Cliffs Natural Resources

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Cliffs Natural Resources
Type Public
Traded as NYSECLF
Industry Iron ore
Founded Cleveland, Ohio, United States (1846)
as Cleveland Iron Company
Founders Samuel Mather and associates
Headquarters 200 Public Square, Cleveland, USA
Key people
  • Lourenco Goncalves (Chairman, Pres. & CEO)
  • Terry Fedor (EVP, U.S. Iron Ore)
  • James Graham (VP, CLO & Sec.)
  • Maurice Harapiak (EVP, H.R.)
  • Terrence Mee (EVP, Global Comm.)
  • Terrance Paradie (EVP, CFO & Treas.)
  • Clifford Smith (EVP, Seaborne Iron Ore)
  • P. Kelly Tompkins (EVP, Bus. Development)
  • David Webb (EVP, Global Coal)
Products iron ore, coal
Revenue US$ 1.3 bil (3Q 2014)[1]
Net income US$ 33 mil (3Q 2014)[1]
Total assets US$ 4.8 bil (3Q 2014)[1]
Website www.cliffsnaturalresources.com

Cliffs Natural Resources, formerly Cleveland-Cliffs, is a Cleveland, Ohio, business firm that specializes in the mining and beneficiation of iron ore and the mining of coal. The firm is an independent company whose shares are traded on the New York Stock Exchange. Cliffs' primary operations are organized and managed according to product category and geographic location: U.S. iron ore, Eastern Canadian iron ore, Asia Pacific iron ore, and North American coal.

Operations overview[edit]

U.S. iron ore[edit]

Cliffs manages and operates five iron ore mines located in Michigan and Minnesota. The U.S.-based mines currently have an annual rated capacity of 32.9 million gross tons of iron ore pellet production, representing 59 percent of total U.S. pellet production capacity.[2] Based on equity ownership in these mines, Cliffs’ share of the annual rated production capacity is currently 25.5 million gross tons, representing 46 percent of total U.S. annual pellet capacity.[2]

During 2013, 2012 and 2011, Cliffs sold 21.3 million, 21.6 million and 24.2 million tons of iron ore pellets, respectively, from its share of the production from its U.S. Iron Ore mines.[2]

Eastern Canada iron ore[edit]

Production from two iron ore mines located in Eastern Canada primarily is sold into the seaborne market to Asian steel producers. During the second quarter of 2013, due to high production costs and lower pellet premium pricing, Cliffs idled production at its Pointe Noire iron ore pellet plant and transitioned to producing an iron ore concentrate product. The Canadian-based mines currently have an annual rated capacity of 12.8 million metric tons of iron ore concentrate production.[2]

During 2013, 2012 and 2011, Cliffs sold 8.6 million, 8.9 million and 7.4 million metric tons of iron ore pellets and concentrate, respectively, from its Eastern Canadian iron ore mines.[2] On February 11, 2014 it was announced that one of the mines, in Wabush, Labrador, would lay off 500 workers due to falling global demand.[3]

Asia Pacific iron ore[edit]

Cliffs’ Asia Pacific iron ore operations are located in Western Australia and consist solely of the wholly owned Koolyanobbing complex. The Koolyanobbing operations serve the Asian iron ore markets with direct-shipped fines and lump ore, and have a production capacity of 11.0 million metric tons annually.[2]

During 2013, 2012 and 2011, Cliffs sold 11.1 million, 10.7 million and 8.2 million metric tons of iron ore, respectively, from its Western Australia mines.[2]

North American coal[edit]

Cliffs owns and operates four metallurgical coal mines located in West Virginia and Alabama and one thermal coal mine located in West Virginia that currently have a rated capacity of 9.4 million tons of production annually. In 2013, Cliffs sold a total of 7.3 million tons, compared with 6.5 million tons in 2012 and 4.2 million tons in 2011.[2]

History[edit]

19th century[edit]

The firm's earliest predecessor was the Cleveland Iron Mining Company, founded in 1847 and chartered as a company by Michigan in 1850.[4] Samuel Mather and six Ohio-based associates had learned of rich iron-ore deposits recently discovered in the highlands of the Upper Peninsula of Michigan. Soon afterwards, the first Soo Locks opened in 1855, allowing iron ore to be shipped from Lake Superior to Lake Erie.

Technological improvements, such as the Bessemer furnace, made it possible for the North American Great Lakes to produce steel on an industrial scale. The south shore of Lake Erie was close to a supply of coal, making that region an efficient point for the construction of steel mills.

The final decades of the 19th century were a period of business consolidation from the partnership-sized businesses of an earlier generation to a new type of business firm, the stock-market-traded corporation intent on maximizing market share. The former Cleveland Iron Mining Co. was a survivor of this shakeout, purchasing many of its competitors. One key merger in 1890, with Jeptha Wade's Cliffs Iron Company led the combined firm to change its name to the Cleveland-Cliffs Iron Company.

The consolidated Cleveland-Cliffs invested substantial sums in operations to improve the logistics of iron-ore transport. In 1892, the firm built the Lake Superior and Ishpeming Railroad to carry iron ore from the mines directly to company-owned docks on Lake Superior.

20th century[edit]

William G. Mather, the son of Samuel, guided Cleveland-Cliffs as president and later as chairman of the board during the period of 1890–1947, participating in the transition from the hard-rock iron ore of Upper Michigan to the soft hematite of Minnesota's Mesabi Range and adjacent lodes.

Under Mather, Cleveland-Cliffs was a leader in the development of the classic-type lake freighter, a bulk-cargo vessel especially designed to carry Great Lakes commodities. The 618-foot-long (188 m) William G. Mather, launched in 1925, is a surviving example of this ship type. For almost a century, the black-hulled Cleveland-Cliffs ships were familiar sights on the upper lakes.

Demand for American iron ore hit peaks during World War I, World War II, and the post-WWII consumer boom. In 1933, Edward Greene (the son-in-law of Jeptha Homer Wade II) replaced William G. Mather as the head of the company. The Mather A Mine opened in the early 1940s and the Mather B shaft in the 1950s. As the Cold War continued, reserves of mineable hematite dwindled in northern Minnesota and Cleveland-Cliffs returned some of its focus to its traditional areas of interest around Marquette, Michigan, where new deposits of magnetite were opened. The first pellet plant was built at Eagle Mills in 1954, followed by the first grate/kiln plant at the Humboldt Mine in 1960. The Republic Mine was converted from a shaft mine to an open pit and concentrator in 1956 and a two-kiln pellet plant was added in 1962. The Empire Mine opened in 1963 and was expanded in the mid- and late-1970s; the Pioneer Pellet Plant was opened in 1965 to pelletize the underground ore from the Mather B Mine in Negaunee. In 1974 the Tilden Mine opened in Ishpeming. This mine was and is the only mine in the world with the ability to produce both hematite and magnetite pellets.

In 1970, a high-grade iron-ore mine was opened at Pannawonica in the Pilbara region of Western Australia, with a 200-kilometre (120 mi) rail line to processing facilities at Cape Lambert for which the residential township of Wickham was built. A pellet plant was built but ceased operation before 1980, following a sharp increase in the cost of diesel fuel.

During the 1970s, Cleveland-Cliffs had sizeable interests in uranium and shale oil fields, as well as the oil and gas drilling industries. It also had holdings in the forest products industry. This interests were disposed of in the 1980s when the company refocused its efforts on its core iron ore business.[5]

The periods following the recessions of 1974–75 and 1981–83 were harsh ones for the iron ore industry. Cleveland-Cliffs shrank its operations, closing the Mather B Mine and the Pioneer Pellet Plant and associated Ore Improvement Plant in 1979. The Humboldt Pellet Plant closed in 1981 and the Republic Mine was idled in 1981 and closed for good in 1996, when Cliffs began turning the associated tailings ponds into compensatory wetlands for its other properties. Over half of the Marquette Iron Range employees were laid off and, in 1984, Cliffs withdrew from the Great Lakes shipping industry.

21st century[edit]

In 2002, LTV Steel, a partner in the Empire Mine managed by CCI, closed and the Empire was idled for six months. Cleveland-Cliffs stock plummeted. President George W. Bush enacted steel tariffs that helped domestically produced steel rebound.

In the years following the introduction of steel tariffs, a sharp increase in steel production in China and other developing countries led to a significant upswing in the price of global iron ore. This trend benefited Cleveland-Cliffs after the two lean decades that had preceded it. To remain competitive, Cleveland-Cliffs decided to expand globally and to diversify into other minerals, leading to the acquisition of iron-ore properties in Brazil and Australia and coal properties in Australia and the US.[6]

In June 2007, Cleveland-Cliffs purchased its first domestic coal property. The coal company, called PinnOak, mines coal in Alabama and West Virginia and once belonged to U.S. Steel.[7] In line with its venture into coal, the company changed its name from Cleveland-Cliffs to Cliffs Natural Resources in October 2008.[8]

On January 11, 2011 it was reported that Consolidated Thompson Iron Mines Limited agreed to a US$4.9 billion takeover by Cliffs Natural Resources ($200 million of that was already owned, the cost includes debt (In September 2011 Thompson reported $230.56 million in long term with $566.07 million in total liabilities).[9] The deal saved both companies a combined US$75 million in operating expense (partly due to many of their facilities being adjacent to one another).[10] The deal gives Cliffs the large Bloom Lake iron ore mine in the province of Quebec, very close to Labrador.

On May 5, 2011, Cliffs Natural Resources was added to the Fortune 500 list of companies. Its ranking of 477 was based on the company's performance in 2010.[11]

The firm’s CEO Joseph Carrabba announced in July 2013 that he would retire by December 31 of that year. Lead director James Kirsch was elected nonexecutive chairperson in his stead.[12] Gary Halverson, formerly interim chief operating officer of Barrick Gold Corporation Inc., was appointed president and chief operating officer in October 2013,[13] and president and chief executive officer in February 2014.[14]

In August 2014, Lourenco Goncalves, former CEO of Metals USA Holdings Corp., was appointed Chairman, President & CEO by Cliffs’ Board of Directors.[15]

Archives[edit]

Cliffs Natural Resources has deposited many of its pre-1981 papers in the Historical Collections of the Great Lakes at Bowling Green State University.[4] They have also deposited material at Central Upper Peninsula Archives at Northern Michigan University.

References[edit]

  1. ^ a b c "Cliffs Natural Resources Inc. Reports Third-Quarter Results" (Press release). Cliffs Natural Resources. October 27, 2014. 
  2. ^ a b c d e f g h Paradie, Terrance M. (February 14, 2014) (PDF). Form 10-K (Annual Report) Filed 02/14/14 for the Period Ending 12/31/13 (Report). Cliffs Natural Resources. http://ir.cliffsnaturalresources.com/English/investors/financial-information/sec-filings/SEC-Filings-Details/default.aspx?FilingId=9786441.
  3. ^ "Nearly 500 Out of Work after Labrador's Wabush Mines Closure". Toronto Sun. February 11, 2014. 
  4. ^ a b "Cleveland Cliffs Iron Company: GLMS 62". Historical Collections of the Great Lakes. Bowling Green State University Library. Archived from the original on December 11, 2011. 
  5. ^ "Cleveland-Cliffs Inc". Encyclopedia of Cleveland History. Case Western Reserve University. 
  6. ^ Reynolds, Terry S.; Dawson Virginia P. (2011). "Reinventing Cleveland-Cliffs, 2000–2006". Iron Will: Cleveland-Cliffs and the Mining of Iron Ore, 1847–2006. Detroit: Wayne State University Press. ISBN 0-8143-3511-X. [page needed]
  7. ^ "Cleveland-Cliffs Announces Acquisition of PinnOak Resources, Major Metallurgical Coal Producer" (Press release). Cleveland-Cliffs. June 14, 2007 – via PRNewswire. 
  8. ^ Baisden, Steve (October 18, 2008). "Cleveland-Cliffs Inc. Is Now Cliffs Natural Resources Inc." (PDF) (Press release). Cliffs Natural Resources. 
  9. ^ "Financial Statements for Consolidated Thompson Iron Mines Limited". Google Finance. [dead link]
  10. ^ "Consolidated Thompson shares up sharply after Cliffs takeover deal". Stockhouse. January 12, 2010. [dead link]
  11. ^ "Cliffs Natural Resources Joins Ranks of the Fortune 500" (Press release). Cliffs Natural Resources. May 6, 2011 – via PRNewswire. 
  12. ^ "Cliffs Natural CEO Joseph Carrabba to Retire by Year End". Mining Weekly (South Africa). July 9, 2013. 
  13. ^ "Cliffs Natural Resources Inc. Announces the Appointment of New President and Chief Operating Officer" (PDF) (Press release). Cliffs Natural Resources. October 25, 2013. 
  14. ^ Moran, Jessica & Persico, Patricia (February 13, 2014). "Cliffs Natural Resources Inc. Announces the Appointment of Gary B. Halverson as President and Chief Executive Officer" (PDF) (Press release). Cliffs Natural Resources. 
  15. ^ "Lourenco Goncalves Appointed Chairman, President and Chief Executive Officer of Cliffs Natural Resources Inc." (PDF) (Press release). Cliffs Natural Resources. August 7, 2014. 

External links[edit]