Operations at Northshore Mining will be idled this spring until at least the fall, Cleveland-Cliffs Chairman, President and CEO Lourenco Goncalves said on a conference call on Friday. Northshore, a subsidiary of Cleveland-Cliffs, includes the Silver Bay and Babbitt operations in Minnesota.

Gonclaves said after the company moved production of direct-reduced grade pellets to its Minorca mine in Virginia, Minnesota, the company needed to look at its cost structure and determine where to adjust production.

Because the company can now produce direct-reduced grade pellets at Minorca and the “ridiculous royalty structure” the company has in place with the Mesabi Trust, the company will idle production at the Northshore mine. This means no production, no shipments, no royalty payments, Gonclaves said.

The  Mesabi Trust is a publicly traded trust that collects royalties from Cliffs based on the volume of shipments from Northshore.

The company said it has been trying to stretch its hot metal but adding increased amount of scrap to the basic oxygen furnaces (BOF). With more scrap in the BOFs, fewer tons of hot metal are needed to produce the same tonnage of liquid steel. “As a consequence, the Northshore idle could go longer than currently planned,” he added.

In the second quarter of 2022, the company will also permanently close the Mountain State Carbon coal plant. This will not only improve the company’s carbon footprint but will also save the company approximately $400 million in CapEx originally planned for this facility, over the next few years.

Although jobs are going to be eliminated at Mountain State Carbon, the company said there are enough job openings at other nearby Cleveland‐Cliffs facilities.