Dee DePass
Cliffs Natural Resources Inc. has renewed a supply agreement to provide ArcelorMittal USA with iron ore pellets through 2026 — which is good news for Minnesota's Iron Range.
The contract announced Tuesday, which involves 7 million to 10 million "long tons" of iron ore, preserves Cliff's position as ArcelorMittal's sole outside supplier of iron ore pellets.
Although no dollar terms were disclosed, the new 10-year contract boosts the prior minimum amount of ore purchased by ArcelorMittal.
Cleveland-based Cliffs had idled for months two taconite plants on Minnesota's Iron Range as well as other operations in Michigan due to the severe downturn in the iron and steel industries.
Cliffs officials anticipated that the ArcelorMittal contract would finalize soon and so previously announced that it would reopen Northshore Mining in Silver Bay/Babbitt by June 1 and the United Taconite operations in Eveleth/Forbes, Minn., before the end of the year. The two plants had laid off 960 workers combined.
Conditions in the industry are improving as global taconite prices rise from historic lows and as new Congressional tariffs on underpriced steel imports slow into the United States mainly from China, but also from Korea, India and Russia and United Kingdom.
Cliffs CEO Lourenco Goncalves told the Star Tribune last week that both situations are getting better and give hope that the industry is turning around. Tuesday's announcement about boosted taconite orders is yet another sign of healing.
"Cliffs is pleased to announce a major accomplishment within the execution of our strategy," Cliffs CEO Lourenco Goncalves said in a statement Tuesday. "The signing of the new supply agreement confirms what we have always stated regarding the strength of the business relationship between Cliffs and ArcelorMittal USA, The new agreement also removes any remaining uncertainty about Cliffs, and supports our conviction in the bright future of our company."
The new contract replaces and extends two ArcelorMittal agreements set to expire in December 2016 and January 2017. The deal means Cliffs will continue to be the sole pellet supplier to ArcelorMittal's Indiana Harbor West and Cleveland Works steelmaking facilities. It also maintains Cliffs' current pellet supply-levels to ArcelorMittal's Indiana Harbor East facility.
Under the agreement, pellet prices will be adjusted based on prices of U.S. steel and iron ore and according to general inflation indexes.
Based on current market levels, Cliffs officials said they anticipate "an improvement in overall United States iron ore realized revenues per ton in 2017, when compared to the company's current guidance for 2016."
"Today's announcement from Cliffs Natural Resources is good news for Minnesota workers and their families.," said U.S. Sen Amy Klobuchar in a statement. "But we cannot declare success until every worker on the range has their job back."
The still idled United Taconite facility has about 420 workers out of work.
Klobuchar said Cliffs' news is evidence that "efforts to crack down on the dumping of foreign steel on our shores and to level the playing field for American workers are getting results."
"We already passed critical legislation to help," Klobuchar said, "but the next step is for Congress to pass our bills to strengthen America's trade enforcement capabilities and ensure laid-off workers affected by steel dumping receive the support they deserve."