Cleveland Cliffs Inc (CLF)

[Saving Grace]

American Banks, Brokers and investors are eliminated from purchasing the new Cliffs notes, removing the hedge from short sellers. This is what this offering is indirectly saying.

The Offering Memorandum and Consent Solicitation Statement and other documents relating to the Exchange Offers and Consent Solicitations will only be distributed to Eligible Holders of Existing AK Steel Notes who complete and return an eligibility form confirming that they are either (a) a “Qualified Institutional Buyer” as that term is defined in Rule 144A under the Securities Act of 1933, as amended, or (b) a person that is outside the “United States” and is (i) not a “U.S. person,” as those terms are defined in Rule 902 under the Securities Act of 1933, as amended, and (ii) a “non-U.S. qualified offeree” (as defined in the Offering Memorandum and Consent Solicitation Statement) (such holders, the “Eligible Holders”). Holders of Existing AK Steel Notes who desire to obtain and complete an eligibility form should either visit the website for this purpose at www.gbsc-usa.com/eligibility/cliffs or call Global Bondholder Services Corporation, the Information Agent and Exchange Agent for the Exchange Offers and Consent Solicitations at [phone] (toll-free) or [phone] (collect for banks and brokers).

The New Cliffs Notes have not been and will not be registered under the Securities Act of 1933, as amended, or any state securities laws. Therefore, the New Cliffs Notes may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act of 1933, as amended, and any applicable state securities laws.

https://www.businesswire.com/news/home/20200114005896/en/


The Cliffs newly aligned company will already have the catalyst while demand for HBI grows where current industry supply isn't even close to being met.

HBI is the need of the hour, given the increasing concerns over environmental sustainability. EAF production facilities use electric energy rather than coke for steel production, where HBI is used as its primary raw material. As per the latest data released by the World Steel Association (WSA), 66% of the total steel produced in North America in 2016 was from EAF facilities rather than from the traditional Oxygen Blast Furnace (OBF) technology. [2] However, there is limited availability of HBI across the globe due to which, EAF facilities use pig iron or steel scrap as an alternate for steel production. Pig iron and HBI are majorly imported from Brazil, Russia, Ukraine, and Venezuela to meet the EAF demand requirement of North America. Thus, a huge market for HBI prevails in the North American region.

IN OUR VIEW: Cliffs CEO's mention of Ashland telling

Lourenco Goncalves said on CNBC about a year ago?that CEOs are “cookie-cutter,”?and that he’s “different.”

If that’s the case, that’s encouraging news for Ashland.

Here’s why:?The Cleveland-Cliffs CEO specifically mentioned the “potential start-up”?of Amanda — AK?Steel Ashland Works’ blast furnace — as part of Cliffs’ grand plans upon acquiring AK?Steel for $1.1 billion earlier this week.

Goncalves claims he’s different because he’s a straight shooter. He cuts through the mularkey, so to speak.

So what would Goncalves have to gain by mentioning Ashland if he didn’t sincerely mean it?

Would it have been a dealbreaker had it not been included in his plan??We don’t think so. A specific mention of Ashland producing pig iron is all the more reason to believe there’s a great chance for the furnace to fire up for the first time since idling in December 2015.

If Goncalves, who’s been the head of Cliffs since August 2014, is indeed a forthright person, he genuinely means it when he says, “I know the historic importance of what we are doing. We are enhancing the legacy of both Cleveland-Cliffs and AK?Steel.”

Cliffs’ self-sufficiency and iron ore coupled with AK?Steel’s established brand — and the automotive market’s dependency on AK — makes for a monster marriage.

The bulk of Cliffs’ facilities are located in Minnesota and Michigan. This acquisition adds Ohio, Pennsylvania and Indiana to the mix — Kentucky, too, if all comes to fruition. Also in Kentucky (Bowling Green) is a downstream steel products assets facility affiliated with AK. The same goes for Alabama (Sylacauga). Mountain State Carbon, also with AK, is in Follansbee, West Virginia.

With an HBI (hot briquetted iron)?approach, the blast furnace will produce “greener”?steel, according to Goncalves. An HBI plant will begin operating in Toledo, Ohio, in early 2020.

While HBI and blast furnaces aren’t a new pair, the Cliffs-AK merger figures to shine a brighter light on that concept.

Blast furnaces will likely never be as plentiful as they were 40 years ago — when there were nearly 300 operating in the United States.

Whatever the strategy, if the merger brings Amanda back into the fold, Cliffs will forever be viewed as Superman swooping into Ashland to save a freefalling entity. And it happened 28 days before the closing date.

But, be careful to envision the blue flame before it burns.

It’s OK?to be optimistic. It’s possible to be both optimistic and realistic simultaneously.

The reality is, if this happens, it will take time. The transaction is set to close by the end of the first half of 2020.

If and when Ashland gets the go-ahead, there will be jobs immediately. But the furnace won’t fire up in the blink of an eye.

But — let’s squash these rumors now — Amanda can physically be fired up again. Anyone who indicates otherwise is misinformed.

Will it? That question remains to be answered.

https://www.dailyindependent.com/opinion/in-our-view-cliffs-ceo-s-mention-of-ashland-telling/article_ffe67d12-17ae-11ea-83bc-a331858bd78c.html

Cleveland, OH-based Cleveland-Cliffs Inc., formerly known as Cliffs Natural Resources, is the largest producer of iron ore pellets in North America. Its U.S. based mines have a rated capacity of 27.4 million long tons of iron ore pellet production annually, representing about 55% of the total U.S. pellet production capacity.

Currently, the company has two reportable segments — Mining and Pelletizing (earlier known as U.S. Iron Ore) and the Metallics.

Mining and Pelletizing - The company is a major producer of iron ore pellets and it mainly sells products to integrated steel companies through this division in the United States and Canada. The segment comprises Cleveland-Cliffs’ ownership in three mines in Minnesota (Hibbing Taconite, Northshore and United Taconite mines) and two in Michigan (Empire and Tilden mines). Notably, the Empire mine historically had annual rated capacity of 5.5 million long tons. It was indefinitely idled in August 2016. Based on the percentage of ownership in the mines operated, the company’s share of the rated pellet production capacity is currently 21.2 million long tons annually, which represents roughly 42% of the total U.S. annual pellet capacity. The company produced around 20.3 million long tons in 2018, up from 18.8 million long tons of iron ore pellets in 2017.

Metallics – In June 2017, the company declared the construction of an HBI production plant in Toledo, OH. It is a specialized high-quality iron ore alternative that can replace scrap when used as feedstock. Cleveland-Cliffs sees its HBI facility to partly replace more than 3 million metric tons of ore-based metallics, which are imported into the Great Lakes region every year. The construction of the plant is currently underway. It is increasing the expected productive capacity of the Toledo HBI production plant to 1.9 million metric tons per annum from 1.6 million. It expects the HBI facility to consume roughly 2.8 million long tons of DR-grade pellets per annum from the Mining and Pelletizing unit.

In June 2018, the company entered into an agreement to divest substantially all of the assets of its Asia Pacific Iron Ore division to leading Australian mining services company, Mineral Resources Limited. The segment has been classified as a discontinued operation.

https://www.zacks.com/stock/research/CLF/company-reports


Plant is way ahead of schedule and as the CEO explained the pot will come to a boil at the drop of a hat where the frogs will have to jump out or be burned.

I believe it is much more risky to be short as they're relying on seasonal shipping layups which will not matter this year when they find out, as I have through Boat Nerd, that the feed stock to go into full operation and production of HBI is already there as Q4 will prevail. First Quarter seasonal slumps because of shipping passage is simply gone. Now, rather than stockpiling DRI pellets in MN waiting to ship they will be producing HBI in Toledo and delivering by rail.

Shorts are going to get burnt if they don't start taking Lorenco serious about the frogs in a boiling pot.