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  • 1. OPERATIONAL EXCELLENCE | A WORLD LEADER | STEWARDSHIPCliffs Natural Resources Inc Inc. February 2011
  • 2. OPERATIONAL EXCELLENCE | A WORLD LEADER | STEWARDSHIP“Safe Harbor Statement under the Private Safe Harbor”Securities Litigation Reform Act of 1995 This presentation and accompanying oral remarks contain statements that constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by the use of predictive, future-tense or forward-looking terminology, such as “believes,” “anticipates,” “expects,” “estimates,” “intends,” “may,” “will” or similar terms. These statements speak only as of the date of this presentation or the date of the document incorporated by reference, as applicable, and we undertake no ongoing obligation, other than that imposed by law, to update these statements. These statements appear in a number of places in this presentation, including the documents incorporated by g g g , p y , p pp p p , g p y reference, and relate to, among other things, the successful completion of the proposed acquisition, our intent, belief or current expectations of our directors or our officers with respect to: our future financial condition, results of operations or prospects; estimates of our economic iron ore and coal reserves; our business and growth strategies; and our financing plans and forecasts. You are cautioned that any such forward-looking statements are not guarantees of future performance and involve significant risks and uncertainties, and that actual results may differ materially from those contained in or implied by the forward looking statements as a result of various factors, some of which are unknown, including, without limitation: • our ability to successfully complete the proposed acquisition; • our ability to successfully integrate Consolidated Thompson’s operations; • our ability to achieve the synergies of the proposed acquisition; • our ability to achieve the strategic and other objectives related to the proposed acquisition; • the impact of the current global economic crisis including downward pressure on prices; crisis, • trends affecting our and/or Consolidated Thompson’s financial condition, results of operations or future prospects; • the outcome of any contractual disputes with our customers; • the ability of our customers to meet their obligations to us on a timely basis or at all; • our ability to maintain good relationships with Consolidated Thompson’s customers following consummation of the acquisition; • our actual economic iron ore and coal reserves; • the success of our business and growth strategies; • our ability to successfully identify and consummate any strategic investments; • adverse changes i currency values; d h in l • the outcome of any contractual disputes with our significant energy, material or service providers; • the success of our cost-savings efforts; • our ability to maintain adequate liquidity and successfully implement our financing plans; • our ability to maintain appropriate relations with unions and employees; • uncertainties associated with unanticipated geological conditions related to underground mining; • the potential existence of significant deficiencies or material weakness in our internal control over financial reporting; and • the risk factors referred to in the “Risk Factors” section of our documents filed with the Securities and Exchange Commission. Reference is made to the d f d h detailed explanation of the many f l d l f h factors and risks that may cause such predictive statements to turn out d ff d k h h d differently, set f h in the Companys Annual Report and l forth h l d Reports on Form 10-K, Form 10-Q and previous documents filed with the Securities and Exchange Commission, which are publicly available on Cliffs Natural Resources website. The information contained in this document speaks as of today and may be superseded by subsequent events. We caution you that the foregoing list of important factors is not exclusive. In addition, in light of these risks and uncertainties, the matters referred to in our forward-looking statements may not occur. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as may be required by law. The information concerning Consolidated Thompson, including Cliffs’ expectations relating to the impact of the completion of an acquisition of Consolidated Thompson, contained in this release has been taken from or based upon publicly available documents and records filed with the Canadian securities regulatory authorities and other public sources at the time of this release and has not been independently verified by Cliffs. Cliffs assumes no responsibility for the accuracy or completeness of such information, or for any failure by Consolidated Thompson to disclose publicly facts, events or acts that may have occurred or come into existence or that may affect the significance or accuracy of any such information but which are unknown to Cliffs. Cliffs We also strongly urge you to not rely on any single financial measure to evaluate our business Please see refer to the appendix for important information business. information.2
  • 3. OPERATIONAL EXCELLENCE | A WORLD LEADER | STEWARDSHIPOverview of Cliffs Natural Resources Inc Inc. Cliffs Natural Resources (NYSE: CLF) (Paris: CLF) is an international mining and natural resources company. A member of the S&P 500, it is the largest producer of company 500 iron ore pellets in North America, a major supplier of direct-shipping lump and fines iron ore out of Australia and a significant producer of metallurgical coal Cliffs is executing a strategy designed to increase scale and diversity and focused on serving the world’s largest and fastest growing steel markets The Company boasts a conservatively managed balance sheet with low debt and strong liquidity g q y With core values of environmental and capital stewardship, our colleagues across the globe endeavor to provide all stakeholders operating and financial transparency as embodied in the Global Reporting Initiative (GRI) framework3
  • 4. OPERATIONAL EXCELLENCE | A WORLD LEADER | STEWARDSHIPCliffs Natural Resources Global Footprint p Chromite Project Production Commencing in 2015 Canadian Iron Ore Production Capacity: 5.5Mt U.S. Iron Ore Production Capacity: 24Mt U.S. Coal Production Capacity: 6.5Mt Australian Coal Production Capacity: 1.6Mt Brazilian Iron Ore Production Capacity: 1.5Mt Australian Iron Ore = Iron Ore Production Capacity: 9.0Mt = Coal = Chromite Deposits4
  • 5. OPERATIONAL EXCELLENCE | A WORLD LEADER | STEWARDSHIPCliffsCliffs’ Strategic Imperatives Building scale through diversification Global execution Multiple Revenue Streams Competencies of the Firm Product Diversification Outlook of Personnel Geographic Presence Global Scalability Scale S l Global Gl b l Through Execution Diversification Operational Shareholder Excellence Returns Operational excellence Shareholder returns Safety Shareholder Value Technical Competencies Risk Management Operating Efficiencies “Earning the Right to Grow”5
  • 6. OPERATIONAL EXCELLENCE | A WORLD LEADER | STEWARDSHIP Impact of Strategic Execution ($ in Millions) $150 Other North American Share price performance since January 2005 North 4% American Coal Iron Ore 13% 59% tion Asia Pacific Iron Ore iness evolut 24% $120 $90 Busi Sales: $1,740 Sales: $1,922 Sales: $2,275 Sales: $3,609 Sales: $2,342 Sales: $4,682 Sales: $6.7B 2005 2006 2007 2008 2009 2010 2011E $60 es 2005 2007 2008 2009 2010 2011EStrateg milestone Acquired 80% of Acquired 30% interest in Acquired remaining $347mm in net proceeds Acquired remaining Announced acquisition Portman Limited, Amapá iron ore project stake in Portman Limited from equity offering stake (73%) in of Consolidated then the third in Brazil (20%) executed in May Wabush Mines Thompson, an emerging largest iron ore world-class iron ore Acquired 45% economic Acquired remaining Added to S&P 500 Index Acquired Freewest mining company producer in interest in Sonoma, stake in United Taconite Resources and Spider $30 in Australia hard coking and thermal (30%) Resources, world-class Eastern Canada gic coal mine in chromite assets in Acquired stake in Golden A i d t k i G ld Queensland, Australia Ontario, Canada West, an Australian Acquired PinnOak, Central iron ore junior Acquired INR Energy, Appalachian high-quality, mining company high-volatile met coal low-volatile met coal mines and thermal coal $0 Jan 2005 Sep 2005 May 2006 Jan 2007 Sep 2007 May 2008 Jan 2009 Sep 2009 May 2010 Feb 2011 6
  • 7. OPERATIONAL EXCELLENCE | A WORLD LEADER | STEWARDSHIPYear over Year Highlights g g Consolidated Financial Cash From Revenues (2006 to 2010) Operations (in billions) Nearly 300% in total shareholder return (in millions) 144% increase in consolidated revenues $2,700 $6.7 425% increase in cash from operations $4.7 Strategic Growth $3.6 Nearly 100% increase in seaborne iron ore exposure from 2006 to 2010 p $1,320 $2.3 $2.3 Completed five iron ore acquisitions$1.9 $853 Increased exposure to metallurgical coal pointed at Asian and European markets $429 $289 Burgeoning Chromite project $186 New global exploration activities7
  • 8. OPERATIONAL EXCELLENCE | A WORLD LEADER | STEWARDSHIPCliffs’ Long-term Growth StrategyCliff ’ L t G th St t Diversify into other end-markets and y Cliffs’ strategy: Geographic and mineral diversification other steel-related minerals Minerals Geographies Expand geographically into low-political-risk geographies l liti l i k hi SEABORNE Emphasize cash-flow positive, profitable, MET COAL ASIA PACIFIC SOUTH commercial-stage businesses NORTH AMERICAN SEABORNE IRON ORE IRON ORE NORTH AMERICA (AUSTRALIA) AMERICA (BRAZIL) MET COAL Evaluate opportunities in the early stage SEABORNE FERROALLOYS of development8
  • 10. OPERATIONAL EXCELLENCE | A WORLD LEADER | STEWARDSHIPWhy Consolidated Thompson? Strategic Operational Financial Seaborne iron ore High-quality concentrate Meaningful earnings and cash flow potential Strategic relationship with Open-pit mining leading global steel producer Strong growth profile gg p Proximity to Cliffs’ existing Builds on platform in Eastern Canadian operating Accretive Eastern Canada Constructive mining jurisdiction Significant and achievable synergy opportunities Excellent health, safety and environmental record10
  • 11. OPERATIONAL EXCELLENCE | A WORLD LEADER | STEWARDSHIPConsolidated Thompson OverviewAn Emerging World-Class Iron Ore Producer One of the fastest developing iron ore producers in North America with o e 580 million metric to s ot e ca t over o et c tons of reserves Access to Asia market Profitable and positive operating cash flow in its second quarter of production q p Excellent infrastructure with power, rail and port Cliffs’ access capable of supporting growth profile Wabush mine and 1 facilities Expected to double its annual iron ore capacity to an annualized 16 million metric tons Attractive development opportunities at Lamêlée and Peppler Lake with approximately 935mt of indicated iron ore resources Expected to be a low-cost producer11
  • 12. OPERATIONAL EXCELLENCE | A WORLD LEADER | STEWARDSHIPStrategic Diversification in Cliffs’ Core Product Cliffs Significantly increases exposure to seaborne customers Major diversification of Cliffs’ client base – Substantially all of Consolidated Thompson’s production sold b ll ll f ld d h ’ d ld into Asian markets – Long-term contracts with Wuhan Iron and Steel (Group) Corporation (“WISCO”) and others Establishes a strategic relationship with one of the leading Chinese steel producers – WISCO, China’s 3rd largest steel maker is Consolidated Thompson’s largest customer and 25% partner in Bloom Lake Significantly enhances Cliffs’ growth profile – Consolidated Thompson expected to double production from current run rate – Potential further development of reserve base Expected to be a low-cost producer and globally competitive Low operating risk and achievable synergies — Adjacent to Cliffs’ Wabush operation — Cliffs has mined in Quebéc for 45 years — Consolidated Thompson has attractive technical characteristics — Sound regulatory environment12
  • 13. OPERATIONAL EXCELLENCE | A WORLD LEADER | STEWARDSHIP Diversifying Cliffs’ Product Mix Cliffs (by metric tons) 2009 1 2011E 2 Beyond 2013E 3 Cliffs Cliff product mix d t i Cliffs Cliff product mix d t i Cliffs product mix North American Coal North American North American 6% Coal Coal 13% North American 11% North American North American Iron Ore Iron Ore Asia Pacific Iron Ore 62% Asia P ifi A i Pacific 54%Asia Pacific Iron Ore 46% Iron Ore Iron Ore 17% 18% 32% Seaborne Seaborne Concentrate to Asia Concentrate to Asia 16% 26% 1 Based on Cliffs’ 2009 From 10-K reported tons sold by product segment (all figures converted to metric tons) 2 Assumes (a) completion of the acquisition; (b) Cliffs’ 2011 guidance disclosed within its 2010 Form 10-K (c) Consolidated Thompson’s June 2010 Feasibility Study 3 Assumes Ass mes (a) completion of the acquisition; (b) Cliffs’ 2011 guidance used for 2013 production and (c) completion of Consolidated Thompson’s expansion projects disclosed in June 2010 acq isition g idance sed fo p od ction e pansion p ojects J ne Feasibility Study with total capacity reaching 16 million metric tons Note: Excludes Cliffs’ Asia Pacific Coal and Amapà 13
  • 14. OPERATIONAL EXCELLENCE | A WORLD LEADER | STEWARDSHIPAttractive Commercial Relationships with pLeading Asian PlayersConsolidated Thompson’s est. production (metric tons mm) Wuhan Iron & Steel (Group) Corporation (“WISCO”) China’s 3rd-largest steel producer – produced more than 30mm metric tons of steel in 2009 16 WISCO affiliate to purchase minimum of 50% of total annual production for first 8 million tons of iron ore produced each year by Consolidated Thompson Worldlink Resources (“Worldlink”) A leading integrated commercial company that imports and exports iron ore, coal, and other bulk solids 8 Agreement t purchase 7 million metric tons of iron ore A t to h illi ti t fi concentrate per year over a seven-year period SK Networks (“SKN”) Subsidiary of SK Group, South Korea’s 3rd-largest conglomerate operating in trading, information technology, energy distribution, ti i t di i f ti t h l di t ib ti and overseas resource development Agreement to purchase one million metric tons of iron ore 2011E Beyond 2013 concentrate from the Bloom Lake mine Source: Consolidated Thompson June 2010 Feasibility Study14
  • 15. OPERATIONAL EXCELLENCE | A WORLD LEADER | STEWARDSHIPSignificant Synergy Potential Expect to realize ~$75mm in pre-tax annual operating synergies Conveyor, dock and loading — Leverage Wabush port and loading capacity — Lower loading costs g — Increase loading rates and potential annual shipping tonnage Capture pellet premium margin — Potential to feed currently idled furnace capacity at Wabush Parts, supplies and warehouse efficiencies Technical expertise, management and administrative tasks15
  • 16. OPERATIONAL EXCELLENCE | A WORLD LEADER | STEWARDSHIPTransaction Overview Cliffs Natural Resources to acquire all of the common shares of Consolidated Thompson Iron Mines Ltd. The total transaction value is approximately C$4.9 billion (including net debt) Consolidated Thompson’s Board has recommended that its shareholders approve the transaction Transaction Consolidated Thompson’s existing off-take agreement with WISCO is expected to continue with Cliffs – WISCO will continue to hold a 25% partnership interest in Bloom Lake Under the terms of the transaction, Consolidated Thompson’s shareholders will receive C$17.25 per share, C$4.9 billion in aggregate, consisting of all cash Consideration The transaction represents an implied premium of 30% to Consolidated Thompson’s closing share price as of January 10, 2011. Bridge financing f the transaction h been committed by J.P. Morgan d f for h has b db Financing Cliffs expects to access capital markets to arrange permanent financing It is Cliffs’ objective to maintain current BBB-/Baa3 ratings Significant synergy potential with Cliffs’ Eastern Canadian operations Financial Impact Transaction is expected to be modestly accretive to earnings and cash flow in 2011 and 2012 The transaction is expected to close in early second quarter, subject to satisfaction or waiver of customaryAnticipated Closing closing conditions16
  • 18. OPERATIONAL EXCELLENCE | A WORLD LEADER | STEWARDSHIPChromite Project Overview Cliffs Natural Resources acquired 100% of Freewest Resources and Spider Resources in 2010 with stock and cash Freewest Resources and Spider Resources Acquisitions position Cliffs to become the leading North American primary chromite and ferrochrome producer and exporter Customers would include global stainless steel producers World-class chromite deposits located in Northern Ontario, Canada – 100% Black Thor – 100% Black Label – 73 5% Big Daddy 73.5% Anticipate mining 1 million to 2 million metric tons of high-grade chromite ore to produce 400,000 to 800,000 metric tons of ferrochrome annually with a >30-year mine life Prefeasibility studies and initial First Nation discussions are underway; production anticipated to commence around 201518
  • 19. OPERATIONAL EXCELLENCE | A WORLD LEADER | STEWARDSHIPChromite Project Capital Expenditure Requirements Estimated capex of $800mm required to develop the site Options for financing capex include: – Internal cash flow – Joint-venture partner – Oth financial options Other fi i l ti Capex will be deployed only after certain project milestones are satisfactorily achieved Cliffs has the opportunity to evaluate proceeding with the development of the assets over the next 5 years – Majority of capex spending would occur in 2013 and 201419
  • 21. OPERATIONAL EXCELLENCE | A WORLD LEADER | STEWARDSHIP Steel Is a Large, Growing Global Business Large Growing, In 2009, China’s steel consumption 1,200 was nine times that of the U.S. 1,000 S. Korea As countries industrialize, per capita steel consumption increases onsumption 800 as GDP per capita expands through the maturing process h i 2009 Kg/Capita Steel Co 600 China Japan 400 Oceania Canada U.S. 200 EU 27 CIS India Mexico Brazil 0 0 10 20 30 40 50 60 2009 GDP Per Capita ($US 000s)Note: Size of bubbles represents size of absolute 2008 finished steel consumption in each respective countrySource: Metals Strategies, CIA World Factbook BRIC economic growth is substantial and appears inevitable. 21
  • 22. OPERATIONAL EXCELLENCE | A WORLD LEADER | STEWARDSHIPThe Long-Term Outlook Remains Strong Long Term World steel demand (millions of metric tons) 1,500 1,000 500 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010E 2011E 2012E 2013E 2014E 2015E Source: Metal Strategies Growth in global steel production using blast furnaces (millions of metric tons ) % of crude steel production 1,400 100% 1,200 75% 1,000 50% 800 600 25% 400 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010E 2011E 2012E 2013E 2014E 2015E Source: Metal Strategies22
  • 23. OPERATIONAL EXCELLENCE | A WORLD LEADER | STEWARDSHIPNorth American Steel Producers Are ParticularlyWell-Positioned t P ti i t i an EW ll P iti d to Participate in Economic R i Recovery U.S. steel supply/demand (mm tons) Production Consumption 133 135 127 122 123 119 118 114 116 110 113 111 108 108 110 105 107 101 101 98 92 89 66 65 2004 2005 2006 2007 2008 2009 2010E 2011E 2012E 2013E 2014E 2015E Net imports as a % of 17% 12% 19% 11% 9% 10% 9% 10% 10% 11% 11% 11% consumption Source: Metal Strategies23
  • 24. OPERATIONAL EXCELLENCE | A WORLD LEADER | STEWARDSHIPSteel Center Inventories Remain Low Relative toHistorical LevelsHi t i l L l Service center inventories Tons (mm) Months supply 18 5 16 14 4 12 10 3 8 6 2 4 2 0 1 2005 2006 2007 2008 2009 2010 Source: Metal Strategies24
  • 25. OPERATIONAL EXCELLENCE | A WORLD LEADER | STEWARDSHIPSteelmaking Raw Materials Supply-Side Considerations Iron ore – New projects commissioned in countries with medium to high sovereign risk – Hi h d of cost curve requiring significant capital deployment High-end f t ii i ifi t it l d l t – Suppliers farther inland from deep-water ports, economic logistics – Further tightening of Indian supply as increased export restrictions have emerged Metallurgical coal – At top of cycle in 2008, Appalachian supplies declined (mines deeper, seams thinner) – Environmental and safety regulations make permitting more difficult to secure – Other global metallurgical coal basins in challenging political geographies (Mongolia, Mozambique, etc.) 25
  • 26. OPERATIONAL EXCELLENCE | A WORLD LEADER | STEWARDSHIPPricing for Core Products Has Corrected Sharply g py Iron ore prices ($/metric ton based on 64% iron content) ($ price and % change) $213250 Pellets Lumps Fines 43%200 $203 35%150 $193100 49% 50 0 1990 0 1991 1 1992 2 1993 3 1994 4 1995 5 1996 6 1997 7 1998 8 1999 9 2000 0 2001 1 2002 2 2003 3 2004 4 2005 5 2006 6 2007 7 2008 8 2009 9 2010 0 2011E Source: Cliffs and various industry publications/reports Metallurgical coal prices ($/metric ton) ($ price and % change) i d h )300 $225250 8%200150100 50 0 2011E 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: Metal Strategies, equity research, Company estimates. Pellet pricing assumes an increase of 35% over 2010 pricing. Fines pricing is the Platts spot price as of 2/21/11. Lump pricing assumes a $20 per ton premium on the fines spot price. 26
  • 27. OPERATIONAL EXCELLENCE | A WORLD LEADER | STEWARDSHIPIn Summary Steel and the raw materials to make it are extremely important — Building block of society — Essential to modernization of Brazil, Russia, India and China Raw materials will continue to be scarce in the long-term g — Very few meaningful iron ore or metallurgical coal projects came online at the top of the last cycle — Worldwide economic recovery is resulting in increased demand Cliffs is well positioned in its current markets and to benefit from the current environment — Active business development targeting program — Strong balance sheet and significant financial flexibility27
  • 30. OPERATIONAL EXCELLENCE | A WORLD LEADER | STEWARDSHIP 2011 Outlook 2011 Outlook Summary North American North American Asia Pacific Iron Ore (1) Coal (2) Iron Ore (3) Current Current Current Outlook Outlook OutlookSales volume (in millions) 28.0 6.5 9.0Revenue per ton $140 - $145 $135 - $140 $175 - $180Cost per ton p $65 - $70 $105 - $110 $70 - $75(1) North American Iron Ore tons are reported in long tons.(2) North American Coal tons are reported in short tons f.o.b. the mine.(3) Asia Pacific Iron Ore tons are reported in metric tons f.o.b the port.SG&A Expenses and Other Expectations Cash from operations- SG&A: Approximately $200 million - More than $2.7 billion- Global Exploration Group: Approximately $50 million to $55 million- Chromite project: Approximately $35 million Capital expenditures- Sonoma Coal partner profit sharing: Approximately $50 million - Approximately $700 million, comprised of $300 million in sustaining- Full year tax rate: Approximately 30% y pp y % capital and $400 million i growth and expansion it l d illi in th d i- Depreciation and amortization: Approximately $360 million 30
  • 31. OPERATIONAL EXCELLENCE | A WORLD LEADER | STEWARDSHIP2011 Outlook - Capital Projects Iron Ore — $125 million for extension of Cliffs’ Empire Mine in Michigan to 2014 — $20 million related to increasing production at Wabush to 5.5 million tons by 2013 — $146 million related to infrastructure upgrades at Cliffs’ Koolyanobbing Mine in pg y g Western Australia Coal — $45 million related to bringing Lower War Eagle, a high-volatile metallurgical coal mine in West Virginia, into production — $16 million related to the mine shaft construction at Cliffs’ Oak Grove Mine in Alabama — $14 million related to the longwall installation at Cliffs’ Pinnacle Mine in West Virginia31