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Thursday, 10/06/2016 10:56:16 AM

Thursday, October 06, 2016 10:56:16 AM

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EVELETH — United Taconite is slated to restart operations in October, Cliffs Natural Resources said Tuesday, ending about nine months of uncertainty for nearly 500 Iron Range workers.

The company also announced Tuesday it signed a new 10-year pellet agreement with ArcelorMittal USA, the lynchpin transaction to reopening UTac’s Eveleth and Forbes locations, which idled last summer.

Cliffs CEO Lourenco Goncalves said in a phone interview the plant is beginning to recall workers needed for startup, and he expects a full callback of the employees impacted by the idle.

“We are already calling people in to bring it back to production,” Goncalves said. “Fair to say that we will be in production in mid-October and at full production in November.”

United Taconite will now undergo a $65 million makeover to enable the plant to produce a new custom pellet for ArcelorMittal. The Mustang pellet contract was key to putting UTac on a schedule to go back online because the location needs to be outfitted with upgrades.

Goncalves said in March there was no timeline for the deal with ArcelorMittal — which merged two contracts that expired in December 2016 and January 2017 — but insisted at the time UTac would be operational this year.

Upgrades will begin “right away” to the plant as Cliffs will start the process of bringing in engineers and contractors, and UTac will begin producing the Mustang pellet next year.

“I said I would proceed with deployment of Cap Ex (capital expenditures) after we have a signed deal,” he added. “Now we have a signed deal. It’s a big project.”

Tuesday’s agreement is yet another sign pointing toward a turnaround for the U.S. iron ore industry, which was plagued by a glut of illegally dumped steel in 2015.

Tariffs enacted by the federal government are beginning to positively impact the supply stateside as the demand is starting to return to normal.

It’s not there yet, Goncalves said, but the 2015 downturn is on the upswing.

Last month, the company recalled most of the 540 workers at its Northshore operation in Silver Bay and Babbitt, who had been laid off since November. Goncalves said Tuesday’s news is a sign of Cliffs’ future viability and a “major accomplishment” for the company.

“Dumping the steel has been treated for what it is — illegal,” the CEO said, noting, however, that two of his clients still have idled blast furnaces. “I feel like they are in the process of fixing this thing, but we are in good shape. This removes any and all uncertainty about the future of Cliffs, and takes away all the speculation about other suppliers coming to replace Cliffs.”

U.S. Sens. Amy Klobuchar and Al Franken, D-Minn., championed the good news for the Iron Range. They said legislation introduced with U.S. Rep Rick Nolan will curb illegal steel dumping and would impose retroactive tariffs on unfairly traded steel.

“Today’s announcement from Cliffs Natural Resources is good news for Minnesota workers and their families, but we cannot declare success until every worker on the Range has their job back,” Klobuchar said in a statement.

Franken touted the economic impact of United Taconite’s revival.

“This move will help get the economy moving on the Iron Range, which has been hit hard by an influx of illegally subsidized foreign steel from countries like China,” he said in a statement. “With United Taconite coming back online, and with Cliffs already having brought its Northshore Mining operation to full production, I’m hopeful that we’re seeing the beginning of a real turnaround for our Range economy.”

White House Chief of Staff Denis McDonough was also brought to the Iron Range in December by the delegation to hear first-hand how the illegal trade and subsidized foreign steel drove the American market into a downward spiral, and to take a report back to Washington, D.C.

“As result of our work and the Administration’s actions, the glut of illegal foreign steel in the U.S. marketplace is declining,” Nolan said in a statement. “Steel imports have dropped by almost 34 percent since the Department of Commerce imposed tough new preliminary tariffs (taxes) of up to 265.79 percent on steel products from that nation. The price of Range iron ore is on the rise. Our steel mills are now operating at 75.1 percent capacity, up from the 60 percent low we saw during the worst times in 2015.”

As part of Tuesday’s deal, Cliffs will supply up to 10 million tons of taconite pellets annually with a minimum order of seven million tons, and pricing is based on market adjustments.

The Cleveland-based mining company will continue to be the sole outside supplier of pellets for ArcelorMittal, which also gets pellets from its own Minorca Mine Virginia.

Cliffs pellets will go to Arcelor’s Indiana Harbor East and West steel mills.

“We are continuing to produce,” Goncalves added. “With all this business going on, we are in great shape.”

http://www.hibbingmn.com/news/local/united-taconite-to-reopen-in-oct/article_09dd7054-279f-11e6-a3f4-8f9d7bf69f4d.html
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