Cleveland Cliffs Inc (CLF)

[Saving Grace]

No. That's not how it works bud. It may cost that amount just to get out of contracts and Cliffs may still be able to supply those customers yet. But total assets outweighs that cost by a long shot.

Cleveland-Cliffs (CLF) said in a regulatory filing Monday it plans to permanently close its mining operations at its Asia Pacific Iron Ore (APIO) business segment in Australia.

The company said the factors considered in the decision include increasingly discounted prices for lower-iron-content ore, the quality of the remaining iron ore reserves at APIO and the lack of a legitimate offer from a qualified buyer received by the company.

It estimates total costs to be incurred in connection with the closure of the APIO mining operations will be $140 million – $170 million. The previous amount does not include previously disclosed asset retirement obligations or any proceeds the company will receive from asset sales, such as rail cars, mobile equipment and the ore handling facility.

The expected costs of implementing this closure primarily consist of potential contract termination costs in the range of $60 million – $70 million; employee severance obligations, demobilization and other closure-related costs of $30 million – $40 million; and non-cash asset impairments and write-offs of $50 million – $60 million. Majority of these charges are expected to be recorded in the first half of 2018.

Of the total charges expected to be incurred, the company anticipates future cash expenditures of $120 million – $140 million, including certain capital lease liabilities previously recorded. This range of cash expenditures excludes any proceeds the company will receive from asset sales and other mitigation strategies.