Cliffs Natural Resources Inc. (NYSE:CLF) has confirmed plans to construct a $700 million hot briquette iron production plant in Ohio. Construction of the 1.6 million ton plant will begin in 2018 with completion slated for mid-2020. The project is contingent upon approval by the State.
$700 Million Iron Ore Plant
The $700 million project has already received $30 million in grants among other financial incentives. The iron ore plant will be Cliff’s Natural Resources first in Ohio expected to result in the creation of 1,200 construction jobs with 130 of them being permanent jobs. Hourly jobs at the plant will pay as much as $100,000 a year according to chief executive officer, Lourenco Goncalves.
“We got a site in the Port of Toledo that is extremely convenient. It is close to the clients and has easy access. Logistically, it is an extremely positive site for us receiving iron pellets from Minnesota to produce the HBI, or hot briquetted iron,” said Mr. Goncalves.
Cliffs Natural Resources settled on the brownfield site for the iron facility, due to its relative proximity to potential future customers. The site also boasts of a number of logistics advantage that includes gas availability as well as multiple rail lines that the company will use to transport products.
Focusing On US Operations
Construction of the plant in Ohio is part of the company’s new plan that seeks to increase focus on profitable U.S operations. The company has in the recent past trimmed its operations abroad having come under immense pressure from iron ore mining giants Rio Tinto plc. (ADR)(NYSE:RIO) and BHP Billiton Limited (ADR)(NYSE:BHP). The fact that these companies enjoy access to low-cost iron ore deposits made it impossible for Cliff Natural Resource to compete against.
A slowdown in Chinese operations also made it extremely hard for the company to compete especially with the increase in iron ore supply in the global market. Focusing on U.S operations will allow the company to enjoy the benefits of demand-supply dynamics unlike abroad where prices depend on international iron ore prices.
Cliffs Natural Resources was up by 0.3% in Monday’s trading session to end the day at $6.64 a share.