One more question, with Cliffs already have a listing CLV, could they just dump all those assets and debt in that listing and create the new company?
India has an export tariff on their iron ore fines and now put a tariff on iron ore pellets. They see expanding steel manufacturing and want to minimize imports in the future as they know world demand will cause prices to rise. Also, it takes away a supply source from China.
No, it was a contributor on CNBC this morning and he deals with the China markets. He has been on the air for a long time, I know his name but can't recall it at the moment and will give it to you if it comes to me. Trust me, I am not an expert no more than you are an expert on this board. But when I hear an expert explain an issue that is relevant to CLF, I will post it and not engage in useless banter on this board.
People outside China cannot directly invest into Chinese companies and the Chinese cannot buy other currencies. To get around this, an importer of Chinese goods will over pay for their goods, giving the Chinese broker foreign currency to invest in the Chinese markets or buy yuan's. With the Chinese stock markets taking a hit and the falling yuan, this extra flow of funds is slowing down resulting in a decrease in exports on paper, not goods.
Yes! The truth is if China's steel production is falling off, the US steel production should be increasing to meet the growing auto and construction industries. This should be good for CLF as the largest iron ore supplier to the US market. But we have no one pointing this out to the markets other than the 15 people posting here. Last I checked, CNBC is not reviewing these message boards for views on the market. Matter of fact, these post have no value at all, why waste my time? Guess this will be my last here.
And again, this is why Casablanca wants to spin off a separate company and sell the shares in the open market. You can't find a buyer for a $3 billion asset, but you can find thousands of buyers that will pay $15 a share for it. A stock offering like this is a gamble, but when you consider that the best you can do is find a single buyer for under $1 billion, it is a calculated risk that you will make more.
Personally, I think they should hold these assets. Your cost of production of $88 includes $25 in depreciation, depletion and amortization where the US mine have a corresponding $7 cost. So if you factor in these write offs, CLF can still generate cash off the operations if spot prices fell to $75 a ton.
I agree with you totally. With depreciation, depletion and amortization accounting for $25 of the expenses, the Canadian operations is generating enough cash and adding to CLF's cash balance every year. But CLF can't sell anyone on this or any other option until they get the shorts under control. That is why they need to stop the bantering and the what if's, they need to use some of their cash now to buyback shares or increase the dividend today and the rest will come together. Management could even do a token act like taking shares in the company instead of pay for 3 months.
You have a very good point and this is the key reason Casablanca wants to split it off by creating a separate company and selling shares. I think CLF could net out $3 billion out of the split that would retire all their debt and leave them with some cash. However, I don't think they should sell off this division until Ontario settles on a transportation plan to the chromite mines, when that happens CLF's chromite mines will be worth $2 billion alone.
But getting back to book value, most companies sell for 2 to 3 times book, so if you back off these assets to their current value it would put book at $25 and CLF should be selling for $50. And I think that is where Casablanca is coming up with a value of a US CLF of $53 for a company with no debt, good producing assets and a stable business model.
Even with the impairments, CLF's shareholder equity increased $1 billion, cash increased over $200 million and debt decreased by over $1 billion. Management has all the performance data to take these shorts on in the media and they chose to sit back and let it happen. You can't beat these forces publishing financials 4 times a year. It would be so easy to put an end to this short action that even I could do it.
No they don't as the Chinese buy at spot and if you average it out over the year, it is close to what CLF has their long term contracts at. But because CLF has 65% of their business on long term contracts, their revenue per ton changes $2 for every $10 move in iron ore. Based on changes in iron ore, CLF's stock price should not move as much. However, shorts are in control and they are jumping all over this export data and falling spot prices to send CLF down further.
from years of double invoicing, shipping half now and half later. Government is trying to stop this and exports that were in the earlier numbers are now being shipped without invoicing. Still, the same amount of iron ore is coming into the country and that is why the huge drop in exports and the big increase in imports.
Yes they do up in their MN mines. They currently do not have customers for them yet because there is no customers in that region. Nucor is big nat gas steel company and use scrap steel, however as US demand grows, they need DRI pellets to meet the demand. I think these steel companies will just pay the cost to transport it as iron ore companies will not build plants to process these pellets near each steel mill.
No it is not enough. CLF needs to address the huge short position if they want to keep their jobs. Failure to do so only opens the door for Casablanca to come in and take over. Herbalife has spent $2 million to take on Ackmann plus obtained good media exposure since the short attack started… that is how a public company should act. And Herballife is not on as strong of a financial footing that CLF is!
It can go either way, but that is why long term contracts are good, it takes away these volatile moves and lock a price in that both the iron and steel companies are comfortable with to make their targeted profits.
They could come out and say that their long term contracts insulate them from these short term swings in iron ore prices. Earning levels are still good and that management is initiating a buyback program with the price of the stock so low and earnings are firm.
behind the scenes. Cramer mentioned CLF about the breaking up of the company developing the steel market around low cost nat gas. The need in the future is for DRI iron ore pellets but they have to overcome the logistics and cost to get them to the mills. It shows that someone is behind the curtain pushing the ideas that future growth is here in the US and my guess it is Casablanca working it. I will watch Mad Money tonight to see what is said.
I disagree, CLF could spend $3 billion getting the transportation network in place and the Government would come in and take it over so all the area could be developed for the other miners and local people. CLF would be out $3 billion and unable to collect road use fees.
CLF had to shut down the Ring of Fire to get Ontario on track to put in the transportation infrastructure. I think they realized that if CLF put in the transportation network, the Canadian government would just come in and nationalize it which would take away any opportunity for CLF to recoup their investment. The development corporation is the right way to proceed and CLF will be a part of that with their investment into that being a small fraction of what they intended to pay to build roads and rails into the area.