North American Iron Ore Industry

Survival or not? 2009 was the year for the North American iron ore industry to test the thesis of Consolidated Survival. Although many mines closed for various time periods, no mine shut down or went into bankruptcy, despite a 47% cut in pellet output for the year. Cushioning the impact of the subprime crisis were: the consolidation of the industry into four main entities from the 19 multi-layered overlapping ownerships of the 1990s, the increasing opportunities for the Eastern Canadian mines in the global seaborne ore market and the higher export prices.

The domestic iron ore industry of today is marked by more consolidated control, reduced marginal capacity and higher productivity. On the marketing side, the major players are now able to optimally supply the domestic or the export market with the most cost competitive ores. This has become very important as the domestic steelmaking industry has been cut from 18 to 7 BF pig iron producers.

The just completed WSD Core Report J evaluates: The North American iron ore industry in the current economic downturn; the status of Cliffs Natural Resources; the cost competitiveness of the individual mines; iron ore pricing; iron ore supply/demand; the blast furnace situation; and the delivered costs and prices to major USA and Canadian steel mill markets.

In the last decade, Cliffs transformed itself from a mine “management house” into North America’s leading owner of iron ore capacity and also into the steel industry's leading merchant iron ore supplier. In the 1990’s, U.S. steelmakers owned 85% of their iron ore supplies compared to a 50% ownership share today. Cliffs, on the other hand, had a 7% share in 1990 and has a 32% share today.

This study was prepared in conjunction with Dr. Peter J. Kakela of Michigan State University.

Core Report J, is provided to WSD subscribers as part of their regular annual service. The price for non-subscribers is $4,000.