Cleveland-Cliffs Inc. (NYSE: CLF) announced today that
based on current market conditions, the Company will be temporarily
idling production at two of its iron ore mining operations,
Northshore Mining in Minnesota and Tilden Mine in Michigan.
Cleveland-Cliffs stated that it will work down current inventory
levels from these two operations and will continue to ship iron ore
to fulfill its commercial agreements with steel customers.
Lourenco Goncalves, Chairman,
President and Chief Executive Officer said, “We have evaluated
market conditions and the extraordinary disruptions in
manufacturing and steel production in North America due to the
impact of the COVID-19 market shock. As our steel customers
rationalize their operations’ capacities, we made the decision to
adjust our iron ore production during the first half of the year
and not continue to build additional iron ore inventory until
market conditions improve. Once the North American steel market
improves, Cleveland-Cliffs will be able to quickly restart and ramp
up production.”
The Company stated that unless business circumstances change, it
plans to temporarily idle production at Northshore mine by
mid-April with a planned restart by August 2020, and Tilden mine
will be temporarily idled by the end of April with a planned
restart in July 2020.
About Cleveland-Cliffs Founded in 1847, Cleveland-Cliffs is among
the largest vertically integrated producers of differentiated iron
ore and steel in North America. With an emphasis on
non-commoditized products, Cleveland-Cliffs is uniquely positioned
to supply both customized iron ore pellets and sophisticated steel
solutions to a quality-focused customer base, with an
industry-leading market share in the automotive industry. A
commitment to environmental sustainability is core to our business
operations and extends to how we partner with stakeholders across
our communities and the steel value chain. Headquartered in
Cleveland, Ohio, Cleveland-Cliffs employs approximately 12,000
people across mining and steel manufacturing operations in the
United States, Canada and Mexico.
Forward-looking Statements
This communication contains
certain forward-looking statements within the meaning of the
federal securities laws, including Section 27A of the Securities
Act of 1933, as amended, Section 21E of the Securities Exchange Act
of 1934, as amended, and the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. When used in this
communication, words such as “anticipate,” “assume,” “believe,”
“build,” “continue,” “create,” “design,” “estimate,” “expect,”
“focus,” “forecast,” “future,” “goal,” “guidance,” “imply,”
“intend,” “look,” “objective,” “opportunity,” “outlook,” “plan,”
“position,” “potential,” “predict,” “project,” “prospective,”
“pursue,” “seek,” “strategy,” “target,” “work,” “could,” “may,”
“should,” “will,” “would” or the negative of such terms or other
variations thereof and words and terms of similar substance used in
connection with any discussion of future plans, actions or events
identify forward-looking statements with respect to our business,
strategy and plans, expectations relating to the merger (the
“Merger”) between Cliffs and AK Steel Holding Corporation (“AK
Steel”) and future financial condition and performance. We caution
investors that any forward-looking statements are subject to risks
and uncertainties that may cause actual results and future trends
to differ materially from those matters expressed in or implied by
such forward-looking statements. Investors are cautioned not to
place undue reliance on forward-looking statements. Among the risks
and uncertainties that could cause actual results to differ from
those described in forward-looking statements are the following:
the severe financial hardship, bankruptcy, temporary or permanent
shut downs or operational challenges, due to the ongoing novel
strain of coronavirus (“COVID-19”) pandemic or otherwise, of one or
more of our major customers, including customers in the automotive
market, key suppliers or contractors, which among other adverse
effects, could lead to reduced demand for our products, increased
difficulty collecting receivables and customers and/or
suppliers/contractors asserting force majeure or other reasons for
not performing their contractual obligations to us; the uncertainty
and weaknesses in global economic conditions, including downward
pressure on prices caused by the ongoing COVID-19 pandemic,
oversupply of imported products, reduced market demand and risks
related to U.S. government actions with respect to Section 232 of
the Trade Expansion Act (as amended by the Trade Act of 1974), the
United States-Mexico-Canada Agreement and/or other trade
agreements, treaties or policies; the uncertainties associated with
the highly competitive and highly cyclical steel industry and
reliance on the demand for steel from the automotive industry; the
continued volatility of iron ore and steel prices and other trends,
which may impact the price adjustment calculations under certain of
our sales contracts; our ability to cost-effectively achieve
planned production rates or levels, including at our hot briquetted
iron (“HBI”) plant once we re-start construction activities, and to
resume full operations, at our facilities that are temporarily
idled due to the COVID-19 pandemic; our ability to successfully
identify and consummate any strategic investments or development
projects, including our HBI plant; the impact of our steel-making
furnace customers reducing their steel production due to the
COVID-19 pandemic or increased market share of steel produced using
other methods or lighter-weight steel alternatives, including
aluminum; our ability to maintain adequate liquidity, our level of
indebtedness and the availability of capital could limit cash flow
available to fund working capital, planned capital expenditures,
acquisitions and other general corporate purposes or ongoing needs
of our business; our actual economic iron ore reserves or
reductions in current mineral estimates, including whether any
mineralized material qualifies as a reserve; the outcome of any
contractual disputes with our customers, joint venture partners or
significant energy, material or service providers or any other
litigation or arbitration; problems or uncertainties with sales
volume or mix, productivity, transportation, environmental
liabilities, employee benefit costs and other risks of the steel
and mining industries; impacts of existing and increasing
governmental regulation and related costs and liabilities,
including failure to receive or maintain required operating and
environmental permits, approvals, modifications or other
authorization of, or from, any governmental or regulatory entity
and costs related to implementing improvements to ensure compliance
with regulatory changes; our ability to maintain appropriate
relations with unions and employees; the ability of our customers,
joint venture partners and third party service providers to meet
their obligations to us on a timely basis or at all; the events or
circumstances that could impair or adversely impact the viability
of a production plant or mine and the carrying value of associated
assets, as well as any resulting impairment charges; the
uncertainties associated with natural disasters, weather
conditions, unanticipated geological conditions, supply or price of
energy, equipment failures and other unexpected events; the
unpredictability and severity of catastrophic events, including
acts of terrorism or outbreak of war or hostilities, as well as
management’s responses to any of the aforementioned factors;
adverse changes in interest rates and tax laws; the potential
existence of significant deficiencies or material weakness in our
internal control over financial reporting; our ability to realize
the anticipated benefits of the Merger and to successfully
integrate the businesses of AK Steel into our existing businesses,
including uncertainties associated with maintaining relationships
with customers, vendors and employees, as well as realizing the
estimated future synergies; the possibility that the Merger may be
less accretive than expected, and may be dilutive, to our earnings
per share, whether as a result of adverse changes in market
conditions, volatility in the commodity prices for iron ore and/or
steel, adverse regulatory developments or otherwise; additional
debt we assumed or issued in connection with the Merger may
negatively impact our credit profile and limit our financial
flexibility; changes in the cost of raw materials and supplies;
supply chain disruptions or poor quality of raw materials or
supplies, including scrap, coal, coke and alloys; disruptions in,
or failures of, our information technology systems, including those
related to cybersecurity; unanticipated costs associated with
healthcare, pension and other postretirement benefits obligations;
and other risks described under the caption “Risk Factors” in
Cliffs’ and AK Steel’s Annual Reports on Form 10-K for the year
ended December 31, 2019 and other periodic reports filed with the
Securities and Exchange Commission.
Unless expressly stated
otherwise, forward-looking statements are based on the expectations
and beliefs of the Cliffs management team based on information
currently available. Forward-looking statements are subject to
inherent risks and uncertainties and are based on assumptions and
estimates that are inherently affected by the operations and
business environment of Cliffs, including economic, competitive,
regulatory and operational risks, many of which are beyond the
control of Cliffs and which are difficult to predict and may turn
out to be wrong. The foregoing list of factors should not be
construed to be exhaustive. There is no assurance that the actions,
events or results of the forward-looking statements will occur, or,
if any of them do, when they will occur or what effect they will
have on the results of operations, financial condition or cash
flows of Cliffs. In view of these uncertainties, Cliffs cautions
that investors should not place undue reliance on any
forward-looking statements. Further, any forward-looking statement
speaks only as of the date on which it is made, and, except as
required by law, Cliffs undertakes no obligation to update or
revise any forward-looking statement to reflect events or
circumstances after the date on which it is made or to reflect the
occurrence of anticipated or unanticipated events or
circumstances.
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MEDIA CONTACT: Patricia Persico Director, Corporate
Communications (216) 694-5316 INVESTOR CONTACT: Paul Finan
Director, Investor Relations (216) 694-6544
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