Cliffs Natural Resources to Reopen Minnesota Mine Early

Cliffs Natural Resources Inc. said it plans to restart its United Taconite mining operation in Minnesota during August, two months earlier than recently expected.

The U.S.'s biggest iron-ore miner cited a contract to supply the majority of U.S. Steel Canada's iron-ore pellet requirement for the third and fourth quarters, which also spurred Cliffs to raise its sales volume and production guidance for 2016.

The moves come after Cliffs on May 31 announced it had reached a 10-year agreement to supply steel giant ArcelorMittal with iron-ore pellets, which lifted Cliffs stock 39% that day.

Cliffs had temporarily idled the United Taconite and Northshore Mining operations in Minnesota late last year, citing high levels of steel imports that had hurt its customers' production rates, which in turn hurt demand for its iron-ore pellets.

Cliffs said that after it reached its deal with ArcelorMital that it planned to reopen the United Taconite site in October. The company previously had announced plans to reopen Northshore Mining in May.

The company's shares, up 18% in the past week, fell 5.9% to $5.09 in recent midmorning trading in New York.

For 2016, Cliffs expects sales volume of 18 million tons, compared with its previous guidance for 17.5 million tons. Its production forecast was increased by 500,000 tons to a total of 16.5 million tons.

The United Taconite operation, which includes an iron-ore mine and a pellet-processing plant, employs roughly 450 workers. The Northshore operations employ about 540 workers.

The mines were among the many industrial facilities in the U.S. to fall prey last year to a painful downtown in the industrial commodities sector, driven by a slowdown in Chinese demand, a collapse of energy prices and the stronger dollar.

Under Chief Executive Lourenco Gonclaves, Cliffs has sold or shut down operations in Canada and the U.S. to focus on mining in Michigan and Minnesota, where the company has a geographical advantage selling to the Midwestern steel mills that supply the U.S. car industry.

During April, Cliffs reported that it swung to an unexpected first-quarter profit because of refinancing related to the iron-ore miner's efforts to improve its balance sheet. Revenue slumped 32%, but the decline was less than analysts had feared.

Write to Tess Stynes at [e-mail]

(END) Dow Jones Newswires

June 09, 2016 12:55 ET (16:55 GMT)

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