Cleveland-Cliffs stock just caught fire.
The shares surged 21.5% in a single day after the company posted stronger-than-expected third-quarter earnings. But the real fuel wasn’t just the steel. In a surprise twist, CEO Lourenco Goncalves revealed that Cliffs is actively exploring rare-earth mineral production from its existing iron ore assets in Michigan and Minnesota. That unexpected pivot into critical minerals — long dominated by China — suddenly puts Cleveland-Cliffs in the geopolitical crosshairs of U.S. industrial policy and national security.
Wall Street had expected a sleepy quarter: flat revenue, predictable losses, and maybe a muted outlook. Instead, Cliffs delivered a $143 million EBITDA beat, confirmed new long-term deals with U.S. automakers, teased a transformational memorandum of understanding (MOU) with a foreign steelmaker, and hinted it could become a key domestic supplier of rare earths.
Steel was just the appetizer. Rare earths? That’s the main course — and investors are salivating.
Let’s unpack what’s really behind the move.
U.S. Auto Renaissance Powers Steel Demand
Cleveland-Cliffs has quietly become the largest supplier of automotive-grade steel in the U.S., and this quarter was its best in over a year. Automotive shipments ticked up from 26% to 30% of volume, driving average selling prices to $1,032 per ton. But it’s the contracts that matter more than the tonnage.
Goncalves locked in multi-year agreements with virtually every major U.S. carmaker — Ford, GM, Stellantis, Hyundai, Honda, Toyota. These deals don’t just secure revenue through 2028. They anchor Cliffs into the onshoring megatrend. Automakers are bringing factories back to U.S. soil to avoid tariffs and geopolitical headaches, and Cliffs is ready. It operates nine galvanizing facilities across Michigan, Indiana, and Ohio — all optimized for exposed automotive parts.
Add in a rebounding EV pipeline and the fragility of aluminum supply chains (highlighted by a recent fire at a major mill), and you start to see how steel — especially Cliffs’ steel — has a second life. Automakers that once chased aluminum for lightweighting are now retooling back to steel, citing reliability and cost. Cliffs is in pole position to benefit.
The Rare Earths Surprise Could Be A Game Changer
Here’s where the story gets interesting. Midway through the earnings call, Goncalves casually mentioned that Cleveland-Cliffs had found signs of rare-earth mineralization in its iron ore tailings — specifically in Michigan’s Upper Peninsula and parts of Minnesota.
Let’s pause. Rare earths aren’t rare in geology, but they’re rarely mined outside China. These elements are essential for everything from EV motors to fighter jets to wind turbines. The U.S. has long depended on Chinese supply chains — a national security risk policymakers are scrambling to fix.
Cliffs’ potential entry into this space couldn’t be more timely. Shares of MP Materials, the West’s biggest rare-earths producer, have quadrupled this year. The U.S. government has already started awarding grants and storage contracts to domestic producers (Cliffs recently landed a $400M GOES electrical steel contract from the Department of War), and rare earths are next in line.
It’s early days. Cliffs is still doing geological assessments and hasn’t committed capital. But it’s uniquely positioned: it has mining infrastructure, government ties, and a CEO who knows how to work Washington. Whether it becomes vertically integrated or partners with another firm remains to be seen — but the option value is real, and Wall Street is starting to price it in.
Strategic MOU Signals Bigger Plans Are In Motion
Buried beneath the rare-earths headlines is something just as meaningful: a new memorandum of understanding with an unnamed global steelmaker.
What we know is limited — Goncalves wouldn’t take questions on it — but the outline is clear. A foreign steel company wants access to U.S. markets and sees Cleveland-Cliffs as the fastest route. Cliffs has the plants, the permits, the workforce, and the political insulation. Exporting steel into the U.S. has become untenable thanks to tariffs and policy uncertainty. The only way in now is via partnership or acquisition.
This MOU, expected to close in late 2025 or early 2026, could be a transformational deal. Goncalves even hinted that it’s significant enough to pause a broader asset divestiture strategy. That says a lot. Cliffs had planned to sell its Toledo HBI plant and scrap assets to streamline operations. Now? Those assets may be repurposed under the MOU, or revalued entirely.
Strategic partnerships aren’t new in steel. But few come with the geopolitical tailwinds that Cliffs now enjoys. If the deal moves forward — and Cliffs becomes the U.S. manufacturing arm of a global player — this could meaningfully shift the earnings and valuation profile.
Valuation Is Still A Headwind
Let’s take a breath. Cleveland-Cliffs has had a good run — up 42% year-to-date, and more than 20% in one day. But the valuation story is still cloudy.
The LTM (Last Twelve Months) numbers don’t inspire confidence. EBITDA multiples have swung wildly negative at times, due to weak profitability in earlier quarters. As of October 20, 2025, Cliffs trades at a trailing EV/EBITDA of (81.93x) and LTM P/E of (4.64x). These aren’t just high — they’re erratic, reflecting inconsistent margins and one-off impacts like the now-expiring slab contract.
Forward-looking multiples offer a slightly clearer view: the NTM EV/EBITDA sits at 10.74x, which is expensive for a cyclical steel name. Meanwhile, NTM P/E is a sky-high 95.18x, suggesting that expectations are now baked in — possibly even overbaked.
Debt also remains elevated. While Cliffs has refinanced its near-term maturities and is selling off real estate to pay down principal, gross debt still limits flexibility. Capex and SG&A cuts help, but the company needs consistent earnings to restore investor confidence.
The bottom line: the market is now pricing in a lot of future good news.
Final Thoughts
Cleveland-Cliffs has done a lot right — and quickly. A strong Q3 report, long-term auto contracts, rare-earth upside, and a juicy new MOU have made the company far more interesting than your average steel stock.
But valuation multiples are stretched, and historical volatility in earnings still lingers. Rare-earth development is promising but speculative, and the MOU hasn’t yet materialized into hard numbers. Debt is manageable but still high, and the Canadian Stelco business remains a drag with little progress from Ottawa.
At a trailing EV/EBITDA of nearly 82x and a forward P/E of 95x, Cliffs isn’t priced like a steel company anymore. It’s priced like a strategic asset — one that might become more than just a steel producer.
Is that justified? Time will tell.
For now, the story is compelling, the execution is improving, but the stock price already reflects a good chunk of the upside. Proceed with eyes open.
