Carrabba made too many mistakes with the acquisition and ramp-up of Bloom Lake, first of all, he bought it too expensive and secondly, the slow expansion has cost too much and taken everyone by surprise including Carrabba himself. After putting in nearly $7 billion—$4.6 billion for the purchase and another $2 billion (it is undoubtedly going to be $2 billion) for phase II expansion, yet not knowing when it would generate income. This year Bloom Lake will again make a small loss like last year. However, this is only part of the story. The other part is that Carrabba ran into arbitration with MT some years ago, has soured the relationship with Clf’s most important client and offended one of most powerful Indian men. That was why MT signed a sales contract with Essar some months ago, even though Essar might not be able to produce iron ores in time for MT. Carrabba has to leave if Clf wants another term of sales contract with MT. I guess Carrabba would be well compensated for his departure. He indeed has done a lot for Clf, good and bad.
I think a lot of the upside is due to CLFs now changing focus to China/India producing in Australia or the possibility of an asset sell off and/or going private..Speaking of Bloom Lake, what isn't cost of production in Quebec, Minnesota/Michigan higher than in Australia or Brazil?? CLF has never said that I know of. Perhaps they could sell these assets to MTL which already mines Fe in Quebec. These mines are convenient to Great Lakes shipping but less so for export. Again, at current prices are Northshore subsidiary & Bloom Lake competitive??????????
Production costs in the US iron ore mines are far lower than those of Koolyanobbing or Bloom Lake, and besides, do you know how much it costs to transport millions of tons of iron ores from Australia or Brazil to the US?? Iron ores are practically rocks and look like mountains!! You seem to have no idea about iron ore business. Go and read Clf's annual reports and annual reports of their compeditors', you would get some ideas there.
Sad, because he won the arbitration with MT for the company but lost his own job. Mittal, the major owner of MT, is simply too powerful, politically and financially. On the other hand, Carrabba also made a lot of mistakes like many other CEOs in iron ore companies. Iron ore spot price is far too volatile for anyone to predict its future price movement after the change of pricing mechanism in 2010.