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Cleveland-Cliffs' CEO on Contract, Bullish Market

Updated: October 19, 2018 09:19 PM

The Cleveland-Cliffs train keeps going. According to their 3rd quarter earnings statement on Friday, increased customer demand has resulted in a higher sales volume of pellets.

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But the major achievement of note, was the new labor deal. The tentative agreement was reached before the deadline, and then ratified last week.

Lourenco Goncalves, CEO, said that it includes a 14% wage increase over four years. "We are proud of our workforce. And value our relationship with the union very much. This is an investment in our workforce that has a guaranteed payoff," he explained on the earnings call. 

As for the impact to the company, he said the cost is around $80 million dollars.

With that behind them, he is looking ahead to the political landscape of Minnesota. He's met with both men who want to be governor of Minnesota, Jeff Johnson and Tim Walz. "My conversations with both candidates were extremely constructive. And it seems like both Commissioner Johnson and Congressman Walz understand the Nashwauk situation well."

He maintains confidence in the future of that property.

"With the vast amount of land we control within the entire Nashwauk iron strip, it's only possible to develop a real, economically viable project in Nashwauk, if Cliffs is running the project," Goncalves added.

He's also bullish about the market conditions. "Early indications from domestic clients show strong demand for domestic pellets into next year. And in 2019, we will be diverting approximately 500,000 long tons of DR grade pellets to Toledo."

Toledo is the place Cliffs is building a $700 million dollar HBI plant. Pellets from Northshore Mining are going to feed the plant, which is expected to start production in 2020.

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