Cliffs Natural Resources Inc. stated in a release Monday that in July 2015, Cliffs' CEO and three other Cliffs' executives accepted the invitation by Essar Minnesota's CEO Madhu Vuppuluri to tour the Essar Minnesota construction site. As a result of the site visit and Cliffs' decades of experience in the business, Cliffs believes that Essar's claims of the project's state of completion are substantially overstated and, as a result, the projected timeline for pellet production in 2016 is inaccurate. Cliffs had previously reported during its second-quarter 2015 earnings call that until Essar starts producing iron ore pellets at a sustainable rate, the Essar project in Minnesota is nothing more than a construction site. This remains Cliffs' position.
The original intention of the State of Minnesota's loans of $73 million ($67 million from the state and $6 million from IRRRB) to Essar was not to subsidize iron ore pellet overcapacity in the U.S., but to support the construction of a new steel mill in the Great Lakes region. Media reports failed to state that the Essar Minnesota project, if it were to come online, would create iron ore pellet overcapacity in the US. It is Cliffs' position that Essar Minnesota should be required to immediately repay its construction subsidy due to Essar unilaterally changing the scope of its project.
Cliffs Natural Resources Inc. clarifies that it does not have any current plans to permanently idle or close any of its Minnesota mines.