CLEVELAND, Jan. 8 /PRNewswire/ -- Cleveland-Cliffs Inc (NYSE: CLF) today
announced several actions to conserve cash and improve financial results
during a period of significant change and uncertainty in the North American
steel industry.
* Cliffs' 82 percent owned hot briquetted iron plant in Trinidad and
Tobago will remain idle until market fundamentals permit a resumption
of operations. Holding costs are being reduced to the absolute minimum
while protecting the asset. Full year idle costs, before depreciation,
are not expected to exceed $6 million.
* The quarterly dividend on common shares, which was 10 cents per share,
has been suspended. This action will save over $4 million annually.
* All operating and administrative costs are being challenged and reduced
wherever possible.
Given the severe economic environment confronting Cliffs' steel company
customers and partners, the Company expects its business fundamentals will
continue to be difficult. While there is substantial uncertainty regarding
Cliffs' pellet sales volume and the pellet requirements of partner companies,
current operating plans for 2002 are as follows:
* Tilden Mine - operate near the mine's 7.8 million ton capacity
* Hibbing Mine - produce approximately 6.8 million tons
* Wabush Mine - produce about 4.5 million tons
* Northshore Mine - produce about 3 million tons
* Empire Mine - currently idle pending a production decision by the two
remaining owners, Ispat Inland and Cliffs
John S. Brinzo, Cliffs' Chairman and Chief Executive Officer, said,
"As one of the first steps in the Company's plan to consolidate North American
iron ore interests, we plan to increase our ownership of the Tilden Mine to
85 percent when Algoma Steel completes its restructuring later this month.
With this transaction, we would expect pellet sales to be between 11.5 and
12.0 million tons, including the sale of about 3 million tons to Algoma. This
sales forecast would represent about 70 percent of our production capacity.
Pellet sales in 2001 were 8.4 million tons."
Brinzo said, "Cliffs is taking decisive actions to reduce its cost
structure, strengthen its competitiveness and ensure that the Company remains
well positioned during this period. Every segment of our organization has
been challenged to ensure that it is as cost efficient as possible. Cost
reduction initiatives include a corporate-wide program termed ForCE 21 (For
Competitive Excellence in the 21st Century). This program, which is designed
to produce organizational and operational excellence through employee
involvement and cultural change, is accelerating change throughout the
Company, with a focus on improvements in cost, safety and quality. The
program has achieved impressive results in a number of operational areas, and
we are optimistic about its potential as the program expands."
Separately, Cliffs' Board of Directors today approved the Company's
participation and investment of $4.5 million ($500,000 in cash, with the
balance in materials, other property and manpower) through Phase II of the
Mesabi Nuggets Project. Other participants in this project are Kobe Steel,
Ltd., Steel Dynamics, Inc., the Iron Range Resources and Rehabilitation Agency
and the State of Minnesota. During Phase II, a pilot demonstration plant will
be constructed at the Northshore Mine to test and develop Kobe Steel's ITmk3
ironmaking technology for converting iron ore into nearly pure iron in nugget
form. Iron nuggets would be used as an alternative or supplement to pig iron
in the steelmaking process. Construction of the pilot plant is expected to
begin in May and to be operational early in 2003.
Cliffs enters 2002 with substantial liquidity. At December 31, 2001, the
Company had about $180 million of cash, resulting from the take down of
available credit, $50 million of cash realized from the purchase of LTV Steel
Mining Company assets, and effective working capital management. "We continue
to be proactive in pursuing business opportunities that have been created by
the adversities in our business, and these efforts will be a high priority in
2002. We intend to be relentless in pursuing the goals and objectives that
will allow Cliffs to successfully meet its challenges and take advantage of
the opportunities that are ahead in 2002 and beyond," Brinzo said.
Cliffs expects to release its fourth quarter 2001 results on January 30
and conduct a conference call on January 31. The call will be broadcast live
on Cliffs' website.
Cleveland-Cliffs is the largest supplier of iron ore products to the North
American steel industry and is developing a significant ferrous metallics
business. Subsidiaries of the Company manage and hold equity interests in
five iron ore mines in Michigan, Minnesota, and Eastern Canada. Cliffs has a
major iron ore reserve position in the United States and is a substantial iron
ore merchant. References in this news release to "Cliffs" and "Company"
include subsidiaries and affiliates as appropriate in the context.
This news release contains predictive statements that are intended to be
made as "forward-looking" within the safe harbor protections of the Private
Securities Litigation Reform Act of 1995. Although the Company believes that
its forward-looking statements are based on reasonable assumptions, such
statements are subject to risks and uncertainties.
Actual results may differ materially from such statements for a variety of
factors; such as: demand for iron ore pellets by North American integrated
steel producers due to changes in steel utilization rates, changes in electric
furnace production or imports of semi-finished steel; changes in the financial
condition of the Company's partners and/or customers; rejection of major
contracts and/or venture agreements by customers and/or participants under
provisions of the U. S. Bankruptcy Code; changes in the market price of HBI
and expected idle costs at Cliffs and Associates Limited; inability to
successfully complete Phase II and subsequent phases of the Mesabi Nugget
Project or failure of the Kobe Steel technology; and adverse developments in
domestic or international economic and political conditions.
Reference is made to the detailed explanation of the many factors and
risks that may cause such predictive statements to turn out differently, as
set forth in the Company's Annual Report for 2000 and Reports on Form 10-K and
10-Q and previous news releases filed with the Securities and Exchange
Commission, which are available publicly on Cliffs' web site. The information
contained in this document speaks as of the date of this news release and may
be superceded by subsequent events.
News releases and other information on the Company are available on the
Internet at http://www.cleveland-cliffs.com
CONTACT: Media, Ralph S. Berge, +1-216-694-4870, or Financial Community,
Fred B. Rice, +1-800-214-0739, or +1-216-694-5459, both of
Cleveland-Cliffs Inc
SOURCE Cleveland-Cliffs Inc
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Related links:
http://www.cleveland-cliffs.com
CONTACT:
Media, Ralph S. Berge, +1-216-694-4870, or
Financial Community, Fred B. Rice, +1-800-214-0739, or
+1-216-694-5459, both of Cleveland-Cliffs Inc
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