Cliffs Natural Resources Inc.
) has extended its commercial agreement with ArcelorMittal USA, a
part of steel giant
), which incorporates new amendments to supply iron ore pellets
for an additional two years through the end of Jan 2017. On
mutual consideration, the partnership can be extended for a third
Additionally, Cliffs has also extended its joint partnership
with ArcelorMittal USA for the Empire Mine located on the
Marquette Iron Range in Michigan. Empire mine was nearing closure
with a scheduled expiry of the partnership agreement in Dec 2014
as the mine did not have any customer for pellet production
However, as a result of the amended commercial agreement, the
partners have mutually agreed to extend the life of this mining
operation by two years. Empire mine will now operate till
Close working relationships at the commercial as well as
operational levels coupled with strong long-term customer and
partner relationships which both ArcelorMittal and Cliffs share
has led to this agreement-expansion decision.
Cliffs will continue to supply high-quality iron ore pellets
to one of ArcelorMittal USA's facilities. The employees of Cliffs
can relax with this news as they will continue operations at
For 2014, Cliffs expects sales and production volume to be
between 22 million tons and 23 million tons from its Iron Ore
business in U.S. Iron ore cash-cost-per-ton for 2014 is expected
to be within $65 to $70. Cliffs will be utilizing limited capital
for this extension.
At the Empire mine, Cliffs has a 79% ownership and the
remaining 21% is owned by a subsidiary of ArcelorMittal USA with
limited rights and obligations. Operations at the mine are
performed through an open pit truck and shovel mine, a
concentrator that utilizes single stage crushing, AG mills,
magnetic separation and flotation to produce a magnetic
concentrate that is then supplied to the on-site pellet
Cliffs released its fourth-quarter 2013 results on Feb 13. The
company's adjusted earnings from continuing operations (barring
special items) of $1.22 per share increased roughly two-fold from
63 cents per share reported in the year-ago quarter. The results
also surpassed the Zacks Consensus Estimate of 77 cents.
Consolidated net income was $31 million (or 20 cents per
share) versus a loss of $1.6 billion (or $11.36 per share)
registered in the year-ago quarter.
Sales for the quarter came in at $1,515.8 million, down 1.3%
from $1,535.9 million in the prior-year quarter. However, it came
ahead of the Zacks Consensus Estimate of $1,450 million. The
decrease was due to lower market pricing and sales volumes for
metallurgical coal products partly offset by a 10% rise in global
seaborne iron ore pricing.
Cliffs expects a healthy pace of economic growth in the U.S.
to support domestic steel production and demand for steelmaking
raw materials. The Chinese economy is also expected to expand at
a pace near the official government target rate, driven by fixed
asset investment. Growth in both these markets is expected to
lead to continued demand for Cliffs' products. It expects pricing
of its commodities to remain volatile.
Cliffs currently carries a Zacks Rank #3 (Hold).
Other companies in the mining industry with favorable Zacks
Stillwater Mining Co.
Rio Tinto plc
). While Stillwater Mining sports a Zacks Rank #1 (Strong Buy),
Rio Tinto carries a Zacks Rank #2 (Buy).
CLIFFS NATURAL (CLF): Free Stock Analysis
ARCELOR MITTAL (MT): Free Stock Analysis
RIO TINTO-ADR (RIO): Free Stock Analysis
STILLWATER MNG (SWC): Free Stock Analysis
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