* Says will delay portion of a mine expansion in Quebec
* Will idle some output at Northshore Mining in Minnesota
and Empire Mine in Michigan
* Idling in the United States to affect about 625 employees
* Expects 2013 capex of $700 million to $800 million
By Swetha Gopinath
Nov 19 Cliffs Natural Resources Inc, the
largest North American producer of iron ore pellets used in
steel making, said it will delay a planned mine expansion in
Quebec and idle some production at two U.S. iron ore operations
due to weak prices.
Shares of the company rose as much as 4 percent on the New
York Stock Exchange in early trading on Monday.
"This is a step in the right direction, showing that the
company is pulling levers to maintain its dividend," said CRT
Capital Group analyst Kuni Chen.
Cliffs, which has reported a drop in profit for three
straight quarters due to weak prices, declared a
quarterly cash dividend of 62.5 cents per share last week.
"There has been some concern by investors that if iron ore
prices remain weak the company will have to cut dividend at some
point," Chen said.
Weak demand for steel from China, the world's largest
producer and consumer of steel, along with a persistently
oversupplied market has sent iron ore prices down in recent
The benchmark 62-percent grade iron ore index , which fell 22 percent in the July to September
period, has recovered since and touched a 4-month high last
week. Still, prices have only risen by over $2 since late
Cliffs estimated its 2013 capital expenditure to be in the
range of $700 million to $800 million, lower than its 2012
capital budget of $1 billion.
Cliffs will delay portions of its Bloom Lake Mine Phase II
expansion in Quebec and idle some production at two of its U.S.
iron ore operations, Northshore Mining in Minnesota and Empire
Mine in Michigan.
The company said the idling in the United States will affect
about 625 employees.
"These production decreases are driven by increased iron ore
pricing volatility and lower North American steelmaking
utilization rates," the company said in a statement.
US steel mill capability utilization fell 3.5 percentage
points to 70.7 percent in the week ending Nov. 10, according to
data released by the American Iron and Steel Institute.
"More production cuts are possible depending on where steel
utilization rates end up next year," said analyst Chen.
Cliffs, which expects to complete the planned construction
in Quebec in early 2014, said the delay will decrease its
Eastern Canadian iron ore sales volumes to between 9 million and
10 million tons in 2013, lower than its previous estimate of
between 13 million and 14 million tons.
Cliffs said it will idle two of four production lines at
Northshore Mining in Minnesota effective Jan. 5, while
production at the Empire Mine in Michigan will be idled
beginning the second quarter of 2013.
Shares of the company, which has a market value of about
$5.03 billion, were up about 1.5 percent at $35.85 on Monday