Cut off from its iron ore supply, Essar Steel Algoma has filed a request for a temporary restraining order in an Ohio court against Cliffs Natural Resources.
In an Oct. 6 news release, Essar said the matter is before a federal judge in Cleveland, Ohio.
“Essar Steel Algoma fully expects Cliffs to honour the supply agreement until such time as the matter has been justly resolved,” the Sault Ste. Marie plate and sheet producer said in a statement.
Hours earlier, Cliffs announced it had halted shipments to Essar by terminating its longstanding agreement to supply Essar with taconite iron ore pellets. The decision took effect Oct. 5.
A spokesperson with Cliffs was unavailable for comment.
Essar spokeswoman Brenda Stenta said a “swift ruling” is expected on the matter.
“There is no immediate impact to operations.”
United Steelworkers Local 2251 president Mike Da Prat was unable to comment as all parties are under a gag order, including himself, because of highly sensitive material information relayed to him by Essar.
But the union has filed an affidavit with the United States District Court, Northern District of Ohio, in support of Essar Steel Algoma’s request.
Cliffs is the main supplier of taconite to Essar, but the two companies in recent years have endured a bitter relationship concerning the supply agreement that’s gone to court to resolve.
In Sault Ste. Marie, Essar recently announced approximately 100 workers were being laid off at the plant as the company seeks to cut costs during a poor steel market.
Pricing for iron ore pellets are at historic lows as steelmakers like Essar are blaming their financial woes on a surge of cheap foreign steel being dumped on the North American market that’s negatively impacting steel prices and demand.
Cliffs and Essar are also shaping up to be mining competitors on the Mesabi Range in northern Minnesota. Essar is building a controversial taconite mine and processing mill in Nashwauk.
Cliffs owns and operates several struggling mines and taconite mills in northern Minnesota.
Meanwhile Essar Steel, the parent of Essar Minnesota, is quickly building a US$1.9-billion taconite mine with a direct-reduction iron production plant in the state.
Essar expects to be producing pellets in the second half of 2016.
Cliffs CEO Lourenco Goncalves has been openly critical of the Essar project, telling Minnesota media outlets that Nashwauk won’t make it to production.
The State of Minnesota is also in talks with the Mumbai, India, global conglomerate’s failure and broken promises to build the state’s first fully integrated mine and steel mill complex.
Essar was given $65.9 million in public infrastructure grants and $6 million in loans to build the complex by Oct. 1, 2015. With steel mill out of their plans, the state can force Essar to reimburse the subsidies.
