Stock Update (NYSE:CLF): Cliffs Natural Resources Inc Adjusts U.S. Iron Ore Production

Cliffs Natural Resources Inc (NYSE:CLF) announced that it is temporarily idling iron ore pellet production at its Northshore Mining operation in Minnesota by Dec. 1, 2015. The Company stated that until its domestic customers’ blast furnace capacity utilization rates improve, existing customer demand will be satisfied from its current pellet inventory.

Lourenco Goncalves, Cliffs’ Chairman, President and Chief Executive Officer, stated, “The historic high tonnage of foreign steel dumped into the U.S. continues to negatively impact the steel production levels of our domestic customers. As our pellet inventory at both Northshore and United Taconite is adequate to meet current customer demand, we will be able to optimize our working capital and cash flow by temporarily idling production at Northshore.” Mr. Goncalves added, “Our pellet inventory is currently at a seasonally, historic high level. As a result, we are taking this action to work off our pellet inventory pending receipt of our customers’ tonnage requirements for 2016 which have not been finalized. The resolution of the trade cases currently filed by the domestic steelmakers against several countries and covering a broad range of steel products should bring a positive impact to the domestic market sometime during the first half of 2016. As soon as the unfairly traded steel problem subsides and domestic steel production recovers to normal levels, we will be able to immediately ramp up iron ore pellet production by bringing idled capacity back to operation.”

Cliffs anticipates that both Northshore and United Taconite operations will be temporarily idled through the first quarter of 2016. During that time frame, Cliffs will continue to operate Hibbing Taconite in Minnesota, as well as the Tilden and Empire mines inMichigan, at normal rates. The Company will assess and adjust its production plans as market conditions improve.

Cliffs is maintaining its previous cash production cost per ton expectations for 2015, and for 2016 is lowering its cash production cost expectation to $50 – 55 per ton and its cash cost of goods sold expectation to $60 – $65 per ton. The cash cost of goods expectation includes $9 million per month of idle costs for the Northshore and United Taconite mines.

Cliffs’ Northshore Mining iron ore operation is comprised of a mine and a taconite pellet processing facility located in Minnesota. The operation employs approximately 540 employees. Cliffs will maintain minimal staffing during the temporary idle for basic maintenance duties and for on-going work to support the DR-grade pellet trials. (Original Source)

Shares of Cliffs Natural Resources closed yesterday at $2.69. CLF has a 1-year high of $10.90 and a 1-year low of $2.28. The stock’s 50-day moving average is $2.83 and its 200-day moving average is $3.77.

On the ratings front, Cliffs Natural has been the subject of a number of recent research reports. In a report issued on November 2, FBR analyst Mitesh Thakkar reiterated a Hold rating on CLF, with a price target of $3, which represents a potential upside of 11.5% from where the stock is currently trading. Separately, on October 28, Axiom’s Gordon Johnson reiterated a Sell rating on the stock and has a price target of $2.

According to, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Mitesh Thakkar and Gordon Johnson have a total average return of -40.7% and 24.8% respectively. Thakkar has a success rate of 27.6% and is ranked #3830 out of 3847 analysts, while Johnson has a success rate of 70.6% and is ranked #34.

Overall, one research analyst has rated the stock with a Sell rating, 2 research analysts have assigned a Hold rating and one research analyst has given a a Buy rating to the stock. When considering if perhaps the stock is under or overvalued, the average price target is $2.00 which is -25.7% under where the stock closed yesterday.

Cliffs Natural Resources Inc is a mining and natural resources company. The Company is a supplier of iron ore pellets to the North American steel industry from its mines and pellet plants located in Michigan and Minnesota.


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