Essar Steel Algoma and Cliffs Natural Resources Extend Iron Ore Purchase Agreement
06/13/2013 - Cliffs Natural Resources Inc. announced that it has entered into an agreement with Essar Steel Algoma Inc. to extend the iron ore pellet sale and purchase agreement between the two companies to 2024.
The agreement sets out the terms and conditions of a negotiated amendment and extension of the current pellet sale and purchase agreement which was scheduled to expire 2016. Among other things, the agreement addresses issues that have arisen related to market price dynamics and extends Essar's supply agreement with Cliffs for a portion of its iron ore requirements from 2017 through to 2024. The agreement supplements Essar's supply agreement with Essar Steel Minnesota LLC to satisfy Essar's expected iron ore pellet requirements come 2017 and beyond.
Essar Steel Algoma chief executive officer Kalyan Ghosh remarked, "This agreement delivers a revised formula that puts Essar's iron ore cost in line with the market price from 2014 to 2024. The extension provides for supply under more favourable terms and is a necessary step toward ensuring the profitability and sustainability of the business."
Donald J. Gallagher, Cliffs' president — global commercial, said, "We are pleased to announce the negotiated extension of our sales contract with Essar. We believe the extension of this contract demonstrates the quality and reliability of our product offering. The long-term stability of our U.S. Iron Ore business segment remains an important cornerstone of Cliffs' business and we are pleased to be supplying a valued customer like Essar for many years to come."
Essar Steel Algoma Inc. is based in Sault Ste. Marie, Ontario. Revenues are derived primarily from the manufacture and sale of rolled steel products, including hot and cold rolled sheet and plate.
