| 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–$40 per ton. This is mainly due to the favorable Australian dollar to the US dollar exchange rate.
It’s also important to note that investors who don’t want to invest in individual companies can invest in ETFs such as the SPDR S&P Metals and Mining ETF (XME), which gives diversified exposure to the metals and mining space. CLF forms 3.4% of XME.
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CLIFFS Natural Resources
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PRODUCTEUR |
CODE : CLF |
ISIN : US18683K1016 |
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ProfilIndicateurs de MarchéVALEUR : Projets & res.Communiqués de PresseRapport annuelRISQUE : Profile actifsContactez la cie |
CLIFFS Natural Res est une société de production minière de fer basée aux Etats-Unis D'Amerique. CLIFFS Natural Res est productrice de fer, de charbon au Bresil, au Canada et en Australie, et détient divers projets d'exploration au Canada. Ses principaux projets en production sont WABUSH MINE, EMPIRE AND TILDEN MINES, HIBBING TACONITE, NORTHSHORE MINE, UNITED TACONITE, OAK GROVE MINE, GREEN RIDGE MINE et PINNACLE MINE au Canada, AUSTRALIAN IRON ORE et SONOMA en Australie et AMAPA au Bresil et ses principaux projets en exploration sont MT JACKSON J1 en Australie et DIAGNOS, WAWA, FREEWEST, MC FAULD'S LAKE, MACFADYEN, WAWA CLAIMS et BIG DADDY au Canada. CLIFFS Natural Res est cotée aux Etats-Unis D'Amerique, en Allemagne et en France. Sa capitalisation boursière aujourd'hui est 3,3 milliards US$ (3,0 milliards €). La valeur de son action a atteint son plus haut niveau récent le 16 mai 2008 à 99,17 US$, et son plus bas niveau récent le 15 janvier 2016 à 1,20 US$. CLIFFS Natural Res possède 297 400 968 actions en circulation. |