Cliffs Natural Resources Inc. (CLF) announced that it has extended its iron ore pellet sale and purchase agreement with Essar Steel Algoma Inc. to 2024. The earlier agreement was scheduled to expire in 2016. The contract includes Essar's minimum volume iron ore pellet purchases from Cliffs beyond 2016 and pricing for 2013 through 2024.
The deal supplements Essar's supply contract with Essar Steel Minnesota LLC to meet Essar's expected iron ore pellet requirements from 2017 and beyond. As per Essar steel, the extension will enable them to purchase under more favorable terms and is an important step toward ensuring the profitability and sustainability of the business.
Essar Steel Algoma Inc. is a fully integrated steel producer and its revenues are primarily derived from the manufacture and sale of hot and cold rolled sheet and plate.
Cliffs is an international mining and natural resources company, a major global iron ore producer and a significant producer of high- and low-volatile metallurgical coal. The company released its first-quarter 2013 results in Apr 2013.
Cliffs posted adjusted earnings of 60 cents per share in the quarter, down 29.4% from 85 cents earned in the year-ago quarter but ahead of the Zacks Consensus Estimate of 32 cents. The adjusted earnings exclude a tax benefit of 6 cents per share.
On a reported basis, Cliffs’ earnings were 66 cents per share compared with $2.63 reported in the year-ago quarter. Weak iron ore pricing coupled with lower volume hurt Cliffs’ earnings in the quarter.
Sales for the quarter came in at $1,140.5 million, down roughly 5.9% from $1,212.4 million in the prior-year quarter and also missed the Zacks Consensus Estimate of $1,226 million. Decline in global iron ore sales volumes led to reduced sales in the quarter.
Cliffs currently retains a Zacks Rank #3 (Hold).
Other companies in the mining industry having favorable Zacks Rank are Claude Resources, Inc. (CGR), Lake Shore Gold Corp. (LSG) and NovaGold Resources Inc. (NG). All of them hold a Zacks Rank #2 (Buy).
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