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Cliffs’ revenue falls on lower iron ore prices

Keywords: Tags  Cliffs Natural Resources, Thompson Iron Mines, Wabush Mine, Bloom Lake, Joseph Carrabba

CHICAGO — Iron ore pellet and coal producer Cliffs Natural Resources Inc. posted a net loss of $899.4 million last year, in contrast to net income of nearly $1.62 billion in 2011, on revenue that fell 10.5 percent to $5.87 billion.

Cliffs said that excluding non-cash impairment charges—including about $1 billion in goodwill related to its 2011 acquisition of Consolidated Thompson Iron Mines Ltd. and a $365-million charge related to its 30-percent interest in an iron ore mine in Amapa, Brazil—adjusted net income was $493 million.

The Cleveland-based company said that the $691.2-million drop in revenue was due largely to a decline in seaborne iron ore prices, which fell 23 percent from 2011.

"While 2012 had some noteworthy highlights, including the operational turnaround of North American Coal and record sales volumes in Australia, the year proved to be challenging both from a market perspective and operationally," chairman, president and chief executive officer Joseph Carrabba said.

Cliffs’ ramp-up of its Bloom Lake Mine in Quebec has been "slower than originally anticipated," raising costs and depressing volumes, Carrabba said. "Despite these challenges, we continue to make progress on the mine’s production stability, development and tailings management."

Bloom Lake is on track to achieve an annual production run rate of 14 million tons by 2015, equivalent to more than a quarter of Cliffs’ current total iron ore volumes, Carrabba said.

Cliffs’ U.S. iron ore pellet sales volumes reached 6.2 million tons in the fourth quarter, down 20 percent from 7.8 million tons in the same period a year earlier. The company attributed the decrease to a customer who took lower volumes due to a bankruptcy earlier in the year, as well as weakening overall demand for iron ore pellets.

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