Cliffs Natural Resources Inc. Announces Significant Adjustments to 2013 Operating Plan
CLEVELAND, Nov. 19, 2012 /PRNewswire/ -- Cliffs Natural Resources Inc. (NYSE: CLF) (Paris: CLF) announced today a decision to delay portions of its Bloom Lake Mine Phase II expansion in Quebec and idle a portion of its production at two of its U.S. iron ore operations, Northshore Mining in Minnesota and Empire Mine in Michigan. The Company is adjusting its 2013 operating plans for its North American iron ore businesses to align with expected sales volumes. These production decreases are driven by increased iron ore pricing volatility and lower North American steelmaking utilization rates.
Joseph A. Carrabba, Cliffs' chairman, president and chief executive officer, said, "Disciplined capital allocation is core to our operating strategy and reducing higher cost production will enhance our financial flexibility in both the short and longer term. Despite today's announcement, we are still committed to our investments in Canada and believe Bloom Lake will deliver significant long-term value over time."
Eastern Canadian Iron Ore
At Bloom Lake Mine in Eastern Canada, Cliffs is suspending certain components of the Phase II expansion, including the completion of the concentrator and load out facility. As a result, construction related to these activities will cease and third-party contractors will be demobilized effective immediately. Pre-stripping activities to develop the working faces of Bloom Lake's ore body, supporting both Phase I and Phase II mine development will continue. Also, Cliffs will continue its environmental projects related to completing Bloom Lake's water and tailings management system and ore storage facility. Depending on market conditions, Cliffs expects to complete Phase II construction in early 2014.
The delay of Bloom Lake's Phase II construction decreases Cliffs' Eastern Canadian Iron Ore 2013 sales volumes to 9 - 10 million tons from the previous expectation of 13 - 14 million tons. In 2013, the Company expects to achieve an annualized run rate of approximately 7 million tons for Bloom Lake's Phase I facility.
U.S. Iron Ore
Effective Jan. 5, 2013, Cliffs will idle two of the four production lines at Northshore Mining in Minnesota. Cliffs will also temporarily idle production at its Empire Mine in Michigan beginning in the second quarter of 2013 in the form of an extended summer shutdown. These production curtailments will impact approximately 125 employees at Northshore and 500 employees at Empire mine, respectively. Full-year 2013 expected sales volumes for U.S. Iron Ore remain unchanged at 19 - 20 million tons as previously disclosed by the Company.
Ms. Laurie Brlas, President Global Operations added, "Unfortunately the U.S. Iron Ore production curtailments will affect many of our employees. However, at this time, we believe it is prudent and necessary to match our production volumes with market demand. We will remain operationally flexible to ramp up production volumes throughout the year if the demand increases."
Cliffs continues to work through its 2013 consolidated business plan and expects to disclose its full-year company-wide assumptions and expectations as part of its fourth-quarter 2012 results. The Company's preliminary 2013 capital expenditures are estimated to be in a range of approximately $700 - $800 million.
About Cliffs Natural Resources Inc.
Cliffs Natural Resources Inc. is an international mining and natural resources company. A member of the S&P 500 Index, the Company is a major global iron ore producer and a significant producer of high- and low-volatile metallurgical coal. Cliffs' strategy is to continually achieve greater scale and diversification in the mining industry through a focus on serving the world's largest and fastest growing steel markets. Driven by the core values of social, environmental and capital stewardship, Cliffs associates across the globe endeavor to provide all stakeholders operating and financial transparency.
The Company is organized through a global commercial group responsible for sales and delivery of Cliffs products and a global operations group responsible for the production of the minerals the Company markets. Cliffs operates iron ore and coal mines in North America and two iron ore mining complexes in Western Australia. In addition, Cliffs has a major chromite project, in the feasibility stage of development, located in Ontario, Canada.
News releases and other information on the Company are available on the Internet at: http://www.cliffsnaturalresources.com
This release contains forward-looking statements within the meaning of the federal securities laws. Although the Company believes that its forward-looking statements are based on reasonable assumptions, such statements are subject to risks and uncertainties relating to Cliffs' operations and business environment that are difficult to predict and may be beyond Cliffs' control. Such uncertainties and factors may cause actual results to differ materially from those expressed or implied by forward-looking statements for a variety of reasons including without limitation: the uncertainty or weakness in global economic and/or market conditions, including downward pressure on prices and reduced market demand; trends affecting our financial condition, results of operations or future prospects, particularly any slowing of the economic growth rate in China for an extended period; our ability to successfully integrate acquired companies into our operations and achieve post-acquisition synergies, including without limitation, Cliffs Quebec Iron Mining Limited (formerly Consolidated Thompson); our ability to successfully complete planned divestitures; our ability to reach agreement with our iron ore customers regarding modifications to sales contract pricing escalation provisions to reflect a shorter-term or spot-based pricing mechanism; the outcome of any contractual disputes with our customers, joint venture partners or significant energy, materials or services providers, or any other litigation or arbitration; changes in sales volume or mix; the impact of price-adjustment factors on our sales contracts; the ability of our customers to meet their obligations to us on a timely basis or at all; our actual economic iron ore and coal reserves or reductions in current resource estimates; our ability to successfully identify and consummate any strategic investments; events or circumstances that could impair or adversely impact the viability of a mine and the carrying value of associated assets; the results of pre-feasibility and feasibility studies in relation to projects; impacts of increasing governmental regulation and related costs, including failure to receive or maintain required environmental permits, approvals, modifications or other authorization of, or from, any governmental or regulatory entity and costs related to implementing improvements to ensure compliance with regulatory changes; the ability to achieve planned production rates or levels; uncertainties associated with unanticipated geological conditions, natural disasters, weather conditions, supply or price of energy, equipment failures and other unexpected events; adverse changes in currency values, currency exchange rates, interest rates and tax laws; our ability to maintain adequate liquidity and successfully implement our financing plans; our ability to maintain appropriate relations with unions and employees and renew expiring collective bargaining agreements on satisfactory terms; availability of capital equipment and component parts; the amount and timing of any insurance recovery proceeds with respect to Oak Grove mine; risks related to international operations; potential existence of significant deficiencies or material weakness in our internal control over financial reporting; problems or uncertainties with productivity, tons mined, transportation, mine-closure obligations, employee benefit costs and other risks of the mining industry; and other factors and risks that are set forth in the Company's most recently filed reports with the Securities and Exchange Commission. The information contained herein speaks as of the date of this release and may be superseded by subsequent events. Except as may be required by applicable securities laws, we do not undertake any obligation to revise or update any forward-looking statements contained in this release.
SOURCE Cliffs Natural Resources Inc.
Released November 19, 2012