US-based iron ore miner and pellet producer Cliffs Natural Resources Inc. said Thursday that it expects to defer about one million tons of customer purchase obligations to the first quarter of 2010, and that it will continue to idle one of its pellet plants.
The one million ton deferral, which reduces the company's contractual obligations for 2009 to 17 million tons, is the result of a request from one of its steelmaker customers who is trying to align its iron ore inventories with its own reduced steel sales, Cliffs said Thursday in a general update of its North American iron ore operations.
The company also said Thursday that its 8.0-million ton Hibbing Taconite joint venture in Minnesota will remain shut down through the first quarter of 2010 as a result of continuing soft demand for iron ore pellets. The facility, owned jointly by ArcelorMittal, Cliffs and US Steel Canada, was shut down in May following the idling of two of Hibbings' three pelletizing furnaces in March.
"While we have begun to see preliminary signs of stabilization in the North American steelmaking industry, we will continue to ensure our production and inventory are balanced with customer demand," Don Gallagher, president of Cliffs North American Business Unit, said.
Cliffs said its North American iron ore business is expected to produce 15 million tons this year, compared to last year's output of 35.2 million tons. Cliffs said in April that its iron ore mines were operating an annualized capacity rate of 50 percent.