Cleveland-Cliffs Inc (NYSE:CLF) has bought United States Steel Corporation’s 15% equity stake in the Tilden Mining Company in cash for a deal valued at $105 million. The company previously owned an 85% stake in the joint venture and now has 100% ownership of the mine. The deal completed on September 29, 2017.
With the closing of this deal, Cleveland-Cliffs has added annual pellet production capacity of 1.2 million long tons and 55 million long tons of probable and proven crude ore reserves. With the increased capacity, Cliffs U.S. Iron Ore business division anticipated pellet sales volume will surge to 20 million long tons in next year from a projected 19 million long tons in this year.
Lourenco Goncalves, the CEO, Chairman and President of Cleveland-Cliffs, expressed that with the prevailing métier in the Great Lakes iron ore pellet segment and expected future demand from their HBI facility, buying additional pellet capacity turned a top priority for company. They have run Tilden since 1974 and buying the remaining stake of the mine became the most rational path to achieving this through a risk free deal.
The Tilden Mine marks as an iron ore mining, pelletizing, concentrating and railroad operation based in Ishpeming, Michigan, that has a workforce of around 900 employees. Cleveland-Cliffs will be issuing third-quarter 2017 financial report before the U.S.-market hours on Friday, October 20, 2017. Founded in 1847, it is the largest independent iron ore mining entity in the United States. The company is a prime supplier of iron ore pellets from its pellet plants and mines located in Minnesota and Michigan to the steel market in North America.
In the last trading session, the stock price of Cleveland-Cliffs jumped more than 3% to close the day at $7.39. The gains came at a share volume of 10.11 million compared to average share volume of 9.49 million.