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Gary Halverson

New Cliffs CEO visits Iron Range, predicts stable times for taconite

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business Duluth, 55802
Duluth Minnesota 424 W. First St. 55802

VIRGINIA -- In his first 100 days on the job, Gary Halverson closed Canada's third largest iron ore mine, halted a chromite mining project in Ontario and worked to fend off a Wall Street demand that his company split up.

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Other than that, it was mostly uneventful for the new president and chief executive officer of Cliffs Natural Resources.

Halverson spent Thursday on the Iron Range, where his company operates three of Minnesota's six major taconite iron ore operations, saying his company is "shrinking to grow'' but predicting a good year for its part of the state's taconite industry.

Halverson, speaking to Iron Range business and community leaders, said he expects U.S. automakers to build 16.5 million vehicles in 2014, 1 million more than 2013; that new construction should increase 6 to 8 percent this year; and that U.S. steel demand should increase 4 percent this year over last, creating a good market for his company's taconite iron ore.

"We're about back to full production at NorthShore (mining) and we expect to produce between 22 and 23 million tons of pellets this year'' at U.S. operations, Halverson said, noting that's up from 21 million tons in 2013.

The Ontario native and former gold mining executive said all three of Cliffs' Minnesota operations -- Hibbing Taconite, United Taconite and NorthShore Mining -- will be at virtually full capacity with stable employment in 2014. Moreover, the company's Upper Michigan operations, Empire and Tilden also will keep producing, with Halvorsen at the helm as Cliffs inked a deal last month with ArcelorMittal USA that will keep Empire open into 2017, two years after it was scheduled to be closed.

With the company scaling back on global growth plans and cutting new spending in half from 2013, Halvorsen intends to "focus on the core business of what we do; iron ore" as part of the company's "drive to a leaner, more efficient organization." But, Halverson said his company will continue to invest in its Iron Range operations, noting they are among the most cost competitive in the North America.

Cliffs said in February that it would close its Wabush iron ore mine in Newfoundland and Labrador and suspend efforts to build a second phase at its Bloom Lake iron ore mine in Quebec. Cliffs also owns an iron ore mine in Australia and coal mines in the U.S.

Halverson's company was praised by several Iron Range officials Thursday at the company's annual breakfast gathering for Cliff's stable operations and investment in Minnesota. The company has 1,856 employees on the Range with a payroll of $251 million.

Halverson, who now oversees 7,100 Cliffs employees worldwide, previously headed Toronto-based Barricks North American operations, which included 10 mines and 6,200 employees. He has also managed mines in Australia and Papua New Guinea.

On other issues Halverson:

  • Said his company stands ready to produce so-called DRI-ready taconite pellets that are made for electric arc steel mills, but so far hasn't found a customer near enough to Minnesota to warrant shipping costs. Cliffs current pellet production is generally aimed at traditional blast furnaces on or near the Great Lakes. But electric arc "mini mills" now account for about 60 percent of the U.S. steel made. Halverson said tests of some 30,000 tons of low silica, DRI-ready pellets at NorthShore Mining went very well but that the company won't start making the pellets until a customer sings on.

    "There are no customers yet in our field of view,'' Halvorsen said. "But it's coming."

  • Said Cleveland-based Cliffs was "well positioned'' for an upcoming increase in global taconite production, including the massive Roy Hill mine in Australia that will produce more than all U.S. mines combined. There's also additional U.S. capacity expected within three years at the Essar Steel taconite plant in Nashwauk under construction and the proposed Gogebic taconite operation in Wisconsin.
  • Declined to elaborate on the status of the effort by Casablanca, the New York-based hedge fund that now owns more than 5 percent of Cliffs' stock, to pressure Cliffs into selling its overseas assets and slash spending to increase profits. Halvorsen said the company can't comment due to a "quiet period," although company officials say they have already taken the steps necessary to control costs and keep the company profitable for shareholders.

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