In its Q2 earnings report, Cliffs Natural Resources said year-over-year revenues had declined by 26%. The lower revenues were primarily due to weak prices for iron ore and metallurgical coal, as well as a 24% decrease in sales volume from the company’s U. S. iron-ore operations.
“We continue to take prudent and decisive actions to optimize the business in the face of continued commodity pricing pressures, which have created a challenging business climate for Cliffs and our industry,” said Gary Halverson, president and CEO, Cliffs Natural Resources. “During the quarter, our team cut costs across the board and significantly reduced our capital expenditures, while enhancing our liquidity by successfully amending our revolving credit facility. We remain focused on controlling what we can control in a volatile environment, and are confident we have the right strategy to operate and extract value from our assets.”
The company reported miscellaneous net expense increased to $48 million, which included $25 million in Wabush-related expenses, primarily associated with costs incurred to idle the facilities. That figure also included a $14 million penalty incurred from a minimum tonnage rail shipment contract not being met as a result of the delay in the Bloom Lake Phase II expansion, as well as an unfavorable impact of $11 million related to foreign currency exchange re-measurements.
U.S. iron-ore pellet sales volume was 4.3 million tons, compared with 5.7 million tons in the second quarter of 2013. The decrease was primarily driven by reduced vessel shipment availability due to the freeze on the Great Lakes, resulting in a delayed start of the 2014 shipping season, as well as lower export and other spot sales. This decrease was partially offset by increased demand from two customers.
Revenues from Cliffs’ North American coal division were down 31% to $72.84/ton, versus $104.89/ton in the second quarter of 2013. During the quarter, Cliffs issued a Worker Adjustment and Retraining Notification notice to all employees at the Pinnacle mine that it intends to temporarily idle its operations. The company expects that the idling of the Pinnacle mine could last more than six months beginning on or about August 25.