The Rising Influence of Rising Affluence

[Democritus_of_Abdera]

Re: Partner for CLF Chromite Project...

Perhaps CLF will have a partner to share the costs of its chromite project (consistent with Dewophile’s suggestion of Feb 18; i.e. #msg-72286090); see quotes from Thursday’s conference call below.

I also thank Dewophile for raising my awareness of the significant electricity draw in chromite production.... It seems that CLF projects that it will have a significant competitive advantage over the mines in South African because of the relative power costs.

Michael Gambardella (JPMorgan Securities LLC):
I had a question on what you know right now looking at the two projects, Bloom Lake and then the chromite project. What has the greater returns, from what you know right now?

Joseph Carrabba (CLF CEO):
What we know right now, Mike, is if you stay in today’s universe, it would certainly be Bloom Lake and iron ore. You see the iron ore pricing continues to strengthen from the first of the year, and I see the spot’s a little bit again today. And if you think about where we’re at right now from – we’re almost – the next expansions are somewhat I’ll call them brownfield. They’re not the infrastructures in place. We’ve already got two modules. So iron ore would certainly at these current levels give us the greatest return. Let me just say on the chrome business, what I think you have to think about, Mike, and again, as we said, we will give a lot more color around the economics of the project as soon as we get out of pre-feasibility and into feasibility. We will it be able to shrink those margins of error, if you will, around estimates a lot closer. You’ve got to think about 2015 when this project would come on, and particularly with what’s going on with the power situation in South Africa and the cost position they’re going to be in with power rates and the lack of power in 2015. So I think the modeling that’s done today is going to look quite different given the South African situation in 2015.

Michael Gambardella:
And then just on the chromite project, are you considering taking a partner on that?

Joseph Carrabba:
We’re considering. I think that’s the nice thing about this project, is it has a lot of off ramps right now, and we’re certainly thinking about partnerships as we go forward. This is a big CapEx, as you know, and a new business for us, so any security and derisking we can do is certainly a large part of the consideration as we go through pre-feasibility.