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Cliffs Natural Resources

NEWS RELEASE: Cliffs Natural Resources Inc. Announces Decision on Bloom Lake Mine

 Commences Formal Canadian Restructuring Proceedings

CLEVELAND, Jan. 27, 2015 /PRNewswire/ — Cliffs Natural Resources Inc. (NYSE: CLF) announced today that Bloom Lake General Partner Limited and certain of its affiliates, including Cliffs Quebec Iron Mining ULC (collectively, “Bloom Lake Group”) commenced restructuring proceedings in Montreal, Quebec, under the Companies’ Creditors Arrangement Act (Canada) (“CCAA”). The Bloom Lake Group had recently suspended operations and for several months has been exploring options to sell certain of its Canadian assets, among other initiatives.

The decision to seek protection under the CCAA was based on a thorough legal and financial analysis of the options available to the Bloom Lake Group. The Bloom Lake Group is no longer generating any revenues and is not able to meet its obligations as they come due. The Initial CCAA Order will address the Bloom Lake Group’s immediate liquidity issues and permit the Bloom Lake Group to preserve and protect its assets for the benefit of all stakeholders while restructuring and sale options are explored.

As part of the CCAA process, the Court has appointed FTI Consulting Canada Inc. as the Monitor. The Monitor’s role in the CCAA process is to monitor the activities of the Bloom Lake Group and provide assistance to the Bloom Lake Group and its stakeholders in respect of the CCAA process.

Lourenco Goncalves , Chairman of the Board, President and Chief Executive Officer of Cliffs Natural Resources Inc. said, “For several months, we have been seeking equity investors and exploring sale options for Bloom Lake including working collaboratively with Investissement Québec. We support the decision by the directors of the Bloom Lake Group to conduct a restructuring process under the supervision of the Court.”

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Cliffs CEO warns Iron Range lawmakers over aid deal for Essar Steel – by John Myers (Duluth News Tribune – January 12, 2015)

http://www.duluthnewstribune.com/

The head of Cliffs Natural Resources met with Iron Range state lawmakers Monday evening in St. Paul, warning the state’s ongoing help for Essar Steel may impact his company’s operations in Minnesota.

In his first ever meeting with the Range delegation, Cliffs CEO Lourenco Goncalves told lawmakers that Essar’s entry into the U.S. taconite iron ore market may upset what has been a well-balanced supply-and-demand chain.

“It was a very friendly meeting. Not confrontational at all. But he made it clear that giving Essar Steel any additional state subsidy may have a detrimental impact on Cliffs down the road,’’ state Rep. Carly Melin, DFL-Hibbing, told the News Tribune.

Goncalves has headed the Cleveland-based company since August, after Cliffs’ previous management team was ousted in a hostile takeover by the New York hedge fund Casablanca Capital.

Cliffs says Essar will become a direct competitor for its taconite iron ore operations – including NorthShore Mining, United Taconite and Hibbing Taconite in Minnesota. Cliffs has some 1,850 employees at the three Minnesota plants, with a payroll of over $250 million annually.

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Investissement Québec in talks to reopen Cliffs Natural Resources mine in Bloom Lake – by Frederic Tomesco and Liezel Hill (Bloomberg News/Montreal Gazette – January 8, 2015)

http://montrealgazette.com/

Quebec is talking to U.S. miner Cliffs Natural Resources Inc. about restarting the Bloom Lake iron-ore mine in the northeast of the province.

It’s too early to provide more details on the discussions or speculate on potential outcomes, Quebec Energy and Natural Resources Minister Pierre Arcand said in an interview yesterday.

Investissement Québec, an investment arm of the provincial government, is talking to the Cleveland-based company “about the next step,” he said. “We’ll look for the best way to relaunch this facility.”

Cliffs announced Jan. 2 it had ended production at Bloom Lake, less than two months after the company said it was considering the closing of the project. Cliffs acquired the mine in 2011 via its C$4.2 billion ($3.6 billion) takeover of Consolidated Thompson Iron Mines Ltd.

Cliffs is exiting higher-cost operations to focus on its domestic business after iron-ore prices slumped to a five-year low amid weakening demand for the steelmaking ingredient in China, the biggest consumer. A Cliffs spokeswoman didn’t immediately respond to requests for comment.

Quebec Finance Minister Carlos Leitao said in June that his government would revive the so-called Plan Nord, a strategy to tap mining and energy resources north of the 49th parallel that the previous administration halted in 2012.

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NEWS RELEASE: Cliffs Natural Resources Inc. Concludes the Sale of Logan County Coal and Provides Update on Bloom Lake

CLEVELAND, Jan. 2, 2015 /PRNewswire/ — Cliffs Natural Resources Inc. (NYSE: CLF) is pleased to announce that it has completed the sale of its Logan County Coal assets in West Virginia to Coronado Coal II LLC, an affiliate of Coronado Coal LLC, for $174 million in cash and the assumption of certain liabilities. The expected tax benefit associated with the transaction will be between 20% to 25% of the previously disclosed pre-tax loss of approximately $400 million, which represents an additional benefit of $80 million to $100 million in future cash tax savings. Cliffs will record the results of this sale in its fourth quarter earnings.

Separately, Cliffs confirms that active production at Bloom Lake has completely ceased and the exit from Eastern Canada continued to be executed on schedule as previously announced. The mine has transitioned to care and maintenance status and, consequently, at this time only a small number of employees involved in such activities are still in the payroll. The last shipment of iron ore out of the Port of Sept-Iles will be completed in early January 2015.

Lourenco Goncalves , Cliffs’ Chairman, President and Chief Executive Officer said, “The execution of the strategic initiatives outlined during our Q3 Conference Call in October 2014 continued to progress as planned during the last two months. The sale of Logan County Coal, which included a meaningful tax benefit to the Company, clearly demonstrates our ability to execute complex transactions despite an adverse M&A environment for commodity related transactions. Additionally, as we approach the final steps of our exit from Eastern Canada, we have brought to an end the flawed expansion that has cost Cliffs and its shareholders billions of dollars.”

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Cliffs’ Bloom Lake mine hit with record $7.5-million environmental fine – by Bertrand Marotte (Globe and Mail – December 26, 2014)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

Cliffs Natural Resources Inc. is feeling more pain from its foray into Canada.

As the Cleveland-based company pulls up stakes at its money-losing Bloom Lake iron ore mine in northeastern Quebec after investing billions in what its chief executive dubbed a “disaster,” the company’s subsidiary has been hit with a record $7.5-million fine for environmental infractions at the site.

Bloom Lake General Partner Ltd. – in which Cliffs has a controlling stake – pleaded guilty on Dec. 18 to 45 offences under the federal Fisheries Act and the Metal Mining Effluent Regulations in the Criminal and Penal Division of the Court of Quebec, according to Environment Canada.

The fine is the largest penalty for environmental infractions in the country’s history, Environment Canada said. Of the $7.5-million, $6.83-million will go to a federal fund that aims to direct money to environmental projects in the location where the incident took place.

Environment Canada said its investigation lasted more than three years. One major infraction involved the breach of a tailings pond dam that allowed more than 200,000 cubic meters of mine tailings and water to be released into fish-bearing waters.

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Bad year for Cliffs gives way to uncertain future – by John Myers (Duluth News Tribune – December 28, 2014)

http://www.duluthnewstribune.com/

A bad year is nearly in the rear-view mirror for Cliffs Natural Resources, but the view through the windshield doesn’t look great, either.

The Cleveland-based mining company with a huge presence on Minnesota’s Iron Range has seen its stock value evaporate in 2014, the price for its iron ore halved and Wall Street confidence in its ability to thrive reach rock bottom. How bad was 2014?

In the past 12 months:

  • Cliffs’ stock has fallen from $27 per share to about $6, and some analysts say it may go lower. That’s for a stock that hit $100 per share in 2011 and $75 as recently as 2012.
  • Cliffs’ management team was ousted in late July when the company became the victim of a hostile takeover by the New York hedge fund Casablanca Capital. Casablanca, which called Cliffs’ old guard an “incompetent and entrenched” board that had “destroyed shareholder value” by expanding too fast and ringing up debt at the expense of profit, said it would downsize the company and sell off many or all of its foreign holdings.
  • Cliffs permanently shuttered its Wabush iron ore mine and shipping facilities in Newfoundland and Labrador early in the year. Then in November it announced it was seeking “exit options” to shut down its Bloom Lake operations in Quebec if a buyer didn’t come forward. So far, no buyer has emerged, and the operations appear doomed, at least in the short run. Ironically, closing the plant will cost Cliffs millions more.

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Will Cliffs Natural Resources Inc (CLF) Go Bankrupt? – by Troy Kuhn (Bidnessetc.com – December 19, 2014)

http://www.bidnessetc.com/

Cliffs Naturals Resources Inc stock has plunged over the last year, and its weak balance sheet points to a grim future

Cliffs Natural Resources Inc (NYSE:CLF) has had a miserable year.

The company has lost around three-quarters of its market capitalization, and Credit Suisse recently downgraded the iron miner’s price target to $1. Cliffs stock has been targeted by investors and traders as a prime candidate for a short sell, as falling iron-ore prices continue to take a toll on the miner’s earnings.

Cliffs generates 83.7% of its revenue from iron-ore sales, and iron-ore assets represent 85.8% of its overall assets. Cliffs has been in trouble for a couple of years now.

Casablanca Capital LLC recently won a proxy fight against Cliffs, which forced several changes to the miner’s board. Cliffs’ CEO and chairman Lourenco Goncalves took over the company’s management after the proxy fight.

Casablanca was of the view Cliffs should sell off its Bloom Lake mine, along with its US coal operations and Australian mines. In August, Mr. Goncalves announced a share repurchase program of $200 million, and sold a minority holding in a graphite mining company.

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Province’s hands tied over Wabush Mines – by Ty Dunham (St. John’s Telegram – December 09, 2014)

http://www.thetelegram.com/

Lack of dialogue between Cliff’s and MFC isn’t hopeful: Minister

The answer many have been waiting for may not become a reality, and Wabush Mines will likely be shut down for good. Talks between Cliff’s Natural Resources and MFC Industrial over the sale of Wabush Mines began in July, but the companies haven’t spoken together in weeks, and MFC hasn’t put anything in writing.

Cliff’s is stripping the mine away one piece at a time, honouring a multi-million dollar closure and rehabilitation plan with the financial assurances it can be carried out, according to the Mining Act.

It would cost millions for them to put the brakes on the closure while the MFC merely expresses interest, and Natural Resources Minister Derrick Dalley said the government is in no position to force a company to spend that kind of money.

“We don’t have authority as a government to stop a company from closing,” said Dalley in a recent interview with The Aurora. “For us to intervene, we would be highly concerned it may jeopardize the closure plan and financial assurance that have been provided.”

MFC has yet to provide a business plan, production plan, closure and rehabilitation plan or financial assurance, Dalley noted.

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Wabush woes: Labrador mining town reels from a China slowdown – by Rachelle Younglai (Globe and Mail – November 29, 2014)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

WABUSH, LABRADOR — Ron Barron has spent 30 years working in the Wabush mine, one of three generations of Barrons who have toiled in the open pits in what western Labrador bills as the iron ore capital of Canada.

The family’s roots run deep here. Mr. Barron’s father was one of Wabush‘s first settlers, who not only got a job in the mine when it opened in the 1960s but also helped organize a union. Five of Mr. Barron’s brothers have worked in the same pits along with his son and nephew.

But now Mr. Barron’s life has been upended along with the rest of city. The Wabush mine, once the cornerstone of this community, is shutting down along with another iron ore mine called Bloom Lake in neighbouring Quebec. More than 1,000 miners will be out of work, not to mention a slew of other job losses from businesses that service the industry. It’s a crippling blow in an area with a population of about 9,000.

“Oh my god, everybody loses. All the organizations, the schools, everything loses. Everything will suffer because of it,” said Mr. Barron, who will be officially out of a job by mid-December. “We have had shutdowns and layoffs before, but this is different. The mine is closing.”

The reason for the closings is simple: The price of iron ore, a key ingredient in steel, has been in freefall, falling 60 per cent in three years. Where the resource once traded as high as $190 (U.S.) a tonne in 2011, it is now below $70.

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Leadership race: Ring of Fire ignites PC debate – by Carol Mulligan (Sudbury Star – November 25, 2014)

The Sudbury Star is the City of Greater Sudbury’s daily newspaper.

It was the last question at the first Ontario Progressive Conservative leadership debate, submitted online by a man from Huntsville. But it fired up candidates and an audience of about 150 people, most party faithful, at College Boreal on Monday night.

Whitby-Oshawa MPP Christine Elliott, Nipissing MPP Vic Fedeli, Nepean-Carleton MPP Lisa MacLeod and Barrie MP Patrick Brown were asked what their plans were to spur development of the Ring of Fire.

“We’ve heard a lot of talk and promises from the Liberals,” wrote the Huntsville resident, “but no real plan to move forward.” All four candidates couldn’t have agreed more with that statement.

Fedeli summed up the frustration of northerners with the lack of development of the chromite deposits 500 kilometres northeast of Thunder Bay at the first of six debates before a new party leader is named May 9.

A former two-term mayor of North Bay, Fedeli said he remembered the Liberals’ Northern Development and Mines minister visiting his town to talk about this “great, vast find.”

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How to Avoid a $1-Billion Boondoggle – by Bill Gallagher (Onotassiniik Magazine – Winter 2014)

http://issuu.com/wawatay/docs/ono_winter_2014_layout/

‘Boondoggle’: any unnecessary and wasteful project
‘Billion’: a thousand million (Webster’s Dictionary)

A billion dollars is an attention-getting number. That’s no doubt why the Wynne Liberals touted that number as a campaign pledge in the run-up to their recent election win. This $1-billion dollar carrot arose after the party politically ‘rediscovered’ the Ring of Fire as a slumbering engine of economic growth for the province.

Buried in the election budget was the glossed-over detail that the Queen’s Park $1-billion was contingent on Ottawa making a matching billion. The feds quickly set this sleight-of-hand straight; whereupon the Wynne Liberals confirmed on the hustings that they were good for their $1-billion dollar pledge no matter what.

On the industry side of the ledger, as Cliffs Natural Resources slowly realized that it was taking a fiscal cold shower on its rushed expansion into Canada; it took its own billion dollar write down on its Bloom Lake iron project in Quebec. (‘Write-down’ is an accounting term used to describe a reduction of the book value of an asset due to economic or fundamental changes in an asset.) Cliffs will likely take another major write down on account of its botched Ring of Fire investment.

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Ring of Fire is ‘beyond the point of no return,’ mining company says – Bill Curry and Bertrand Marotte (Globe and Mail – November 20, 2014)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

Ottawa and MONTREAL – The Ring of Fire project is “beyond the point of no return” in spite of renewed government pledges to move ahead, says the CEO of the mining company that owns the rights to most of the resources in the remote Northern Ontario mineral deposit.

Cliffs Natural Resources Inc. CEO Lourenco Goncalves made headlines last month with his declaration that he had “zero hope” that the Ring of Fire would be developed in his lifetime.

In an interview with The Globe and Mail this week, Mr. Goncalves said recent pledges from the federal and Ontario governments to support the project with public infrastructure cash have not changed his assessment of the project’s viability.

“Last month I said it would not happen in the next 50 years. This month I will say it’s not going to happen in 49 years and 11 months,” he said. “We are beyond the point of no return.”

The Cleveland-based company bought three chromite deposits in 2010 for $350-million and has spent about $200-million on development. Since large chromite deposits were first discovered in 2008, estimates have pegged the mineral potential of the region at $60-billion.

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Cliffs Natural Resources retreats from Canadian ‘disaster’ – by Nicolas Van Praet (Globe and Mail – November 21, 2014)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

MONTREAL — The chief executive officer of mining giant Cliffs Natural Resources Inc. is taking aim at his predecessors for their decision to pump billions of dollars into Canada, saying every single investment it made here in recent years was a “disaster” that failed to produce any profit.

“I’m walking away from Canada big time – Canada for Cliffs has not been a good thing,” Lourenco Goncalves, the company’s chairman and CEO, said in an interview Thursday. “All these investments that the company made in Canada after the Wabush mine were a disaster.”

“I’m not the type of guy that’s too much of a Monday morning quarterback,” he said. “But these [decisions] are very clear. Misguided decisions all the way.”

Cleveland-based Cliffs, the biggest U.S. iron ore producer, has spent $6-billion (U.S.) in all on its Bloom Lake iron ore mine in northeastern Quebec over the past three years and “never made a penny” on the investment, Mr. Goncalves said. The company on Wednesday announced that it is “pursuing exit options” for its Eastern Canadian iron ore operations, evaluating its maximum exposure to close the Bloom Lake site at $700-million. The company will also close its mine in Wabush, Nfld., which had been in operation for more than 40 years.

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Rock-bottom prices forcing Cliffs to pull up stakes in Canada – by Bertrand Marotte and Nicolas Van Praet (Globe and Mail – November 20, 2014)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

MONTREAL — Cliffs Natural Resources Inc.’s Canadian adventure is winding down. The Ohio-based mining giant is preparing to shut down its money-losing Bloom Lake iron ore mine in northeastern Quebec amid rock-bottom prices for the mineral and high operating costs. It has already closed a Labrador iron ore property at Wabush and said it is looking to sell its chromite deposits in northern Ontario’s Ring of Fire.

Cliffs has spent hundreds of millions of dollars developing the high-potential Ring of Fire deposit and the existing Lake Bloom operations, but has run into a series of roadblocks, including a five-year low for iron ore prices, slumping Chinese demand and major delays in getting agreements with Ontario and First Nations over essential infrastructure for the Ring of Fire.

A shutdown of Bloom Lake would be a major blow to the local economy and to the provincial government’s multibillion-dollar Plan Nord economic development strategy pinned on natural resources extraction north of the 49th parallel.

Likewise, the Ontario government had made the Ring of Fire the centrepiece of its ambitious development plans for the mineral-rich region about 500 kilometres northeast of Thunder Bay in the James Bay Lowlands. And Cliffs had been the leading mining player in that plan.

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Cliffs’ massive closure costs at Bloom Lake stun analysts – by Peter Koven (National Post – November 20, 2014)

The National Post is Canada’s second largest national paper.

Three weeks ago, Lourenco Goncalves warned that shutting down the Bloom Lake mine in Quebec would not be a simple task. “Going away from [Bloom Lake] is not deleting it on a computer. It’s a pretty complicated process,” the chief executive of Cliffs Natural Resources Inc. told the Financial Post.

He wasn’t kidding. Cliffs announced on Wednesday that it plans to exit Bloom Lake. And if it can’t find a buyer, it expects to be on the hook for astounding closure costs of US$650-million to US$700-million during the next five years. The stock plunged US$2.04 or 20% to US$8.17 in New York on the news.

The Cleveland-based miner did not respond to requests for comment. But analysts said a key problem for Cliffs is the penalty costs involved in breaking a “take or pay” rail contract between Bloom Lake and the Quebec North Shore and Labrador Railway Company. If the mine shuts, there is no choice but to terminate that contract.

Citigroup analyst Brian Yu was forecasting US$360-million of care and maintenance and transport penalty costs over three years to close Bloom Lake, noting the company’s estimate is “obviously much larger.”

Cliffs said in a filing this month that if Bloom Lake were to close, “various commitments including rail minimums, royalties, and other ongoing costs could be incurred.”

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