Escanaba

[Guest]

There's been a lot of speculation on where Cliffs will source pellets for the Toledo plant. Regardless of whether it's Northshore or Tilden or Empire, it's new demand that could mean they need more production capacity. If they source from Northshore then some of the previous Northshore tonnage could be produced elsewhere; like Empire, if the price is right. Based on everything Cliff's has said and done, clearly something is afoot with Empire.

[Negaunee Miner]

With the Empire Mine having closed hardly any of the Tilden ore goes to Lake Michigan, so that doesn't make sense Escanaba would be open for that. Also, why would Cliffs need a year around source for their Toledo facility?

Cleveland Cliffs has publicly stated its desire to re-open Empire mine if demand for iron ore continues to increase. As for a year round source, I'm sure every steel producer on the Great Lakes would prefer that since it decreases the amount of raw material you have to purchase up front and stockpile. But they have lived with stockpiling (and seasonal direct rail shipments) since the industry started.

As for Empire supplying the new Cliffs HBI plant in Toledo, remember that it will require their DR grade of pellets for feed stock. Cleveland Cliffs is currently investing $80 million into their Northshore plant in Minnesota to increase its production of this grade of pellet. I don't think Tilden nor Empire could currently produce these grade pellets, so investment will be needed in their plants before they can supply the Toledo HBI plant.

In a statement, Cleveland-Cliffs Chairman, President and CEO Lourenco Goncalves described the deal to acquire U.S. Steel’s equity stake in Tilden Mining as “a risk free transaction” that will aid the development of a hot briquetted iron (HBI) production facility in Toledo, Ohio.

[Guest]

Cleveland Cliffs probably meant to say that the Empire mine reached its economic "end of life", meaning that at the then current prices for iron ore pellets it wasn't economically viable. Now if steel production rises, and hence an increase for iron ore pellets amd their prices, then the mine may become viable.

Here's what was said.

“It’s the end of the life,” said Patricia Persico, spokeswoman for the mine owner, Cleveland-based Cliffs Natural Resources. “There is no ore that is viable to mine anymore.”

The same is not true of the company’s adjacent Tilden Mine. Lourenco Gonclaves, chief executive of Cliffs, told community leaders earlier this year the younger mine could have several decades left.

[Guest]

Cleveland Cliffs probably meant to say that the Empire mine reached its economic "end of life", meaning that at the then current prices for iron ore pellets it wasn't economically viable. Now if steel production rises, and hence an increase for iron ore pellets amd their prices, then the mine may become viable.

[Guest]

Regardless of the type of ore required by the future plant at Toledo, Escanaba does not necessarily provide a year-round source for iron ore to users on the lower lakes. There is big difference between supplying receiving points on Lake Michigan and those on the Detroit River and Lake Erie due to the often ice clogged connecting channels (St. Clair and Detroit Rivers). I believe that when Escanaba was still a shipping port, nearly all of the ore went to mill on Lake Michigan during the winter.

[Mr Link]

When Cliffs closed the Empire Mine they said the mine had reached its "end of life." They also said there was no "viable ore left to mine." If that's the case, why would it re-open?

That's probably a question only Cleveland Cliffs can answer. But they announced in August 2017 that they were paying $132.7 million (over 3 years) to buy out ArcelorMittal's 21% share of Empire. That certainly implies Cliffs still sees some future in the mine.

A geologist I know who does mine development work told me once that a few pennies per ton in excess production costs can be all it takes to turn a once profitable mine into a money losing one. I suspect that Empire is sitting near that break even point. It probably still has a lot of ore reserves, but they are more expensive to mine that what was mined in the past. But costs are just one side of the equation. If the price of ore goes up, the added revenue could offset higher production costs.

[Guest]

When Cliffs closed the Empire Mine they said the mine had reached its "end of life." They also said there was no "viable ore left to mine." If that's the case, why would it re-open?

[Mr Link]

With the Empire Mine having closed hardly any of the Tilden ore goes to Lake Michigan, so that doesn't make sense Escanaba would be open for that. Also, why would Cliffs need a year around source for their Toledo facility?

Cleveland Cliffs has publicly stated its desire to re-open Empire mine if demand for iron ore continues to increase. As for a year round source, I'm sure every steel producer on the Great Lakes would prefer that since it decreases the amount of raw material you have to purchase up front and stockpile. But they have lived with stockpiling (and seasonal direct rail shipments) since the industry started.

As for Empire supplying the new Cliffs HBI plant in Toledo, remember that it will require their DR grade of pellets for feed stock. Cleveland Cliffs is currently investing $80 million into their Northshore plant in Minnesota to increase its production of this grade of pellet. I don't think Tilden nor Empire could currently produce these grade pellets, so investment will be needed in their plants before they can supply the Toledo HBI plant.

[Guest]

With the Empire Mine having closed hardly any of the Tilden ore goes to Lake Michigan, so that doesn't make sense Escanaba would be open for that. Also, why would Cliffs need a year around source for their Toledo facility?

[Esky Boatwatch]

The thing that everyone seems to have overlooked, is that with Escanaba open the lower lake mills had a port to load ore at weeks before the Soo opened.

That is correct.
There was only a brief period, usually the month of February, that no vessels were running out of Escanaba.
Otherwise, the Joe Block and Great Lakes Trader pretty much ran all winter from Escanaba to Indiana.
The Trader has a hull designed to go through ice, and Basic Marine kept the dock opened.
With the future needs of Toledo, Escanaba could become a year round Iron Ore loading operation again.

[PDBLK25]

The thing that everyone seems to have overlooked, is that with Escanaba open the lower lake mills had a port to load ore at weeks before the Soo opened.

[Guest]

Touched bases with a couple guys that have a connection to CN and they both said there's no way Escanaba will be shipping pellets again.

[Woodtick]

The ore cars are being scheduled for use at the Escanaba dock

[DL]

What my understanding is the empire mine that supplied Escanaba the tracks are different than Tilden mine. What I heard Cleveland Cliffs is gonna match the track from Tilden to Escanaba. So once the facility in Toledo is finished they can haul from Escanaba to Toledo year round. The Toledo facility is moving right along.

[Jon Paul]

The L.S. & I Dock in Presque Isle is roughly 25 miles from the Empire Mine, the dock in Escanaba is closer to 75 miles.
When I was sailing for Cliffs we took Empire pellets out of both ports.
I would love to see boats loading in Esky once again but like anything else in the Great Lakes Shipping world, rumors swirl and there's always some new story going on.
The reality is that the dock won't open unless the powers that be see a financial and strategic advantage in having an ore loading and shipping port again on Lake Michigan.

[Mr Link]

If ore can be railed down from the mines in Minn to the ports of Duluth/ 2 Harbs / Silver bay; If ore deliv'd to Ashtabula can be railed into Cleveland; if ore can be deliv'd to Conneaut and railed to USS plants in PA; then WHY is it off the mark for ore to be railed from the Marquette mines to Escanaba (~60 mi as the wind blows) and then be available for the lower lakes with out having to deal with the seasonality of the Locks ? It would see a whole lotta water miles and lock time could be relatively easily replaced with a few unit trains across the Upper Peninsula. Does anyone have some insight as to the economics in play here ?
TIA

I think the biggest factor is that Cleveland Cliffs already owns the railroad from the mines to the dock at Marquette. So they can directly control their costs and scheduling. CN owns the railroad to Escanaba so not only does Cleveland Cliffs loose some control, they also have to pay CN to move the ore.

It will be interesting to see what happens. I'd love to see the Escanaba dock open back up. I think it all depends on what price CN gives Cleveland Cliffs.

[Esky Boatwatch]

The talk was about the possible re-activation of the Empire Mine, which supplied the ore that was shipped out of Escanaba. In the event that the mine does reopen, Cliffs intends to have Ore shipped out of Marquette via the LS&I. Escanaba's days as an ore port are over.

JT:
I am just wondering, do you have credible information, or just voicing an opinion?
I know for a fact they are doing maintenance at the Escanaba CN Ore Dock. I know a contractor who has been working onsite. No reason to do maintenance, unless you intended to use it.

[Jerry at Duluth]

Few people have an understanding of how much cheaper the water transportation of cargo is when compared to rail or other means of transport. My guess is that the cost of rail transport from Marquette to Escanaba is more than the cost of water transportation to that point. The industry does not close a port that handles cargo at a lower cost. The port was closed because the cost of operation exceeded the cost of water transportation.

[hugh3]

Agreed that I am talking about many years ago 60/70's, but at that time I was told that it cost (per ton) as much to bring the ore from the mines to the docks in Duluth as it cost to take the ore from the docks In Duluth to the furnaces on the lower lakes!

[Hobieone]

If ore can be railed down from the mines in Minn to the ports of Duluth/ 2 Harbs / Silver bay; If ore deliv'd to Ashtabula can be railed into Cleveland; if ore can be deliv'd to Conneaut and railed to USS plants in PA; then WHY is it off the mark for ore to be railed from the Marquette mines to Escanaba (~60 mi as the wind blows) and then be available for the lower lakes with out having to deal with the seasonality of the Locks ? It would see a whole lotta water miles and lock time could be relatively easily replaced with a few unit trains across the Upper Peninsula. Does anyone have some insight as to the economics in play here ?
TIA