Headquartered in Cleveland, Ohio, Cleveland-Cliffs Inc., which will be renamed Cliffs Natural Resources in mid-October, announced Friday that it has signed three new pellet supply agreements from its North American Iron Ore segment. The supply agreements were signed at World Pellet Prices, as defined by the "Eastern Canada Pellet Price,” which is currently at about $148/metric ton for pellets containing 65 percent iron content.
Donald J. Gallagher, President of Cleveland-Cliffs’ North American Business Unit, said, "These three agreements illustrate the extraordinary demand for metallics that are available to serve the US and global steelmaking industries and the lengths to which global steelmakers are willing to go to secure raw materials for production. All three agreements are with customers that have historically been outside of our North American Iron Ore segment's natural geographic market, with these pellets destined for Europe, Asia and Latin America."
Each of the new supply agreements has a five-year term. One agreement will be started in 2008, and the other two agreements will commence in 2009. The minimum sales tonnages for the combined agreements are to reach:
-- 300,000 metric tons in 2008,
-- 850,000 metric tons in 2009,
-- 1,100,000 metric tons in 2010,
-- 800,000 metric tons in 2011,
-- 1,100,000 metric tons in 2012, and
-- 800,000 metric tons in 2013.
The company could also supply additional tonnage if available. Pricing under these agreements is determined by the Eastern Canada Pellet Price every year. The three new agreements are based on FOB shipping point with freight costs to ship the pellets to the point of consumption being borne by the customer.
Cleveland-Cliffs is an international mining company, the largest producer of iron ore pellets in North America and one of the major suppliers of metallurgical coal to the global steelmaking industry. The company operates six iron ore mines in Michigan, Minnesota and Eastern Canada, and three coking coal mines in West Virginia and Alabama. Cliffs also owns 85 percent of Portman Limited, a large iron ore mining company in Australia, serving the Asian iron ore markets with direct-shipping fines and lump ore. In addition, Cliffs has a 30 percent interest in the AmapAi Project, a Brazilian iron ore project, and a 45 percent economic interest in the Sonoma Project, an Australian coking and thermal coal project.