U.S. Iron Ore Operations
Blast Furnace Pellets
We produce various grades of iron ore pellets, including standard and fluxed, for use in our customers’ blast furnaces as part of the steelmaking process. The variation in grades results from the specific chemical and metallurgical properties of the ores at each mine and whether or not fluxstone is added in the process. In many cases our iron ore pellets can be used interchangeably.
Industry demand for the various grades of iron ore pellets depends on each customer’s preferences and changes from time to time. In the event that a given mine is operating at full capacity, the terms of most of our pellet supply agreements allow some flexibility in providing our customers iron ore pellets from different mines, if feasible.
Standard pellets require less processing, are generally the least costly pellets to produce and are called “standard” because no ground fluxstone, such as limestone or dolomite, is added to the iron ore concentrate before turning the concentrate into pellets. In the case of fluxed pellets, fluxstone is added to the concentrate, which produces pellets that can perform at higher productivity levels in the customer’s specific blast furnace and will minimize the amount of fluxstone the customer may be required to add to the blast furnace.
While most iron ore producers mine, market and sell a commoditized product that is effectively fungible across most blast furnaces, our production of custom-made pellets is the true differentiating factor when comparing Cliffs to its peers in the iron ore space. During the 1950’s, Cliffs pioneered a process that beneficiated the lower-grade ore into high quality, custom made pellets. Since that time, Cliffs has remained on the cutting edge of this technology. While iron ore pellets are made in other parts of the world, it can be said that competitive pellet producers are still “catching up” to the improvements Cliffs continues to make in its unrivaled product quality.
Mainly, our iron ore pellets perform superior to other products in the market due to the productivity it help to drive in the customer’s blast furnace. As Cliffs pellets are homogenous in size, they rank at the top versus other comparable pellets with regard to consistency in size. This consistency allows air to flow through the furnace efficiently, and thus, drive the most optimal yield possible. The other superior quality of the Cliffs product is that it minimizes pollution in the steelmaking process. Compared to a fines or sinter product, iron ore pellets have the advantageous homogenous qualities as well as much higher iron content. As a result, emissions from the blast furnaces are diminished. We believe that as pollution becomes more of an issue in China, more iron ore producers will continue to attempt to emulate the quality of Cliffs pellets while the market begins to shift in that direction.
Using its technical expertise to increase product offerings, Cliffs is excited about its new business opportunity as a supplier of DR-grade pellets to DRI producers. At this stage, the Company has reached a significant milestone with very positive results from the successful operational trial of our DR-grade pellets. Full-scale production testing has been successful, and we are well-positioned to produce DR-grade pellets that achieve DRI-targeted specifications. Having received environmental permits to produce DR-grade pellets, we are actively pursuing commercial opportunities with companies who have or who are planning U.S. DRI operations.