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Cliffs to Restart United Taconite, Raises 2016 Sales Outlook
Cliffs Natural Resources Inc. (CLF - Free Report) declared that it will will restart operations of the United Taconite mining facility (UTAC) in Minnesota in August, which is two months earlier than Oct 2016, as planned earlier. United Taconite comprises an iron ore mine and a pellet processing plant.
The early restart was spurred by the signing of a contract with U.S. Steel Canada to meet the majority of their iron ore pellet requirements during the third and fourth quarters of 2016. The sales volume of the new iron ore pellet order by U.S. Steel Canada will be much higher than Cliffs’ prior expectation.
Cliffs has thus revised its 2016 sales volume guidance to 18 million long tons from the previous guidance of 17.5 million long tons. Further, 2016 production volume guidance has been increased by 500,000 long tons to 16.5 million long tons.
Steel companies, mainly in North America, are enjoying a higher volume of orders from their suppliers of high-quality iron ore pellets of late. As a result, Cliffs has witnessed a significant improvement in its business with existing and new clients.
CLIFFS NATURAL Price
CLIFFS NATURAL Price | CLIFFS NATURAL Quote
Cliffs is one of the world’s lowest-cost producers of iron ore. The mining company swung to a profit on a reported basis in the first quarter of 2016. Adjusted loss was much lower than the Zacks Consensus Estimate. Revenues fell year over year but surpassed expectations.
The company recently cut a major supply pact with ArcelorMittal (MT - Free Report) . Last week, Cliffs announced a 10-year iron ore pellet supply agreement with ArcelorMittal USA LLC, part of ArcelorMittal. The contract ensures that Cliffs will remain ArcelorMittal USA’s sole external iron ore pellet supplier until 2026.
Cliffs is a Zacks Rank #1 (Strong Buy) stock.
Other favorably placed stocks in the mining space include Teck Resources Limited and BHP Billiton Limited (BHP - Free Report) . While Teck Resources sports a Zacks Rank #1, BHP Billiton carries a Zacks Rank #2 (Buy).
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