Cliffs Natural Resources Inc. Announces Extended Supply Agreement with ArcelorMittal USA Inc.
Posted by Lake Superior Community Partnership on February 27, 2014
CLEVELAND — Feb. 27, 2014 — Cliffs Natural Resources Inc. (NYSE: CLF) (Paris: CLF) announced today that it has entered into a revised commercial agreement with ArcelorMittal USA Inc. to supply iron ore pellets for an additional two years through the end of Jan. 2017, with a mutual option to extend for a third year. In addition, Cliffs and ArcelorMittal USA have also extended their joint partnership for the Empire Mine located on the Marquette Iron Range in Michigan.
Previously, Cliffs had announced an impending closure of the Empire Mine. Until the amended commercial agreement was reached with ArcelorMittal, the Empire Mine did not have a customer for pellet production beyond 2014. In addition, the partnership arrangement was scheduled to expire automatically in December 2014, without the mutual agreement of both companies to extend. With this decision, Cliffs and ArcelorMittal will extend the life of this mining operation into 2016.
P. Kelly Tompkins, Cliffs’ Executive Vice President – External Affairs & President Global Commercial, said, “This agreement was made possible by the close working relationships we have with ArcelorMittal, both at the commercial and operational level. Importantly, this extension builds upon the long-term customer and partner relationship we have with ArcelorMittal particularly at the Empire Mine. We are pleased to continue as a reliable supplier of high-quality iron ore pellets to one of ArcelorMittal USA’s facilities which is also good news for our dedicated employees who have demonstrated that Empire remains a safe, viable producer of high-quality, cost competitive pellets.”
Cliffs is maintaining its 2014 full-year sales and production volume expectation of 22 – 23 million tons from its U.S. Iron Ore business. Cliffs’ full-year 2014 U.S. Iron Ore cash-cost-per-ton expectation is $65 – $70. The Company said that this extension would require very limited capital.
The Empire mine is located on the Marquette Iron Range in Michigan’s Upper Peninsula approximately 15 miles southwest of Marquette, Michigan. Operations consist of an open pit truck and shovel mine, a concentrator that utilizes single stage crushing, AG mills, magnetic separation and flotation to produce a magnetic concentrate that is then supplied to the on-site pellet plant. Cliffs has a 79 percent ownership of Empire and a subsidiary of ArcelorMittal USA has retained the remaining 21 percent ownership with limited rights and obligations.
About Cliffs Natural Resources Inc.
Cliffs Natural Resources Inc. is an international mining and natural resources company. A member of the S&P 500 Index, the Company is a major global iron ore producer and a significant producer of high-and low-volatile metallurgical coal. Cliffs’ strategy is to continually achieve greater scale and diversification in the mining industry through a focus on serving the world’s largest and fastest growing steel markets. Driven by the core values of social, environmental and capital stewardship, Cliffs associates across the globe endeavor to provide all stakeholders operating and financial transparency.
The Company is organized through a global commercial group responsible for sales and delivery of Cliffs’ products and a global operations group responsible for the production of the minerals the Company markets. Cliffs operates iron ore and coal mines in North America and an iron ore mining complex in Western Australia.
SOURCE: Cliffs Natural Resources Inc.
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This release contains forward-looking statements within the meaning of the federal securities laws. Although the Company believes that its forward-looking statements are based on reasonable assumptions, such statements are subject to risks and uncertainties relating to Cliffs’ operations and business environment that are difficult to predict and may be beyond Cliffs’ control. Such uncertainties and factors may cause actual results to differ materially from those expressed or implied by forward-looking statements for a variety of reasons including without limitation: trends affecting our financial condition, results of operations or future prospects, particularly the continued volatility of iron ore and coal prices; uncertainty or weaknesses in global economic conditions, including downward pressure on prices, reduced market demand, increases in supply and any slowing of the economic growth rate in China; our ability to successfully identify and consummate any strategic investments or capital projects and complete planned divestitures; our ability to successfully integrate acquired companies into our operations and achieve post-acquisition synergies, including without limitation, Cliffs Quebec Iron Mining Limited (formerly Consolidated Thompson Iron Mining Limited); our ability to cost effectively achieve planned production rates or levels; changes in sales volume or mix; the outcome of any contractual disputes with our customers, joint venture partners or significant energy, material or service providers or any other litigation or arbitration; the impact of price-adjustment factors on our sales contracts; the ability of our customers and joint venture partners to meet their obligations to us on a timely basis or at all; our ability to reach agreement with our iron ore customers regarding modifications to sales contract pricing escalation provisions to reflect a shorter-term or spot-based pricing mechanism; our actual economic iron ore and coal reserves or reductions in current mineral estimates, including whether any mineralized material qualifies as a reserve; the impact of our customers using other methods to produce steel or reducing their steel production; events or circumstances that could impair or adversely impact the viability of a mine and the carrying value of associated assets, as well as any resulting impairment charges; the results of prefeasibility and feasibility studies in relation to development projects; impacts of existing and increasing governmental regulation and related costs and liabilities, including failure to receive or maintain required operating and environmental permits, approvals, modifications or other authorization of, or from, any governmental or regulatory entity and costs related to implementing improvements to ensure compliance with regulatory changes; uncertainties associated with natural disasters, weather conditions, unanticipated geological conditions, supply or price of energy, equipment failures and other unexpected events; adverse changes in currency values, currency exchange rates, interest rates and tax laws; availability of capital and our ability to maintain adequate liquidity and successfully implement our financing plans; our ability to maintain appropriate relations with unions and employees and enter into or renew collective bargaining agreements on satisfactory terms; risks related to international operations; the potential existence of significant deficiencies or material weakness in our internal controls over financial reporting; problems or uncertainties with leasehold interests, productivity, tons mined, transportation, mine-closure obligations, environmental liabilities, employee-benefit costs and other risks of the mining industry; and other factors and risks that are set forth in the Company’s most recently filed reports with the Securities and Exchange Commission. The information contained herein speaks as of the date of this release and may be superseded by subsequent events. Except as may be required by applicable securities laws, we do not undertake any obligation to revise or update any forward-looking statements contained in this release.