Cliffs Natural Resources Inc has announced that it plans to dissolve its Joint Venture with Kobe Steel on developing the ITMk3 rotary hearth process to produce iron nuggets. The project, based in Michigan, USA, was estimated to cost some $200M.

The joint venture was originally formed in 2007 to explore the viability of constructing a commercial operation to produce a pig iron substitute using Kobe's ITmk3 technology and Cliffs' iron ore assets. This product was anticipated to be marketed as a feedstock to the electric arc furnace and foundry markets. The plant was designed and permitted for construction adjacent to Cliffs' operations in the Upper Peninsula of Michigan.

Cliffs indicated that throughout the life of the venture it had conducted a number of feasibility studies on the possibility of pursuing a commercially viable process, but ultimately concluded that given its strategic priorities to focus on its core ore business, continued work on the project should be ended.

Cliffs said it had less than 10 employees exclusively working on the joint venture and plans to reassign nearly all to other positions within the Company. In addition, there are no anticipated material financial impacts as a result of the decision.

To date, one ITMk3 unit is operating at Hoyt Lake, northern Minnesota which started in January 2010. Known as, Mesabi Nugget, it is the world's first commercial plant using the ITmk3 Process and is a joint venture between Steel Dynamics and Kobe Steel.

A number of projects are awaiting the outcome of the Mesabi Nugget plant which saw various delays in ramp-up to its full capacity of 500kt/y. In Q4 2011 the plant shipped 53kt, up 62% on Q3 2011. In 2012 they are projecting output at 280kston or 56% of design capacity.

At the close of 2011, Indian State owned SAIL announced a jv to study the feasibility of building such plants in India which suffers a lack of coking coal. Prior to this, Thach Khe Iron JSC in Vietnam announced a jv with Kobe in May 2011 and Kumba Iron ore of South Africa said, in April, it was one of four processes they were studying. In May 2010, SBS Steel of Kazakhstain said it would consider the process once the outcome of Mesabi Nugget was known.