Cliffs Natural Resources

Cliffs Natural Resources, formerly Cleveland-Cliffs, is a Cleveland, Ohio business firm that specializes in the mining and beneficiation of iron ore and the mining of coal. The firm is an independent company whose shares are traded on the New York Stock Exchange. The firm has stated that it had approximately 4,000 employees and a 28% share of the iron-ore pellet market. After acquiring Consolidated Thompson Iron Mines in January 2011 for US$4.9 billion in a negotiated deal (won't close until the 2nd quarter) Cliff's will control 10 iron ore facilities, 6 coal mines and a chrome project with the capacity to produce upwards of 46 million tonnes of iron ore pellets (30) and concentrate (16). Prior to the January 11 deal Cliffs owned 2-3% of the company, 19% of Consolidated Thompson is being purchased from Wuhan Iron and Steel Group of China. The deal gives Cliffs Natural Resources exposure outside of North America (Consolidated Thompson has long term deals with China's third biggest steel producer and two other Asian commodity brokers. The company started producing (and receiving revenue from) coal only since the third quarter of 2007.

For the first nine months of 2010 coal made up 12.9% of total revenue ($421.1 million, down from 14.4% the year before) while iron ore contributed $2,615.7 million (80.3% compared to 80.5% in '09), the other 6.8% (up from 5.1% in '09) came from freight and minority interests (such as its 45% stake in a coking and thermal coal mine in Western Australia and the 30% interest in Brazil's Amapa iron ore project). Although revenue has generally been stable quarter to quarter (no extreme changes) gross income was wildly inconsistent, the result of expenses being high even when total revenue wasn't. Between 2007 and 2010 quarterly sales margin was lowest in each of the two quarters beginning 2009 (combined for $30.7 million despite revenue being over $700 million), combined they generated gross profit 2.5-3 times smaller than during any other single quarter. For the first nine months of 2010 total costs (goods sold & operating expenses) amounted to $2,216.8 million representing a 60% increase over 2009.