Cleveland-Cliffs' Northshore Mining operations on the Iron Range will be closed until at least April 2023.
Lourenco Goncalves, CEO of Cliffs, said Friday the company has enough scrap in its steelmaking operations because of its acquisition last year of Detroit-based Ferrous Processing & Trading.
"The pellets from Northshore are not needed at this time. Rather than deplete this finite resource for the benefit of the Mesabi Trust and its so-called unitholders we will keep Northshore idle until we decide otherwise," Goncalves said during the company's second quarter analysts' call.
Cleveland-based Cliffs is in a long-running dispute with Mesabi Trust, a publicly traded company that gets all of its revenue from royalties paid by Cliffs for ore mined in Babbitt. Goncalves has called the royalty payments "absurdly high."
Northshore's mine in Babbitt and the taconite processing plant in Silver Bay have been idled since May 1, a significant economic blow to the area.
In 2019, Cliffs spent $100 million upgrading Northshore's operations to produce a better grade of iron for steelmaking. But that supply is now being sourced from the Minorca mine near Virginia, Minn., which Cliffs has owned since buying ArcelorMittal USA in late 2020.
Through acquisitions over the past couple of years, Cliffs — which also owns two other Iron Range taconite operations — has transformed itself into a full-fledged integrated steelmaker.
Goncalves also said it has begun union negotiations with United Steelworkers, which covers about half the company's workforce. The contract expires Sept. 1.
Cleveland-Cliffs made $596 million, or $1.13 a share, in the second quarter. That was down from the same quarter a year ago when it posted a profit of $780 million, or $1.33 a share.
Analysts on average had expected the company to earn $1.31 a share, according to figures compiled by Thomson Reuters.
Goncalves said he expects demand for its steel to increase as the automotive industry continues to ramp up production. He said the company has made investments to serve the current needs plus electric car factories.