Production Temporarily Idled at Northshore Mining
Cliffs Natural Resources Idles Iron Ore Plant in Silver Bay
Cliffs Natural Resources Inc. announced Tuesday that it is temporarily idling iron ore pellet production at its Northshore Mining operation in Minnesota by Dec. 1, 2015.
The Company stated that until its domestic customers’ blast furnace capacity utilization rates improve, existing customer demand will be satisfied from its current pellet inventory.
Lourenco Goncalves, Cliffs’ Chairman, President and Chief Executive Officer, stated, “The historic high tonnage of foreign steel dumped into the U.S. continues to negatively impact the steel production levels of our domestic customers. As our pellet inventory at both Northshore and United Taconite is adequate to meet current customer demand, we will be able to optimize our working capital and cash flow by temporarily idling production at Northshore.” Mr. Goncalves added, “Our pellet inventory is currently at a seasonally, historic high level. As a result, we are taking this action to work off our pellet inventory pending receipt of our customers’ tonnage requirements for 2016 which have not been finalized. The resolution of the trade cases currently filed by the domestic steelmakers against several countries and covering a broad range of steel products should bring a positive impact to the domestic market sometime during the first half of 2016. As soon as the unfairly traded steel problem subsides and domestic steel production recovers to normal levels, we will be able to immediately ramp up iron ore pellet production by bringing idled capacity back to operation.”
Cliffs anticipates that both Northshore and United Taconite operations will be temporarily idled through the first quarter of 2016.
During that time frame, Cliffs will continue to operate Hibbing Taconite in Minnesota, as well as the Tilden and Empire mines in Michigan, at normal rates.
The Company will assess and adjust its production plans as market conditions improve.
Cliffs is maintaining its previous cash production cost per ton expectations for 2015, and for 2016 is lowering its cash production cost expectation to $50 – 55 per ton and its cash cost of goods sold expectation to $60 – $65 per ton.
The cash cost of goods expectation includes $9 million per month of idle costs for the Northshore and United Taconite mines.
Cliffs’ Northshore Mining iron ore operation is comprised of a mine and a taconite pellet processing facility located in Minnesota.
The operation employs approximately 540 employees.
Cliffs will maintain minimal staffing during the temporary idle for basic maintenance duties and for on-going work to support the DR-grade pellet trials.
Representative Rick Nolan issued a statement on the idling saying that the announcement is “terrible news” especially as we approach the Holidays. Nolan said his thoughts are with the families and businesses affected in the Babbitt and Silver Bay areas.
Nolan went on to say that “the U.S. has proven time and again that it is incapable of effectively enforcing trade laws and agreements to protect American workers. We need to once and for all get to the heart of why these layoffs continue to happen across Minnesota’s Iron Range and throughout the iron ore and steel industries: bad trade agreements and a broken trade enforcement system that continue to permit the illegal dumping of millions of tons of low-grade, foreign subsidized steel by China and other Southeast Asian nations into the U.S. market.”