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Cleveland-Cliffs Signs Three Iron Ore Supply Agreements
09/29/2008 - Cleveland-Cliffs signs three new five-year supply agreements from its North American Iron Ore segment.
Cleveland-Cliffs Inc—soon to be known as Cliffs Natural Resources—recently signed three new supply agreements from its North American Iron Ore segment. The contracts were based on World Pellet Prices as defined by the “Eastern Canada Pellet Price,” which is currently 228.82 U.S. cents per natural tonne unit (i.e., approximately $148/tonne for pellets containing 65% iron content).
The three new supply agreements each have a five-year term, with pricing determined annually by the Eastern Canada Pellet Price settlement. The combined sales tonnage for the agreements—one of which begins in 2008 and the other two in 2009—is as follows:
- 300,000 tonnes minimum in 2008
- 850,000 tonnes minimum in 2009
- 1,100,000 tonnes minimum in 2010
- 800,000 tonnes minimum in 2011
- 1,100,000 tonnes minimum in 2012
- 800,000 tonnes minimum in 2013
Cliffs also has the option to supply additional tonnage if available.
“These three agreements illustrate the extraordinary demand for metallics that are available to serve the U.S. and global steelmaking industries and the lengths to which global steelmakers are willing to go to secure raw materials for production,” said Donald J. Gallagher, Cliffs President, North American Business Unit. “All three agreements are with customers that have historically been outside of our North American Iron Ore segment’s natural geographic market, with these pellets destined for Europe, Asia and Latin America.”
The three new agreements include terms of f.o.b. shipping point with freight costs to ship the pellets to the point of consumption being borne by the customer.
