also guides our near-term production decisions.
As has been publicized, we will be taking our Middletown facility down for a 45-day maintenance outage to do some work inside the blast furnace, but not a full reliance.
In order to continue to meet our strong customer demand, we have restarted the smaller Cleveland No.
6 blast furnace to make up for the lost Middletown production.
Once Middletown comes back, we will have another maintenance outage at Indiana Harbor No.
We currently have 10 blast furnace in our portfolio and are keeping between six and eight points in simultaneous operations.
At any given time, we will probably have some maintenance to perform.
We will manage all of these assets appropriately, without having any shortfalls with our customers, while also not what in the market with steel.
Value over volume is a simple philosophy that we will carry on into the future, and it is why you are not going to hear me talk about capacity utilization or even market share, except in automotive, but just because our leadership position on this one segment is still up.
Only as most liked of the recent steel price run-up positively impacted our fourth-quarter adjusted EBITDA performance of $286 million.
Due to how contract prices work and usually applies lagging mechanisms and the fact that we only controlled the AM USA assets for the last 23 days toward the end of the year, our steel profitability in the fourth quarter of 2020 has not benefited or improved from these strong prices just yet.
As a result, our EBITDA performance will dramatically improve in the first quarter of 2020.
In addition, we can confidently say that the second quarter will look even better than the first quarter, this very good first quarter that we are in now, as rising prices become further reflected, HBI shipments pick up pace and external pellet sales pickup with the reopening of the Great Lakes.
This current steel pricing environment has also highlighted the competitive advantages that our unique business model.
As we all know, EAF uses scrap as their primary feedstock.
The price for a ton of busheling scrap in the Midwest has almost doubled from where it was a little over a year ago.
Meanwhile, the cost of our primary iron feedstock, iron ore pellets we produce ourselves out of our own mine, is basically the same as it has been for the past five years.
Because of this, Cliffs has actually been your proverbial low-cost producer.
To make it clear, this is not even a tie I care to have because there is so much more to making steel than a low production cost.
You cannot reach safety first if you are obsessed with tons per employee.
You can't invest capital to protect the environment if you are governed by your production cost number.
And you will not pay your workforce well if cash cost is your main metric.
This is actually a capital-intensive industry, and we must work to generate return on invested capital and not for bragging rights based on a questionable and not always true low-cost position.
Hopefully, this current environment is a lesson on the blank statements made comparing cost positions, and we can put that subject to rest for good.
As I said, we don't believe this current scrap dynamic will be short lived.
China has publicly stated their target of doubling EAF capacity from 100 million metric tons to 200 million metric tons over the next five years.
The increase alone is bigger than the size of our entire domestic steel industry and will require a lot of scrap.
By 2025, China will be producing two and a half to three times more steel via the EAF route than the United States.
However, to move from where they are today to the level that they plan to be, China does not have the infrastructure in place to collect and deliver all that scrap, and the void will be filled by imported scrap into China.
That will come in large part from the United States, which has, by far, the largest and most mature scrap infrastructure in the world.
This is something we at Cleveland-Cliffs predicted several years ago and one of the reasons why we built our direct reduction plant.
With the already very large existing EAF capacity in the United States, the new EAF furnaces being built by the domestic mills here in the U.S., and the massive new EAF capacity coming online in China, all fighting for the same amount of scrap available.
We at Cleveland-Cliffs feel very comfortable with the powerful company we have built and with our self-sufficient [Inaudilble] business model.
The capital structure, underlying this best-in-class business model, was improved once again two weeks ago.
As you may recall, last April, at the beginning of the pandemic, when the automotive industry was out of operations, we issued a tranche of high-component secured bonds as insurance capital.
Now that business conditions have normalized, we sought to reduce the outstanding amount of these secured notes as much as possible.
And the only method to achieve that was by using the 35% equity cost provision from the indenture of the notice.
The sole focus of issuing the small number of 20 million shares was to use this claw-back provision and retire the maximum amount possible of these high-coupon notes without paying a make-whole panel.
This coincided with a block sale of about half of ArcelorMittal's CLF common shares that they received as part of the payment we made to them when we acquired AM USA.
These secondary shares were already outstanding and had no impact on share count.
We also successfully placed $1 billion of unsecured notes, the lowest coupons we have ever achieved as a high-yield issuer, respectively, 4.625% and 4.875% for eight- and 10-year issue.
These outstanding coupons and the same-day deal price execution, after spending just a few hours in the market, are a clear and unequivocal demonstration of the leveraged finance market support to our business model, strategy, and execution.
And at the end of the day, with this capital markets activity, we replaced secured debt with unsecured debt, lowered interest expense, cleared our maturity runway entirely all the way to 2025, and further improved our liquidity by using a portion for ABL repayment.
Finally, in January, we publicly announced our commitment to reduce greenhouse gas emissions by 25% by the year 2030, covering both the Scope one and Scope two emissions.
While we have transformed as a business, we will continue to operate Cleveland-Cliffs on the same environmentally responsible manner we have always done.
Climate change is one of the most important issues impacting our industry and our plants.
Our commitment includes using more natural gas to reduce our iron ore as we do in our direct reduction plant producing HBI, implementing clean energy and carbon capture technologies, and becoming more transparent on disclosing our products.
Before I get into the specific results that were foreshadowed with our pre-announcement a month ago, I will first discuss our new business segmentation.
You saw in today's release that we are now split into four segments, but the bulk of the operational and commercial activity will take place in our steelmaking segment.
The foundation for this is driven by how the management team views our business.
The strategic rationale behind our two major acquisitions was to form one large and competitive, fully integrated steel company, which is exactly what this segment represents.
This segment captures effectively all of the production activity that begins at our mine sites, including our pellet plants and other raw materials operations, and ends with our steel and finishing plants.
Products sold for this segment include slabs, hot rolled, cold rolled, coated, galvanized, stainless, electrical, tinplate, plates, rail, forgings, pellets, and HBI.
Our downstream units will remain as separate segments due to the different commercial nature of these businesses, though they remain an important piece of our integrated entity.
Because of this reporting change, we will not have any significant, noticeable intersegment eliminations going forward, other than the small impact from the finished steel sold to our downstream segments resulting in a much smoother and cleaner model.
As for our results, our fourth-quarter adjusted EBITDA of 286 million represented 127% increase over last quarter and 158% increase over last year's fourth quarter.
The sequential increase was driven by the following: increased steel shipments, higher prices, better costs due to increased production volumes, and reduced idle costs, the stub period contribution from the AM USA assets, and increased third-party pellet prices.
In the steelmaking segment, of our 1.9 million net tons of shipments, we shipped 1.25 million net tons from the AK side and picked up the remaining 600,000 from our 23 days of ownership of AM USA.
We expect to more than double this amount in the first quarter with total shipments of approximately 4 million net tons.
You will notice our average net selling price declined in the fourth quarter compared with the prior quarter, which was purely related to mix.
The AM USA assets we acquired do not sell stainless or electrical steels, which carry a much higher average selling price, bringing the overall average down.
Our shipments during the quarter were 44% coated, 22% hot rolled, 18% cold rolled, and 16% other steel, which includes stainless, electrical, slabs, plate, and rail.
Third-party pellet sales during the fourth quarter were about 2.0 million long tons which consists of approximately 1.6 million long tons sold to AM USA prior to the acquisition date.
Going forward, our external pellet sales volume should be 3 million to 4 million long tons per year, with the remainder of our output being used internally by our blast furnaces and direct reduction facility.
Our steel supply contracts are roughly 45% annual fixed price with resets throughout the year, and 55% HRC index-linked.
That latter piece further breaks down to about 40% on pricing lag, split between monthly and quarterly, with the remaining 15% on a spot basis that currently have lead times up to three months for hot-rolled and four months for cold-rolled, and coated products.
As Lourenco noted, given this structure and the short stub period for the new AM USA acquisition, the recent run-up in steel prices should accelerate in our results in the first quarter and continue its advancement into the second quarter.
When we completed the AM USA acquisition, we upsized our ABL facility from 2 billion to 3.5 billion, which is currently more than fully supported by our inventory and receivable balances.
This has provided us with a sizable liquidity balance of 2.6 billion as of this week, of which approximately 850 million is earmarked for bond redemptions set to take place in March related to the capital markets transactions we completed earlier in February.
Most of the other significant changes to our balance sheet, like PP&E and goodwill, are attributable to standard acquisition accounting.
As for cash flow, our fourth quarter was impacted primarily by changes in working capital, most notably receivables and inventory.
Because of the factoring arrangement AM USA had in place prior to the acquisition that was terminated at closing, we began rebuilding the receivable balance in December, which was factored into our valuation for the acquisition.
We will continue to build working capital in the first quarter, after which it will then normalize and become a source of cash for the remainder of the year.
Our fourth-quarter capital expenditures of 147 million took into account spending for the AM USA assets during the last 23 days of the year and included $61 million related to the Toledo plant, where we have about 60 million in run-out spend going into 2021.
This is included in our 600 million to 650 million capital budget for 2021, which includes about 500 million in sustaining capex, as well as other small projects such as the new precision partners plant in Tennessee, walking beam furnaces at Burns Harbor, and the Powerhouse at Cleveland Works.
In closing, with the completion of our two transformative acquisitions and the recent capital structure activity we completed two weeks ago, the company is on solid financial ground with no cash taxes to pay and manageable capex, interest, post-employment obligations, we are primed to generate significant free cash throughout 2021.
We will use this excess free cash flow to continue to reduce our debt balance, and we will have ample opportunity to do so in the current market environment.
What a year 2020 was, and what a phenomenal company we have formed during 2020.
Rather than panic during the most challenging days of the pandemic, we went on the offensive and took advantage of the amazing opportunities out there to improve not only ourselves but also to change for good the steel business environment in the United States.
As the new Biden administration starts to work toward infrastructure, manufacturing, environmental responsibility, and good pay middle-class union jobs, we believe we have just built the perfect company to thrive in these challenging times that we are in.
We are ready to make our market on the industry with our 25,000 employees all rowing in the same direction, and we can't wait to show you what we can accomplish.

user
cleveland-cliffs - with contribution of steel sales from cleveland-cliffs steel llc for full quarter, expect q1 steel product shipments of about 4 million net tons.
full-year 2021 capital expenditures are expected to stay in range of $600 million to $650 million.

assistant