ArcelorMittal USA on Wednesday announced it is replacing Cleveland-Cliffs as the manager of the 8.0 million-ton-per year iron ore pellet plant in Hibbing.
No changes in production volumes or operating plans will occur, according to an ArcelorMittal USA statement.
The announcement ends about four months of speculation over management of the taconite plant. Cleveland-Cliffs, which had overseen management of the plant, said in mid-August it would not manage the facility beyond August 12, 2019. However, the announcement is not surprising. ArcelorMittal, with 62.3 percent ownership, holds the largest stake in the taconite plant. Cleveland-Cliffs owns 23 percent and United States Steel 14.7 percent.
“When Cliffs announced it would tender its resignation as managing partner, we knew that assuming oversight for the operation was the right thing for our business, the Hibbing workers and the Iron Range community,” John Brett, ArcelorMittal USA president and chief executive officer said in a prepared statement. “ArcelorMittal is responsible for a significant portfolio of raw material and mining assets throughout the world, producing more than 62 million tons of iron ore last year. Assuming the role of managing partner demonstrates ArcelorMittal's continue commitment to Hibbing Taconite while ensuring the long-term supply of quality iron ore to our key operations in the United States.”
On the Iron Range, ArcelorMittal also owns 100 percent and operates ArcelorMittal Minorca, a 2.8 million-ton-per taconite plant in Virginia.
The transition to ArcelorMittal USA management at Hibbing Taconite will occur over the next eight months. Terms of the recently ratified labor contract between United Steelworkers (USW) and Hibbing Taconite Co., will be honored, according to ArcelorMittal USA.
After several months of uncertainty about future ownership of the plant, the announcement provides a sense of the future, but also some uncertainty for about 650 United Steelworkers (USW) members who work at the taconite plant.
“It's kind of like the fear of the unknown,” said Chris Johnson, president of USW Local 2705 at Hibbing Taconite. “Our members have a lot of respect for Lourenco, (Cleveland-Cliffs president and CEO Lourenco Goncalves) for his track record with us and for doing what he says he is going to do. Now, we don't know what to expect.”
And another major issue facing Hibbing Taconite remains unresolved. The facility's ore reserves are running low, which means ArcelorMittal and its partners in the plant need additional sources of taconite to secure the plant's future. Currently, the facility has about four years of full production remaining and about seven total years of mine life, said Johnson.
“That's our biggest thing that our members worry about – life of mine,” said Johnson. “We need to find some reserves whether it be a land deal between U.S. Steel and ArcelorMittal or whatever. Rumors are rampant about a land deal between U.S. Steel and ArcelorMittal, so there could be some positives too. We gotta get this done somehow.”
Iron ore pellets produced at Hibbing Taconite and other Iron Range taconite plants are the primary ingredient used to make steel.
Hibbing Taconite began iron ore pellet production in 1976 after being built by Bethlehem Steel and Pickands Mather. Pickands Mather was the original plant manager.
A total of 735 hourly and salaried employees currently work at the facility. ArcelorMittal is the world's largest steelmaker with facilities in 60 countries.