Cleveland-Cliffs CEO Lourenco Goncalves said Friday he is close to a decision on reopening the Empire Mine in Michigan, saying the idled plant is ahead of the company’s efforts in Nashwauk.
Cliffs is still in the process of analysing Empire, which was indefinitely idled in 2016, and didn’t provide a timetable for an announcement. Goncalves said the investment would reach about $600 million over three years to bring back iron ore pellet production at a rate of up to 3.5 million tons annually.
“Empire has a great chance to be brought back into operation in the not-too-distant future,” he said during a conference call with investors. “That would be great news for Michigan.”
A pending announcement of Empire has no impact on Hibbing Taconite and is not planned to be a new hot-briquetted iron (HBI) facility.
However, Nashwauk still has a chance to be brought into the fold for Cliffs, who owns about half the land and minerals at the former Essar Steel Minnesota project site, where Mesabi Metallics currently holds state mineral leases. Former owners Essar Global recently bought out Mesabi Metallics’ debt involved with the project, but their role has not been defined.
Goncalves praised Gov. Tim Walz for taking steps to ban Essar Global from doing business in Minnesota, an action that has unknown impacts to Mesabi Metallics or the project as a whole.
“Governor Tim Walz has been making very intelligent and very precise moves to get rid of that thing that has been infecting Minnesota called Essar,” Goncalves said. “That virus is going away. Hopefully soon. We are ready to step in and take care of Nashwauk, but these things take time.”
He also praised the union leaders in Minnesota and Michigan for working with and standing up for Cliffs through the Empire idle and the saga in Nashwauk.
“Those guys are partners and we are partners for life with [United Steelworkers],” the CEO said. “For the next 10 years we are going to busy bringing production back to the United States.”
Friday’s fourth quarter report showed a strong year for the Cleveland-based company, which owns and operates United Taconite in Eveleth and Forbes and Northshore in Babbitt and Silver Bay. It also co-owns and manages Hibbing Taconite.
The company reported more than $2.3 billion in revenues for the year and net income of $1.1 billion. It also produced 20.3 million long tons of iron ore in 2018, operating at 81 percent capacity for the year, its highest in a decade.
Goncalves said he expects another year at full capacity with $40 million going into upgrading Northshore this year. He also said the company is increasing its capacity on the HBI facility in Toledo, Ohio from 1.6 million tons a year to 1.9 million tons, moving the company’s overall investment from $700 million to $830 million. The Toledo plant remains on target to begin production in June or July 2020.
Goncalves called the results and outlook presented Friday as “unimaginable” when considering the $2 billion in debt Cliffs assumed under past management four years ago.
“With the momentum we have built, it is hard to contain my excitement for how this business will look three, four, five years into the future,” he said.
Cliffs stock was up 8.53 percent to $11.83 on the heels of Friday’s report.