Soon after Cliffs Natural Resources Inc (NYSE:CLF) made an announcement regarding its power solution agreement with WEC Energy Group Inc (NYSE:WEC), a need for clarification was seen.
What followed was that Cliffs and WEC Energy decided to issue a joint statement to try to bring some matters that did feature clearly in the earlier announcement to light.
So far what we know is that Cliffs is not making a direct financial investment in the gas-fired power project that WEC Energy is creating in the Upper Peninsula of Michigan. Instead, it is WEC Energy and its affiliates that will put $255 million into the project. But Cliffs will use the electricity to power its Tilden mine.
What’s the generating capacity?
In an earlier press release, Cliffs said that WEC Energy will be seeking to generate 170 MW of power at two sites in the Upper Peninsula. The two facilities are expected to come online in 2019, with the timing being ahead of the end-of-life for the Presque Isle Power Plant.
Cliffs said that it is getting into a new 20-year agreement with WEC Energy to supply electricity to its Tilden mine. The company further said that it was looking forward to a more reliable and affordable electricity supply, which should in turn make its Tilden mine the most efficient producer of pellets.
Cliffs supplies North American steel industry with iron ore pellets produced from its plants in Michigan and Minnesota.
Benefit to the residents
Besides supplying the Tilden mine, the energy collaboration that Cliffs has entered into with WEC Energy will also benefit residents of the Upper Peninsula. Those residents have long suffered from electricity reliability problems.
Cliffs noted that the long-term energy generation agreement with WEC Energy demonstrates the success of the settlement that was reached by key stakeholders in the State of Michigan.