Cliffs CEO: UTac to reopen in 2016

Today, Cliffs Natural Resources CEO Lourenco Goncalves said that he would reopen United Taconite in Eveleth sometime in 2016. He also said that the company remained committed to next-generation technology for Iron Range ores.

He did not, however, name a date that United would reopen. About 500 workers are currently laid off from that mine.

Goncalves was speaking at the annual Cliffs breakfast in Virginia. I was invited, but unable to attend due to my work schedule.

WDIO’s Renee Passal reported on the comments in a series of Tweets from the Cliffs Breakfast event.

The notion of Cliffs being a lowest-cost producer must refer to a particular kind of pellet. Mining analysts are in wide agreement that the cheapest iron ore comes from efficient new mines in Western Australia, which have ramped up production in recent years.

Cliffs has long vowed to produce value-added ore — the direct-reduced (DR) pellets referred to above. This is important because right now Iron Range ore is used to produce taconite pellets that go to blast furnaces. That technology is slowly being phased out of the steel industry in favor of electric arc furnaces, which use direct-reduced iron made from the DR pellets.

Cliffs has already produced DR pellets at Northshore Mine. (It’s no secret how to make them). Now Goncalves is saying that Cliffs can produce them at commercially competitive prices. And he’s saying he has customers.

If that’s true, it’s good news for the Iron Range mining industry. But then again, mining CEOs are not in the business of promising bad news. The market for iron and steel will remain the central determiner of Minnesota’s mining future.

UPDATE: The Mesabi Daily News reports that Goncalves plans a $65 million investment in UTac to produce its new higher-iron content “Mustang” pellet. Once in place, the plant would resume production. This has long been the claim; it just hasn’t been carried out yet.

Cliffs owns and operates United Taconite, which is currently idled, and Northshore Mining in Babbitt and Silver Bay, which is reopening soon. It also operates Hibbing Taconite, which it co-owns with ArcelorMittal and U.S. Steel. These mines produce about half the tonnage of iron ore from the Iron Range.

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