BUTLER TWP — If Cleveland-Cliffs CEO Lourenco Goncalves is certain of anything, it’s his belief that grain-oriented electrical steel — and its sole domestic producer, Butler Works — is essential to the success of the country.

In 2023, the federal Department of Energy published a proposed rule that would increase efficiency of distribution transformers by switching them from grain-oriented electrical steel to amorphous steel cores by 2027.

The plan faced scrutiny from Cleveland-Cliffs and the union for over 1,000 Butler Works employees, United Auto Workers Local 3303; as well as state and federal elected officials in Butler County and the surrounding region.

Ultimately, the department modified the rule to extend the implementation to 2029 instead of 2027, giving companies more time to adjust to the increased efficiency mandate. It will also allow around 75% of distribution transformers to continue using grain-oriented steel cores.

But recently, under President Donald Trump’s administration, the 2024 ruling has come under review. With that, the department issued a request on June 15 for comments regarding how it interacts “with national security considerations, including impacts on domestic manufacturing capacity, supply chain resilience and the availability and cost of key materials.”

Cleveland-Cliffs submitted a public letter urging the department to either follow the preexisting guidelines, or to increase efficiency mandates by a lesser amount compared with the current ruling.

Goncalves, who visited the Butler Works facility Monday, Aug. 3, said he believes keeping grain-oriented electrical steel as the primary core material would keep the country’s supply chain uninterrupted and help refrain from foreign reliance.

“(Amorphous steel) is not something that we can use in places of high density population because transformers work at capacity. It’s just not applicable for the situation we have in 90 to 95% of the transformers used in this country,” he said.

Much like grain-oriented steel, amorphous steel is produced in a single location domestically: Metglas in Conway, S.C.

He said the 2024 ruling only served to delay investment at Butler Works because the gain in efficiency from amorphous steel is “insignificant” and would end up forcing companies to import materials or whole transformers.

“We’d have to import. And depending on imported transformers is a lot worse than depending on imported gloves for surgical use or face masks. We can’t do that with transformers because they can just shut us down,” he said.

He said it is important to recognize that other countries will always prioritize their supply chain over exporting to the United States.

“If there’s a decision to be made between supplying their own country — say Japan — or supplying the United States, they’ll supply Japan. They’ll never prioritize us against supplying themselves. That’s why this is strategic and a matter of national security,” he said.

While the decision is still out on whether the 2024 ruling will change, Goncalves said Cleveland-Cliffs is “putting its money where its mouth is” by greenlighting a $195 million hot mill expansion for Butler Works. That expansion began production earlier this year and is expected to be completed by 2028.

“It will be an expansion with 25% growth. So, it’s significant,” he said.

Out of the cost for the expansion, Goncalves said $75 million comes from a Department of Energy grant.

“It’s confirmation that the U.S. government recognizes that this is national security. This grant was granted to Cliffs during the Biden administration. This project survived the change from Biden to Trump,” he said.

He said restrictions, such as Section 232 tariffs on imported steel, will encourage more investment into domestic grain-oriented electrical steel production.

“As these restrictions continue to be in place, we will be more and more motivated to continue to produce it more and more. These threats of allowing for imported steel will not help us invest billions of dollars to increase domestic production,” he said.

Goncalves said Cleveland-Cliffs works to make sure their products remain competitive on a national and global market.

United Auto Workers Local 3303, which represents more than 1,000 Butler Works employees, also shares the opinion that the 2024 ruling should be reconsidered or overturned.

Jamie Sychak, president of the local, said amorphous steel is more efficient at low loads, but is quickly outpaced by grain-oriented steel at higher loads.

He also noted that cores using amorphous steel are heavier and larger than grain-oriented electrical steel cores. With the change, future development would not be the only thing impacted.

“If places all across the nation require amorphous steel cores, it will change the size of the transformers,” Sychak said. “Some places have specific areas of their buildings dedicated to transformers, so how will they fit something that is now significantly larger in that same space?”

He said with new developments like electric vehicles and data centers, energy demand is expected to at least triple by 2035.

Sychak also emphasized that changing the ruling to a different alternate efficiency standard previously considered by the DOE known as EL2 would be viable for grain-oriented steel.

“There is still room for an increase in efficiency. EL2 would have allowed for grain-oriented electrical steel in all transformer cores while still increasing efficiency,” he said.

He said the country faces a distribution transformer shortage that cannot be solved until the DOE makes a final decision on core materials and efficiency mandates.

“To expand the capacity of grain-oriented electrical steel being produced, you need an expectation that it will continue to be used and supported,” Sychak said.