Iron ore prices should climb during 2013 due to growing demand and reduced stockpiles in China, predicted Joseph Carrabba, president, CEP and board chair of Cliffs Natural Resources

The international iron ore mining firm, which in January idled two production lines at North Shore Mining in Silver Bay, lost $899 million during 2012, largely attributable to lower pellet prices. A year earlier, the company reported $1.6 billion in net income.

Last year, Cliffs exported 1.2 million of tons of pellets from the lower Great Lake into the seaborne market. Sales volumes for the fourth quarter and full year decreased primarily due to lower demand for pellets at Great Lakes steel mills.

“For the U.S, we anticipate modest growth in 2013. We have seen a recent uptick in the North American steel making utilization rate which is currently running 75 percent,” Carrabba said in a conference call with analysts. “Should we see an improvement for U.S. pellet demand, we can resume production at (North Shore) fairly easily.”

He said Cliffs will idle its Empire mine in Upper Michigan beginning in the second quarter and throughout the summer months.

“We anticipate resuming Empire's production in the early fourth quarter depending on our partners needs,” Carrabba said.

Cliffs made direct-reduced iron pellets (DRI) at two Iron Range facilities during 2012, he noted.

“As DRI becomes more of a reality in the … market, we are putting the wheels in motion to capitalize on this new opportunity. For our U.S. iron-ore business, we expect our 2013 sales and production volumes to be approximately 20 million tons,” he said.

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