Coal news and updates

Cliffs Natural Resources Inc, an iron ore and coal producer, said on Thursday that Lourenco Goncalves, a former steel company executive, was named to run the company after activist investor Casablanca Capital triumphed in a proxy battle.

 

The Cliffs board of directors named Goncalves as chairman, president and chief executive officer, effective immediately.

 

In a separate filing later on Thursday, Cliffs said it has reversed a decision by its previous management team to idle the Pinnacle coal mine in West Virginia unless market conditions improve.

 

Goncalves was the preferred CEO candidate of Casablanca, the hedge fund investor that last week succeeded in getting a majority of its nominees appointed to the board.

 

Goncalves, a former CEO of Metals USA Holdings Corp, a manufacturer of steel and other metals, said in a statement he intended to refocus Cliffs "on a new strategic path" that builds on its strengths.

 

Analysts said Goncalves could pursue the sale of three of the company's four operating segments: its Asia-Pacific iron ore business, its eastern Canadian iron ore operations and North American coal unit.

 

The new management's decision to keep the Pinnacle mine operating appears to be so they can try to sell it, a move that could be difficult under the current weak conditions in the metallurgical coal market, RBC Capital Markets analyst Fraser Phillips said in a note to clients.

 

Keeping the mine running would have a negative impact on earnings unless costs are reduced, Phillips said.

 

In an interview with Reuters in February, Goncalves said he would focus on supplying iron ore to steelmakers in the United States, not selling into the competitive global iron ore market, if he became Cliffs CEO.

 

New York-Casablanca, which has a 5.2 percent stake in Cliffs, claimed the company was destroying shareholder value. Cliffs shares have fallen about 85 percent in the past three years, at a time when iron ore and coal prices have plunged.

 

Goncalves replaces Jim Kirsch as chairman and Gary Halverson as CEO. Cliffs produces iron ore and metallurgical coal in the United States, Canada and Asia.

 

Cliffs shares closed down 0.3 percent at $17.09 on the New York Stock Exchange on Thursday.

 

 

Source: Reuters