Cleveland-based iron ore and met coal producer Cliffs Natural Resources Inc. (NYSE: CLF) (Paris: CLF) said Nov. 12 that its wholly owned subsidiary, Cliffs Australia Coal Pty Ltd, has finalized the sale of its 45% economic interest in the Sonoma coal mine located in Queensland, Australia, to its joint venture partners, QCoal Sonoma Pty Ltd (QCoal) and JS Sonoma Pty Ltd (JSS).
Cliffs divested its interests in the Sonoma mine along with its ownership of the affiliated wash plant. The company sold 90% of its interest to QCoal and the remaining 10% to JSS. Cliffs received about A$141m in cash upon the closing of the transaction.
Cliffs had previously said this was a non-core asset. It still has a met coal longwall mine (Oak Grove) in Alabama and a mix of met and steam coal mining operations in southern West Virginia.
Cliffs Chairman, CEO and President Joseph Carrabba said during a July 27 earnings call, right after the company’s initial announcement of this Sonoma sale, that the coal business has not delivered up to its expected results. But U.S. operations, like the Oak Grove mine in Alabama, crippled for much of last year by a spring tornado that damaged its prep plant, are doing better operationally.
“Nevertheless, we get paid to look at the shifting sands and if the market were to stay depressed, we’ve got to continue to look at all of our assets just like Sonoma and all the rest of our assets and evaluate the coal business on the long term,” Carrabba said at the time. “We’re still like everybody else, bullish on met coal. I don’t think the macros have changed. And we don’t see on the supply side any of the good, hard coking coal that our longwall mines produce out of West Virginia and out of Alabama. They’re still heavily sought after to blend off the lower grade met coals, if you will. And I think as we watch, it’s all about Europe right now as far as the coal business in the Atlantic basin. And we’ll just have to watch the run rate of Europe. But certainly, all assets are under scrutiny in this business for Cliffs at all times.”
Said the company about its ambitions in its Oct. 25 Form 10-Q earnings statement: “We have been executing a strategy designed to achieve scale in the mining industry and focused on serving the world’s largest and fastest growing steel markets. In the United States, we operate five iron ore mines in Michigan and Minnesota, five metallurgical coal mines located in West Virginia and Alabama, and one thermal coal mine located in West Virginia. We also operate two iron ore mines in Eastern Canada that primarily provide iron ore to the seaborne market for Asian steel producers. Our Asia Pacific operations primarily are comprised of two iron ore mining complexes in Western Australia, one being Cockatoo Island, which we sold in the third quarter of 2012, serving the Asian iron ore markets with direct-shipping fines and lump ore, and a 45 percent economic interest in a coking and thermal coal mine located in Queensland, Australia, which is expected to be sold in the fourth quarter of 2012. In Latin America, we have a 30 percent interest in Amapá, a Brazilian iron ore operation, and, in Ontario, Canada, we have a major chromite project that entered into the feasibility stage of exploration during May 2012.”