Cliffs Natural Resources Inc.
) has announced an agreement to sell its 45% stake in the Sonoma
coal mine joint venture in Queensland, Australia, to QCoal Sonoma
Pty. Ltd. (QCoal) for approximately AUD$141 million in cash. Cliffs
expects to close the deal in the fourth quarter of 2012.
Apart from QCoal, JS Sonoma Pty. Ltd, CSC Sonoma Pty. Ltd. and
Watami (Qld) Pty Ltd. also have stakes in the joint venture. The
existing joint venture provided all the stakeholders with the
rights to acquire their share of Cliffs' interest on a pro rata
basis depending on the conditions of sale.
Cliffs, in April 2012, released its first-quarter 2012 earnings.
The company witnessed lower profit in the quarter on account of
higher costs. However, sales improved 7% year over year to $1,264.7
million driven by higher volume across the board.
Cliff is switching its focus from acquisition-led growth to
organic growth including developing assets within its existing
project pipeline. The company sees steady end-markets for its
customers on the back of a recovering U.S. economy.
Cliffs is the largest producer of iron ore pellets in North
America. It remains optimistic regarding the prospects for cash
generation and the opportunities that will fund organic growth
projects and return cash to shareholders. The company also has a
significant presence in the Asia-Pacific region, where demand is
still robust, lending support to shipments.
However, the prices for commodities have been under pressure due
to the uncertain economic environment. International demand and
economic conditions strongly affect the prices of iron ore and
coal. The current uncertain macroeconomic environment, including
the European sovereign debt crisis, may impact the company's
operations and its results.
Cliffs, which competes with
CONSOL Energy Inc.
Alpha Natural Resources, Inc.
), currently retains a Zacks #3 Rank, reflecting a short-term (1 to
3 months) Hold rating. Currently, we have a long-term (more than 6
months) Neutral recommendation on the stock.
ALPHA NATRL RES (ANR): Free Stock Analysis
CLIFFS NATURAL (CLF): Free Stock Analysis
CONSOL ENERGY (CNX): Free Stock Analysis Report
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