WSJ: "Cliffs Natural Resources Inc. CLF -0.07% has hired three investment banks, in the first concrete sign of the shake-up promised by new management installed this summer at the U.S. miner following a shareholder revolt.
Cleveland-based Cliffs has hired Deutsche Bank DBK.XE +0.65% to sell its coal assets in West Virginia and Alabama, Jefferies Group LLC to sell its Australian iron ore mines, and Moelis MC +1.74% & Co. as strategic adviser on the overall process, according to two people familiar with the matter."
The meeting with Vale and Jeffries appears on fly----wall at 12.43 EST today..
U.S. Steel price target raised to $60 from $40 at Deutsche Bank
Vale management to meet with Jefferies...Is Jefferies trying to do a deal between Cliffs and Vale? Cliffs retained Jeffries and Deutsche Bank to market its assets...
Nucor: Overall operating performance at steel mill improved in Q3
The company said it expects increased profitability in sheet, structural, bar and plate steel. Structural steel had no major outages in the third quarter, as compared to the planned three week outage at Nucor-Yamato Steel in the second quarter associated with our $115M sheet piling capital project. The strongest markets for the steel mills continue to be manufactured goods, including energy and automotive. Though third quarter results are expected to be much improved from the second quarter, imports remain at high levels, applying downward pressure on pricing. The performance of the fabricated construction products businesses is expected to improve compared to the second quarter of 2014, reflecting improving conditions in the nonresidential construction markets. Although nonresidential construction markets are at historically low levels, they are improving. The performance of the raw materials segment includes an anticipated operating loss of $27M at our direct reduced iron plant in St. James Parish, Louisiana.
Enjoy your reaming Gordon Johnson/Axiom Capital and Weiss of CNBC...absolute idiots.. Johnson was wrong about FSLR...wrong about U.S. Steel... and wrong about CLF...
(Reuters) - Sagging iron ore prices raise the prospect the world's biggest miners will shelve plans to return excess cash to shareholders in February, despite promises to investors who had hoped to reap the benefits of two years of austerity.
Stung by slower growth in China, global miners have reined in expansion plans and brought in new management to sell assets and drive their mines harder, raising hopes that BHP Billiton alone could hand back up to $8 billion to investors.
In the August reporting season, Glencore kicked off the expected party with a $1 billion share buyback, world No. 2 iron ore miner Rio Tinto flagged it would be in a strong position to return capital in February, and BHP said a move was "close".
But iron ore prices have collapsed to five-year lows since then, thanks to the major miners flooding the market with new supply and high-cost miners in China continuing to produce, defying expectations the market would bottom around $90 a metric ton (1.1023 tons).
If prices remain below $90 for the rest of the year, BHP and Rio, both looking to keep their single 'A' credit ratings, would be hard-pressed to return capital to shareholders, beyond raising their dividends, debt and equity analysts said.
"At the moment, there's a lot of cash flow at risk relative to history because of commodity price volatility, not just in iron ore, any spot price exposure. You can't pre-emptively give back cash in this environment," said Paul Phillips, a partner at fund manager Perennial Growth Management.
BHP and Rio would be focused on maintaining conservative balance sheets, he said, with both companies slashing costs, cutting project spending and paring debt to help weather the downturn in the price of iron ore and other commodities.
Iron ore has fallen nearly $50 a metric ton so far this year. Every $1 drop in price would wipe $135 million off BHP's bottom line for the year to June 2015.
"We're not pressuring them for capital returns per se. It's got to be sensible given the environment we're in," said Ross Barker, managing director of Australian Foundation Investment Co, one of the top five investors in BHP's Australian shares.
BHP CEO Andrew Mackenzie conceded after releasing annual results in August that the board had decided not to endorse a share buyback as it was being cautious in the face of volatile commodity markets.
"Looking forward with our current configuration today, our desire to remain a solid 'A' credit rating business and our view of future markets, we think it would be premature to start right now, but we are getting close," he told reporters in London.
But with iron ore prices having fallen 8 percent since then to hover near five-year lows, BHP and Rio may be even less likely to start handing back excess cash in February, Standard & Poor's analyst May Zhong said.
"The lower iron ore prices will reduce their flexibility to do any significant capital return," Zhong said.
She still expects a small recovery in iron ore prices in 2015, but not above $100, and sees BHP and Rio being in the strongest position to withstand the tough market.
The prospect of buybacks is a luxury only the major miners can consider with iron ore in the doldrums.
At the other end of the spectrum, investors and S&P are concerned about more heavily geared miners like Anglo American, for whom iron ore is the biggest earner, as well as Australia's no.5 producer, Atlas Iron Ltd and U.S. miner Cliffs Natural Resources Inc.
Anglo American is close to completing its long-delayed $8.8 billion Minas Rio mine in Brazil, which is expected to produce 11-14 million tonnes next year. The company declined to comment on whether it is looking at ways to shore up its balance sheet in light of the weak iron ore market.
In Australia, investors are most worried about Australia's fifth-largest iron ore producer, Atlas Iron Ltd, the most heavily shorted stock on the Australian market with close to 16 percent of its shares sold short.
Rival Arrium Ltd moved to raise $680 million through a share sale this week, and analysts and investors said Atlas may consider selling stakes in its mines or holding back on planned expansions to ease pressure on its balance sheet.
"I dare say they'll come up with some sort of joint venture solution," said Phillips. "They've got a bit of room to move."
Atlas, which analysts estimate is producing at a loss with iron ore prices below $86, declined to comment on what impact the weak iron ore price is having on its balance sheet.
One company still weathering the downturn is world no.4 iron ore producer Fortescue Metals Group, which is in a much stronger position than it was two years ago, when iron ore prices briefly dipped below $90 a metric ton.
Once carrying more than $10 billion in debt, Fortescue took advantage of a spike in iron ore prices to accelerate its debt repayments and expand its output to 155 million tonnes a year, slashing its operating costs.
"We're pretty comfortable with where Fortescue sits at the moment," said Fitch credit rating analyst Vicky Melbourne.
Federal Program Supplies Surplus Military Gear to Schools
A federal program that has drawn criticism in recent weeks for supplying surplus military gear to local police has also provided high-powered rifles, armored vehicles and other equipment to police at public schools, some of whom were unprepared for what they were getting.
In the wake of school shootings in Newtown, Conn., and elsewhere, some school security departments developed SWAT teams, added weapons and called on the federal government to help supply gear. But now, the program is facing renewed scrutiny from both outside observers and schools using it.
The Los Angeles Unified School District stocked up on grenade launchers, M16 rifles and even a multi-ton armored vehicle from the program. But the district is getting rid of the grenade launchers, which it never intended to use to launch grenades or use in a school setting, said Steven Zipperman, chief of the Los Angeles Schools Police Department. The launchers, received in 2001, might have helped other police in the county disperse crowds by shooting rubber munitions, he said.
But the district never used them, and the technology is outdated, said Mr. Zipperman.
In July, the district received a massive MRAP armored vehicle. Mr. Zipperman said his department thought it could be useful for evacuations and to save lives in a "sustained incident."
But the district is considering dumping the MRAP as well, in part because of its unwieldiness, but also after media and community members began asking questions about why the district had such a vehicle.
"We have to balance the need for a vehicle that can save lives and what's best for our department, with what perception is and what community expectations are," Mr. Zipperman said.
In Texas, near the Mexican border, the sprawling Edinburg Consolidated Independent School District has 34,700 students and operates its own SWAT team, thanks in part to military gear it received in recent years from the federal program. The gear included two Humvees and a cargo truck, as well as power generators, said district Police Chief Ricardo Perez. The district applied for weapons, too, but wasn't given any, so instead purchased its own M4 and AR-15 assault-style rifles, he said.
The Humvees, he said, are helpful because they can travel off road and quickly reach remote elementary schools surrounded by ranch land, but the chief said they haven't been used to stop a crime or threat to schools. The 12-member SWAT team, in fact, hasn't dealt with a school shooting or any other major incident, he said.
"We just want to be prepared for the kind of things that have happened elsewhere in the country, Sandy Hook and earlier before that, Columbine," said Mr. Perez, a 30-year law-enforcement veteran and former SWAT officer, referring to two of the most notable U.S. school shootings. "These officers are trained in tactics. Some are former military."
The weapons are given to schools through the 1033 Program, created by Congress in the early 1990s to allow law-enforcement agencies to obtain excess Defense Department supplies, paying only for shipping. The program has transferred $5.1 billion in items, including $4.5 million worth in 2013.
Among recipients are more than a dozen school police departments, according to a spreadsheet from the Defense Logistics Agency, which runs the program. But for security reasons the list excludes districts that received only "tactical" gear such as weapons, as opposed to other types of supplies. That means the list likely understates the number of districts that participated.
California is one of few states that provides a list of participating school districts and what they received. Its state website shows that two school police departments received armored vehicles, others added M-16s and grenade launchers to their armories, while one district took in televisions, projectors and a podium but no weapons.
Images of police toting military-style rifles and using armored vehicles on the streets of Ferguson, Mo., captured the nation's attention in August in the days after a white police officer shot and killed an unarmed black teenager. Officers wearing combat fatigues confronted peaceful protesters—and clashed with violent looters and rioters—prompting questions about the appropriateness of the police response. The Senate Homeland Security and Governmental Affairs Committee held a hearing last week to debate the wisdom of the 1033 Program.
"We saw at our hearing a real gap in training for police departments receiving equipment through the Pentagon's 1033 program, which is even more troubling when we're talking about the potential for misuse of these military-grade weapons and MRAPs in a school setting," said Sen. Claire McCaskill (D., Mo.) in a statement.
Now, some say the Defense Department should stop supplying schools with weapons. The NAACP Legal Defense and Education Fund and Texas Appleseed, two civil-rights advocates, wrote an open letter signed by nearly two dozen other groups calling on an end to the program.
"Adding the presence of military-grade weapons to school climates that have become increasingly hostile due to their overreliance on police to handle routine student discipline can only exacerbate existing tensions," the letter said. "We write to urge you to end the Department of Defense 1033 Program's transfer of military weapons to local school districts."
A spokeswoman for the Defense Logistics Agency said in a statement that 95% of the equipment provided to law-enforcement agencies through the program isn't weapons, and less than 1% is tactical vehicles. She said "each state is visited biannually for a program compliance review to further look at records, property and usage."
At the Granite School District in Salt Lake County, Utah, spokesman Ben Horsley said the security department carefully thought out its request for a handful of M16 rifles. "It would be irresponsible to send our officers into an active shooter situation with just a handgun," he said.Each officer has a rifle, which is kept locked up, Mr. Horsley said. He said he understood concerns people have about the military-style weapons, but added they were needed and that the department has a fully-developed training regimen for them. "When concerns have been expressed, we simply outline that civilian-type weapons like these are being purchased every day," he said. "Adam Lanza had one of these when he stormed Sandy Hook," he said.
But Mr. Horsley noted that the three M-16s the school police were provided are from the 1960s and unable to mount high-tech rifle accessories such as scopes. He said the department probably will buy new rifles on its own eventually, bypassing the Defense Department program.
BHP Billiton downgraded to Underperform from Neutral at Exane BNP Paribas
I dumped my last set of 'new' shares @ $15.29 today...probably a stupid move...I'll know in two days...