ArcelorMittal USA Signs Decade-Long Pellet Supply Agreement
05/31/2016 - U.S. iron ore producer Cliffs Natural Resources has signed a new 10-year pellet supply agreement with ArcelorMittal USA, which will buy up to 10 million long tons over the life of the deal.
According to Cliffs, the agreement, which will remain in effect through 2026, replaces two supply contracts that expire in December and January.
"The signing of the new supply agreement confirms what we have always stated regarding the strength of the business relationship between Cliffs and ArcelorMittal USA. The new agreement also removes any remaining uncertainty about Cliffs, and supports our conviction in the bright future of our company, its employees, its shareholders and all other stakeholders, including the communities in which we operate," said Cliffs chairman and chief executive Lourenco Goncalves in a statement.
The deal preserves Cliffs’ status as the sole outside pellet supplier for ArcelorMittal’s Indiana Harbor East, Indiana Harbor West and Cleveland blast furnaces. It also increases ArcelorMittal’s minimum purchase requirement to 7 million long tons.
In a statement, ArcelorMittal said the deal pegs pellet pricing to iron ore and domestic steel market indices.
“The market-based pricing mechanisms at the core of this agreement provide ArcelorMittal USA with increased financial flexibility, better aligning raw material costs with pricing conditions in the steel market,” said John Brett, ArcelorMittal USA president and chief executive officer, in a statement.
“Similar to the previous agreements, the new agreement also allows us to adjust volumes based on market conditions,” he said.
"The signing of the new supply agreement confirms what we have always stated regarding the strength of the business relationship between Cliffs and ArcelorMittal USA. The new agreement also removes any remaining uncertainty about Cliffs, and supports our conviction in the bright future of our company, its employees, its shareholders and all other stakeholders, including the communities in which we operate," said Cliffs chairman and chief executive Lourenco Goncalves in a statement.
The deal preserves Cliffs’ status as the sole outside pellet supplier for ArcelorMittal’s Indiana Harbor East, Indiana Harbor West and Cleveland blast furnaces. It also increases ArcelorMittal’s minimum purchase requirement to 7 million long tons.
In a statement, ArcelorMittal said the deal pegs pellet pricing to iron ore and domestic steel market indices.
“The market-based pricing mechanisms at the core of this agreement provide ArcelorMittal USA with increased financial flexibility, better aligning raw material costs with pricing conditions in the steel market,” said John Brett, ArcelorMittal USA president and chief executive officer, in a statement.
“Similar to the previous agreements, the new agreement also allows us to adjust volumes based on market conditions,” he said.
