Magnetation Planning to Wind Down Operations
08/29/2016 - AK Steel Corp. will pay up to US$37.5 million to end its pellet supply agreement with its joint venture pellet producer, Magnetation LLC, which will begin to wind down its remaining operations unless it finds a buyer or new financing.
In a filing with the U.S. Securities and Exchange Commission, AK Steel said it will go out into the market for replacement pellets.
“AK Steel currently anticipates that it can purchase replacement iron ore pellets from third-party producers who can meet AK Steel’s future needs by offering superior quality and reliability, as well as responsible environmental performance and competitive pricing. In addition, AK Steel expects to benefit from enhanced flexibility with respect to iron ore pellets as a result of terminating its off-take agreement with Magnetation,” the company said.
Magnetation LLC, which is under Chapter 11 bankruptcy protection, is owned by AK Steel and partner Magnetation Inc. It recovers iron ore from abandoned waste stockpiles and tailings basins, processing the remnants of previous mining operations into iron ore concentrate.
The company filed for Chapter 11 in May 2015. And absent a buyer or new financing, the company said on Friday that it would begin winding down by 30 September.
"While this was a difficult decision, the company believes that, in light of current circumstances, preparing for a safe and orderly wind-down while we continue to seek an alternative to a shutdown is the best course of action to support what is in the best interests of our employees, creditors and other critical constituents," Magnetation chief executive Larry Lehtinen said in a statement.
"As a result, we are communicating the proper notifications to our employees and the communities. We will be working closely with the appropriate governmental agencies to assist any affected employees who would be laid off if this shutdown is implemented," he said.
Magnetation previously idled plants in Keewatin and Bovey, Minn., USA. It also shut down a plant that was co-owned by Steel Dynamics Inc., according the Duluth News Tribune newspaper.
“AK Steel currently anticipates that it can purchase replacement iron ore pellets from third-party producers who can meet AK Steel’s future needs by offering superior quality and reliability, as well as responsible environmental performance and competitive pricing. In addition, AK Steel expects to benefit from enhanced flexibility with respect to iron ore pellets as a result of terminating its off-take agreement with Magnetation,” the company said.
Magnetation LLC, which is under Chapter 11 bankruptcy protection, is owned by AK Steel and partner Magnetation Inc. It recovers iron ore from abandoned waste stockpiles and tailings basins, processing the remnants of previous mining operations into iron ore concentrate.
The company filed for Chapter 11 in May 2015. And absent a buyer or new financing, the company said on Friday that it would begin winding down by 30 September.
"While this was a difficult decision, the company believes that, in light of current circumstances, preparing for a safe and orderly wind-down while we continue to seek an alternative to a shutdown is the best course of action to support what is in the best interests of our employees, creditors and other critical constituents," Magnetation chief executive Larry Lehtinen said in a statement.
"As a result, we are communicating the proper notifications to our employees and the communities. We will be working closely with the appropriate governmental agencies to assist any affected employees who would be laid off if this shutdown is implemented," he said.
Magnetation previously idled plants in Keewatin and Bovey, Minn., USA. It also shut down a plant that was co-owned by Steel Dynamics Inc., according the Duluth News Tribune newspaper.
