The Company stated that until its domestic customers’ blast furnace capacity utilization rates improve, existing customer demand will be satisfied from its current pellet inventory.
Cliffs chairman, president and CEO Lourenco Goncalves said: "The historic high tonnage of foreign steel dumped into the U.S. continues to negatively impact the steel production levels of our domestic customers.
"As our pellet inventory at both Northshore and United Taconite is adequate to meet current customer demand, we will be able to optimize our working capital and cash flow by temporarily idling production at Northshore.
"Our pellet inventory is currently at a seasonally, historic high level. As a result, we are taking this action to work off our pellet inventory pending receipt of our customers’ tonnage requirements for 2016 which have not been finalized.
"The resolution of the trade cases currently filed by the domestic steelmakers against several countries and covering a broad range of steel products should bring a positive impact to the domestic market sometime during the first half of 2016. As soon as the unfairly traded steel problem subsides and domestic steel production recovers to normal levels, we will be able to immediately ramp up iron ore pellet production by bringing idled capacity back to operation."
Cliffs anticipates that both Northshore and United Taconite operations will be temporarily idled through the first quarter of 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. The Company will assess and adjust its production plans as market conditions improve.
Cliffs is maintaining its previous cash production cost per ton expectations for 2015, and for 2016 is lowering its cash production cost expectation to $50 – 55 per ton and its cash cost of goods sold expectation to $60 – $65 per ton. The cash cost of goods expectation includes $9m per month of idle costs for the Northshore and United Taconite mines.
Cliffs’ Northshore Mining iron ore operation is comprised of a mine and a taconite pellet processing facility located in Minnesota. The operation employs approximately 540 employees. Cliffs will maintain minimal staffing during the temporary idle for basic maintenance duties and for on-going work to support the DR-grade pellet trials.
