(Reuters) -- Cleveland-Cliffs on Monday posted a third-quarter loss that was narrower than Wall Street estimates as the company's automotive-grade steel business benefited from recent U.S. trade policies, sending its shares up 22%.
CEO Lourenco Goncalves also said that the company had entered into a memorandum of understanding with a major global steel producer and is exploring rare-earth opportunities at its mining assets in Michigan and Minnesota.
"A potential transaction with a global steel producer may be accretive to Cliffs shareholders as we have seen foreign steel producers are willing to materially invest in the US under the current administration to get un-tariffed access to US end-markets," analysts said in a Jefferies note.
If Cliffs' rare-earth exploration is successful, Goncalves says it would align the company with the broader national strategy for critical-material independence.
"American manufacturing shouldn't rely on China or any foreign nation for essential minerals," Goncalves said.
During the earnings call on Monday, Goncalves further noted that "Cleveland-Cliffs was able to lock in two- or three-year agreements with all major automotive OEMs covering higher sales volumes and favorable pricing through 2027 or 2028."
The developments come at a time when the U.S. steel industry seeks demand recovery amid a market oversupply stemming from cheaper imports.
Earlier this year, U.S. President Donald Trump increased tariffs on imported steel and aluminum to tackle rising foreign competition. Last week, he also set new 25% tariffs on imported medium- and heavy-duty trucks and parts to shift more auto production to the United States.
For the quarter ended Sept. 30, the steelmaker's adjusted loss stood at 45 cents per share, compared with analysts' estimated loss of 48 cents per share, according to data compiled by LSEG.
Third-quarter revenue rose 3.6% from a year ago to $4.73 billion, compared with estimates of $4.9 billion.
