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Cliffs to Temporarily Idle Iron Ore Pellet Production

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Cliffs Natural Resources Inc.CLF said that it will temporarily idle iron ore pellet production at its Northshore Mining operation in Minnesota by Dec 1, 2015. Cliffs expects both Northshore and United Taconite operations to be temporarily idled through the first quarter of 2016. The company will maintain minimum number of staff during the temporary idling to be implemented for basic maintenance duties and on-going work to support the DR-grade pellet trials.

The company stated that the historic high tonnage of foreign steel dumped into the U.S. continues to hurt the steel production levels of its domestic customers. Per the company, the pellet inventory at both Northshore and United Taconite is sufficient to meet current customer demands, and thus the company will be able to have optimum working capital and cash flow by temporarily idling production at Northshore.

The pellet inventory is at a seasonally, historic high level. The domestic steelmakers filed trade cases against several countries and covering a variety of steel products, which should bring about a positive result during the first half of 2016. Cliffs will immediately ramp up production by restarting idled facilities as soon as the unfairly traded steel problem subsides and domestic steel production returns to normal levels.

Cliffs will continue to operate the Hibbing Taconite mine in Minnesota and the Tilden and Empire mines in Michigan. The company reaffirmed its previous cash production cost per ton expectations for 2015 while lowering its cash production cost expectation for 2016 to $50-$55 per ton and cash cost of goods sold expectation to $60--$65 per ton. The cash cost of goods projection includes $9 million per month of idle costs for the Northshore and United Taconite mines.

Cliffs currently carries a Zacks Rank #3 (Hold).

Some better-ranked mining stocks include Atlas Iron Ltd. AGODY , Fortescue Metals Group Ltd. FSUGY and NovaGold Resources Inc. NG . All of these carry a Zacks Rank #2 (Buy).

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CLIFFS NATURAL (CLF): Free Stock Analysis Report

NOVAGOLD RSRCS (NG): Free Stock Analysis Report

FORTESCUE METAL (FSUGY): Free Stock Analysis Report

ATLAS IRON LTD (AGODY): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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