Steel Mills

Cliffs and ArcelorMittal USA Announce 10-year Pellet Supply Agreement

Written by Sandy Williams

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.


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