| Cliffs’s Asia Pacific Iron Ore Division: More Cost Cuts? | |
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Will Cliffs Natural Resources Weather the Storm in 3Q15 Results? (Continued from Prior Part) Asia Pacific iron ore
Cliffs Natural Resources (CLF) is operating its Asia Pacific iron ore (or APIO) segment until it’s sold out. The remaining life left for this operation is 3.5 years.
The APIO segment directly competes in the seaborne iron ore market with iron ore giants such as BHP Billiton (BHP), Rio Tinto (RIO), Vale S.A. (VALE), and Fortescue Metals Group (FSUGY).
Seaborne iron ore trade is the hardest hit due to a supply glut from these players along with weak demand from China. So realized prices for APIO are not expected to be higher than 2Q15 when they came in at $44.30 per ton.
More reduction in costs
On the other hand, the costs could benefit from the depreciating Australian dollar against the US dollar as well as lower freight costs. While cash costs per ton for APIO were $34.30 per ton in 2Q15, they were just $28 per ton in June 2015.
Reduced mining and administrative costs along with a favorable exchange rate led to this decline. Favorable exchange rates helped costs to the extent of $7 per ton in 2Q15. Since the Australian dollar has remained weak compared to the US dollar (UUP) in 3Q15, there’s a potential for APIO cash costs to fall even further.
Guidance
The volume guidance for Cliffs’s Australian business is 11 million tons for 2015. The cash cost guidance is $35–$40 per ton. This is mainly due to the favorable Australian dollar to the US dollar exchange rate.
It’s also important to note that investors who don’t want to invest in individual companies can invest in ETFs such as the SPDR S&P Metals and Mining ETF (XME), which gives diversified exposure to the metals and mining space. CLF forms 3.4% of XME.
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CLIFFS Natural Resources
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PRODUCER |
CODE : CLF |
ISIN : US18683K1016 |
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ProfileMarket IndicatorsVALUE : Projects & res.Press releasesAnnual reportRISK : Asset profileContact Cpy |
CLIFFS Natural Res is a iron producing company based in United states of america. CLIFFS Natural Res produces iron, coal in Australia, in Brazil and in Canada, and holds various exploration projects in Canada. Its main assets in production are WABUSH MINE, EMPIRE AND TILDEN MINES, HIBBING TACONITE, NORTHSHORE MINE, UNITED TACONITE, OAK GROVE MINE, GREEN RIDGE MINE and PINNACLE MINE in Canada, AUSTRALIAN IRON ORE and SONOMA in Australia and AMAPA in Brazil and its main exploration properties are MT JACKSON J1 in Australia and DIAGNOS, WAWA, FREEWEST, MC FAULD'S LAKE, MACFADYEN, WAWA CLAIMS and BIG DADDY in Canada. CLIFFS Natural Res is listed in France, in Germany and in United States of America. Its market capitalisation is US$ 5.3 billions as of today (€ 5.0 billions). Its stock quote reached its highest recent level on May 16, 2008 at US$ 99.17, and its lowest recent point on January 15, 2016 at US$ 1.20. CLIFFS Natural Res has 297 400 968 shares outstanding. |