Cliffs Natural Resources 2Q15 Earnings Call Notes

Let me state that we have ample liquidity

“Let me state right out of the gate that Cliffs has ample liquidity, as we ended the quarter with cash and available capacity on our ABL facility in excess of $600 million, net of existing letters of credit commitments.”

As the absurdly high rate of imported steel reverts back to normal levels..

“Bottom line, as the absurdly high rate of imported steel penetration reverts back to normal levels and our clients’ blast furnaces return to normal operating levels, we expect to be able to adjust our production and our sales volume accordingly.”

China does not need low iron content iron ore and we don’t need subsidized imported steel fed by that ore

“China does not need any more low iron content iron ore as a major source of pollution, and our U.S. market does not need any more subsidized imported steel fed by that ore.”

This could be a painful few years for those who bet heavily on China. Luckily we bet on the US

“As this unfolds, the next year or even the next two years or three years could be very painful for those that bet their farm on China. Luckily, we have the ability to separate ourselves from this catastrophe before it is too late and focus on a U.S. market whose worst days are likely behind us.”

Spreadsheet specialists and computer screen wizards…

“Spreadsheet specialists and computer screen wizards do not know a good pellet from a bad one and have never built a pellet plant within a realistic budget and against a real tight timetable.”

I know it’s a tough battle here

“I know it’s a tough battle here; I knew coming in. I wasn’t even invited to come in. I came in because I wanted and the shareholders elected me to come here. But a difficult war like that will take a lot of difficult decisions and I’m ready to take them at the right time.”

Minimills need to go toward iron based scrap substitutes

“it’s not just a matter of cost, it’s a matter of market, it’s a matter of the ability to do things that they can’t do or produce products that they can’t produce and address markets that they can’t address if they stay only with scrap, let alone the fact the availability and quality of good scrap has been deteriorating quickly in the United States. So going toward iron-based scrap substitutes is not only a matter of cost, even though cost will always be a factor”

The current situation for iron ore is not sustainable

“we need to really understand that the current situation for iron ore in the world is unsustainable. It’s not going to persist forever. You can argue that it’s going to last another year, another two years or another six months or just a quarter. But one thing we all know, the Australians and the Brazilians will not be able to continue to finance their business, their dividend policies, their political goals within their respective countries giving iron ore to the Chinese at $50 per ton.”

Everyone is waiting for my demise. It’s not going to happen

“You’re going to have to sit still, sit tight, and continue to see Lourenço in action, as you have seen for a long time at Metals USA and you are seeing for a year here. It will be fun to watch…Lots of people are looking forward to my – for Lourenço to crash to the ground. It’s not going to happen. Any other questions, Tony?”