Cliffs CEO threatens to close mine

Lourenco Goncalves

Lourenco Goncalves

UPDATE: Cliffs Natural Resources spent most of Monday trying to walk back Goncalves’s comments about closing an Iron Range mine.


Lourenco Goncalves, CEO of Cliffs Natural Resources, is threatening to close one of Cliffs’ Iron Range mines in the event Essar Steel opens its new mine near Nashwauk.

This is Bill Hanna’s front page story of today’s Mesabi Daily News.

“If they go online, I will shut down a plant up there the same day,” Lourenco Goncalves said in an exclusive interview with the Mesabi Daily News last Thursday. “We have fully planned for the worst case scenario.”

Essar Minnesota CEO Madhu Vuppuluri said in response on Saturday that he is “very saddened to hear that statement that could have such an impact on employees and communities of the Iron Range.”

Bill’s story is well worth a read for those following the drama of Iron Range mining politics, which is also the subject of my newspaper column this morning in the Hibbing Daily Tribune.

And when you add the information I share in my column with the information revealed in this new story, I form the following conclusion:

If Cliffs is prepared to close an Iron Range mine over the start-up of Essar, we should assume that mine will close regardless. The threat implies that there is some way to stop Essar from starting. Maybe you can stop Essar, the company, from opening that mine. I tend to believe Essar is just packaging the project for sale anyway. Given the amount of progress and the fact that this is going to be a much more efficient mine, it will only mean that another company (possibly Cliffs!) will open it up and close that other mine anyway.

The issue here is that there is an ongoing contraction in the global iron ore market. These companies are jostling for position in order to survive. We are preparing for a future with fewer Iron Range mines producing the supply necessary for the domestic marketplace. Things will be better for the local mining industry if value-added iron products are developed here. Right now the plant closest to doing that is Essar — the incomplete, start-and-stop enigma under construction at Nashwauk.

One thing I do know is that United Taconite at Eveleth is idled and winterized. The ore body at Eveleth is high quality, but the plant is in need of upgrades to keep pace with modern technologies.

Goncalves is using big threats to achieve a business objective. That doesn’t mean Essar has performed well — it hasn’t. In fact, Essar has used a different kind of threat — the threat of constant default — to achieve its objectives.

That’s why it’s important for our people and our communities to govern based on strategy, not threats. Believe me, Cliffs and Essar are using strategy right now. We should too.


  1. Well now isn’t that special. Now they are throwing temper tantrums. Too bad their fellow 1%ers have thrown them all under the bus.

    Now start diversifying the range so they are not dependent on these jerks who are more concerned about their own paychecks and bonuses than a job for any poor miner.

  2. Independent says

    Wow that Lourenco Concalves sure is a tactful leader…

  3. If it turns out to be Utac, there’s an opportunity to save the state about a half billion dollars building that new bridge that like so many others on the Range won’t be needed. I’m sure a half billion dollars to the state would be useful for something, even as inefficiently as they spend money. Maybe some fiber in the country?

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