Cliffs idles Norhshore Mining; more than half of the major Iron Range operations are now shut down

November 17, 2015

The depressed global iron ore market claimed another victim, at least temporarily, as Cliffs Natural Resources Inc. announced that it would close its Northshore Mining operations in Minnesota because of the oversupply of iron ore in the United States and around the world.

The Duluth News Tribune reported that most of the 540 employees of Northshore would be laid off on Dec. 1 and would remain laid off at least through the first quarter of 2016. The company did say that there is no firm date for reopening the operations.

The price of iron ore continues to plummet globally and in the U.S. thanks to a vast oversupply. That reduced the price of steel, especially foreign steel, which is being imported, often below cost, into the U.S. at a record clip.

All that imported steel has reduced the demand for U.S. made steel and thus the demand for its primary ingredient — taconite iron ore from Minnesota and Michigan.

"The historic high tonnage of foreign steel dumped into the U.S. continues to negatively impact the steel production levels of our domestic customers,’’ said Lourenco Goncalves, Cleveland-based Cliffs' president and chief executive officer.

The move will help cash-strapped Cliffs continue to operate for the short term.

Goncalves said Cliffs has never had this many unneeded taconite pellets on hand this late in the season, with Great Lakes shipping set to close in January.

With the move to shut down Northshore more than half of the major mining operations in Minnesota’s Iron Range have now been shut down.
In addition to Northshore and United Taconite, U.S. Steel’s Keetac plant remains idled, as do two of Grand Rapids-based Magnetation ore recovery plants and the Mesabi Nugget iron nugget plant near Hoyt Lakes.

Cliffs also noted that United is now unlikely to reopen until April at the earliest.

Goncalves said Cliffs’ operations will reopen only if and when his customers, U.S. steelmakers, begin to order more pellets. He said so far that hasn’t happened, but he continues to be bullish that U.S. steel production and taconite demand will increase in 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.

Cliffs will maintain minimal staffing at Northshore “during the temporary idle for basic maintenance duties and for on-going work to support the DR-grade pellet trials.” The company hopes to eventually make pellets at the plant that can be used in electric arc furnaces instead of only blast furnaces.


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