Cliffs Natural Resources and ArcelorMittal USA in iron ore deal through 2026
The new agreement will replace two existing agreements expiring in Dec. 2016 and Jan. 2017 and fill the entirety of ArcelorMittal's pellet purchase requirements from the previous contracts.
The new commercial agreement includes ArcelorMittal's total purchases of iron ore pellets from Cliffs up to 10 million long tons and preserves Cliffs' current position as ArcelorMittal USA's sole outside supplier of pellets.
Accordingly, Cliffs will continue to be the sole pellet supplier of ArcelorMittal's Indiana Harbor West and Cleveland Works steelmaking facilities, while maintaining the current level of pellet supply to ArcelorMittal's Indiana Harbor East facility.
The new contract also establishes a minimum tonnage of pellets of 7 million long tons, which is higher than the current minimum level from the two previous contracts combined.
Pricing for the pellets under the agreement will be adjusted by the price of steel in the U.S. domestic market, and iron ore market based and general inflation indices.
Based on current market levels, Cliffs anticipates an improvement in overall United States Iron Ore realized revenues per ton in 2017, when compared to the company's current guidance for 2016. ■