Steel Mills
Cliffs and ArcelorMittal USA Announce 10-year Pellet Supply Agreement
Written by Sandy Williams
May 31, 2016
ArcelorMittal USA and Cliffs Natural Resources have entered into a new long-term iron ore supply agreement that will run through 2026. The new agreement replaces two existing agreements that expire Dec. 2016 and Jan. 2017 and fills the entirety of ArcelorMittal’s pellet purchase requirements from the previous contracts.
Cliffs Natural Resources will supply 7 to 10 million tonnes of iron ore pellets to ArcelorMittal’s Indiana Harbor East, West and Cleveland blast furnaces. The new contract preserves Cliffs’ status as sole outside supplier to ArcelorMittal USA.
“The market based pricing mechanisms at the core of this agreement provide ArcelorMittal USA with increased financial flexibility, better aligning raw material costs with pricing conditions in the steel market,” said John Brett, ArcelorMittal USA, president and CEO. “Similar to the previous agreements, the new agreement also allows us to adjust volumes based on market conditions.”
Lourenco Goncalves, Cliffs’ Chairman, President and CEO, said, “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, its employees, its shareholders, and all other stakeholders, including the communities in which we operate.”
Based on terms of the agreement, pricing for the pellets will be adjusted by iron ore and domestic steel market based indices.
Cliffs will reopen United Taconite in October with full production expected by November. The restart will supply iron ore pellets for the new contract agreement with ArcelorMittal as well as jumpstarting an expansion at United to provide the Indiana Harbor No. 7 blast furnace with custom designed “Mustang pellets.” The Mustang is currently produced at the Empire operation in Michigan which is slated to close later this year.
Goncalves said, “We hope to be making the Mustang pellet at United early next year.”
Cliffs recently reopened the Northshore mining operations in Silver Bay and Babbit that were idled in November.
Sandy Williams
Read more from Sandy WilliamsLatest in Steel Mills
AISI: April mill shipments fall, sheet down YTD
US steel mills saw a decline in shipments from March to April.
Hybar rolls first rebar, ramping up Arkansas mill commissioning
The startup steelmaker produced its first rebar at its greenfield steel mill in Osceola, Ark., marking a key milestone by completing construction in 22 months.
Goncalves: Despite higher tariffs, two Cliffs mills to remain idled
Cleveland-Cliffs Chairman, President, and CEO Lourenco Goncalves said he would keep one mill idled and still plans to idle another despite increased protections from Section 232 tariffs doubling to 50%.
Trump says Section 232 tariff on steel, aluminum to double to 50% at Pennsylvania rally celebrating Nippon-USS deal
At a rally celebrating a “planned partnership” between U.S. Steel and Nippon Steel, President Trump announced higher tariffs on steel and aluminum imports into the United States, and revealed few more details on Nippon’s investment in USS’ operations.
CRU: Trump hails a partnership of Nippon with USS
In a social media post, President Donald Trump said a planned partnership between Nippon Steel and U.S. Steel will add $14 billion to the US economy and ensure USS remains headquartered in Pittsburgh.