Cliffs Natural Resources is executing plans to reduce production at its six North American iron ore mines to a current annualized rate of around 15 million equity st, with total production at an annualized rate of 22 million st, the US miner said Monday.

 

This compares with expected 2008 production of approximately 23 million equity st, with total production of approximately 36 million st.

 

"It is important to recognize that the decision to adjust production is being made to balance our operations with current industry demand and avoid unnecessarily investing cash into working capital," said Joseph A. Carrabba, the company's chairman, president and CEO, in a statement.

 

"We are well positioned to resume increased production levels in a relatively short time upon any increases in this demand," he added.

 

For 2009, Cliffs said it has contractual obligations for around 75% of 2008 expected sales volumes of approximately 24 million st, but the company noted that based on current market uncertainties and corresponding blast furnace capacity utilization in North America, it would continue to monitor the marketplace and adjust its production plans up or down as needed.

 

Cliffs is temporarily idling various pellet furnaces and initiating workforce adjustments at each of its North American iron ore mines, the company said. At the expected current annualized production rate, 2009 cost per st will be higher than expected 2008 cost $57/st, as around one-third of its 2008 total cost of goods sold in its North American iron ore segment are fixed costs, Cliffs said.

 

Cliffs' Asia-Pacific iron ore business segment is maintaining production at a current annualized rate of approximately 7.5 million mt, the company said, adding that it had agreed to sell some shipments at current spot prices for lump and fines iron ore in order to maintain production levels in the current challenging market environment. –Platts