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Coal prices dent coal miner’s finances

World Coal,


Cliffs Natural Resources Inc, which is currently in negotiations with an activist investor who wants to break up the company, posted a Q1 loss on the back of lower market prices for iron ore and metallurgical coal.

The Ohio-based miner reported a net loss of US$ 83 million. Over the same period one year previously, the mining company posted a net profit of US$ 97 million.

Revenue fell 18% to US$ 940 million, hurt by the price declines, as well as a 2% decrease in global iron ore sales volumes, which Cliffs blamed on extremely cold weather across the US Midwest. The weather hurt production and slowed shipments on the Great Lakes.

"The first-quarter's winter weather in North America was some of the worst conditions we have experienced in 30 years," Cliffs' president and CEO, Gary Halverson, said in a statement.

Despite the weather's impact, Cliffs said it was maintaining its full-year sales and production volumes for all business segments. Demand from the company's North American customers is "very strong," Cliffs said, reflecting lower-than-normal iron ore inventory stockpiles at its customers' facilities.

However, the company is in dispute with one of its investors, hedge fund Casablanca Capital, following several quarters of weak earnings and share performance. Cliffs stock is down 80% in the past three years.

Casablanca argues that Cliffs' international assets are weighing on its cash-generating US business and should be spun off. The New York-based fund wants to install a new chief executive at Cliffs, as well as a majority of new directors.

Weakness in the steel market has hit relatively high-cost iron ore suppliers like Cliffs hard. In recent quarters, the company's earnings have also been weighed down by higher-than-expected costs at its Bloom Lake mine in Canada.

After months of uncertainty, Cliffs earlier this year said it has decided to indefinitely suspend a planned expansion at Bloom Lake, and idle Wabush, another Canadian mine, slashing capital spending and cutting some 500 jobs. 


Edited from various sources by Sam Dodson

Read the article online at: https://www.worldcoal.com/coal/25042014/cliffs_natural_resources_posts_q1_loss_751/


 

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