NEW YORK Cliffs Natural
Resources Inc. is "well aware" of the competition it could face
from new iron ore projects that have been announced in North
Americas Great Lakes region over the past two years.
"Naturally, we are monitoring
these projects on a regular basis and we are well aware of the
potential competition we could face later this decade," Cliffs
chairman, president and chief executive officer Joseph Carrabba
said April 25 during an earnings conference call with
Cliffs iron ore business
in the Great Lakes region generates 75 to 80 percent of group
earnings. However, the company is facing a supply/demand
imbalance, which could seriously erode its earnings potential,
analysts have said (
amm.com, April 8).
"I would like to take this
opportunity to address recent concerns over the long-term
sustainability of our U.S. iron ore business," Carrabba said.
"As many of you know, our U.S. iron ore segment has really been
the core of Cliffs global operations. Over the past
decade, we have significantly increased our market position,
enabling us to become the largest merchant supplier of iron ore
pellets to steel mills in the USA."
The company sells its iron ore
to North American consumers via long-term sales contracts and
it will continue to do so for the next three-and-a-half years,
"Our U.S. iron ore cash costs
are consistent quarter over quarter," he said. "This enables us
to generate respectable sales margins and to price
competitively. That being said, we fully intend to protect the
long-term volumes in our U.S. iron ore business."
Cliffs main North American
iron ore mines are both in Canada: the Wabush Mine in Labrador,
with an annual capacity of 5.6 million tons of hematite iron
ore, and Bloom Lake in Quebec, with an annual capacity of 8
million tons of magnetite and hematite. Bloom Lake is
75-percent owned by Cliffs and 25-percent owned by Wugang
Canada Resources Investment Ltd.
A version of this article was
first published by AMM sister publication Steel First.