TORONTO (miningweekly.com) – US iron-ore producer Cliffs Natural Resources on Tuesday complained that foreign steel being "dumped" in the US negatively impacted the steel production levels of its domestic customers, which forced it to shutter two Minnesota operations and cut 450 jobs.
While the United Taconite operation had already been temporarily suspended since early August, Cliffs also expected to shutter the Northshore operation from December 1, with both operations to remain idle in the first quarter of 2016.
The company stated that until its domestic customers' blast furnace capacity utilisation rates had improved, existing customer demand would be satisfied from its current pellet inventory.
The news sent Cliffs’ NYSE-listed stock tumbling 12.27% to $2.36 apiece on Tuesday.
"The historic high tonnage of foreign steel dumped into the US continues to negatively impact the steel production levels of our domestic customers. 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,” CEO Lourenco Goncalves stated.
US steel companies United States Steel, Nucor, Steel Dynamics, ArcelorMittal USA, AK Steel and California Steel Industries, in June, filed a complaint with the US Department of Commerce and the US International Trade Commission over cheaper imports of stainless steel from China, India, Italy, South Korea and Taiwan. The companies alleged steel producers in the five countries benefited from subsidies not available to US producers.
“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,” Goncalves noted.
Cliffs maintained its previous cash production cost per ton guidance for 2015, but lowered its cash production cost guidance for 2016 to $50/t to $55/t and its cash cost of goods sold guidance to $60/t to $65/t. The cash cost of goods guidance included $9-million a month of idle costs for the Northshore and United Taconite mines.
Cliffs' Northshore Mining iron-ore operation comprised a mine and a taconite pellet processing facility, employing about 540 employees. Cliffs advised that it would maintain minimal staffing during the temporary idle for basic maintenance duties and for ongoing work to support direct reduced-grade pellet trials.
The company would continue to operate the Hibbing Taconite operation, in Minnesota, as well as the Tilden and Empire mines, in Michigan, at normal rates. The company said it would assess and adjust its production plans as market conditions improved and pending receipt of its customers' tonnage requirements for 2016, which had not been finalised.