Replies to post #8672 on The Rising Influence of Rising Affluence

[Democritus_of_Abdera]

Re: CLF Bloom Lake Cash Positive Break Point...

Thanks Dew for the shipping cost information... I wanted some estimate of the shipping costs so that I could determine the Platt iron ore price (62%) needed to make the Bloom Lake output cash positive.

As you note, they get about $9/ton premium for the 66% Bloom Lake product.

The cost at the mine is projected to be about $80/ton for the rest of the year.

The shipping cost from the mine to the port is about $14/ton..... The shipping cost from the port to China is about $27/ton.

So, I calculate that the Platt 62% number needs to be above $112/ton for the Bloom Lake output to be cash positive. Albeit, there may be some continuance of the $8/ton reduction due to lag pricing for Japanese customers.

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Relevant quotes from today's CC:

Gary Halverson (CEO), prepared remarks:

....Efficiencies from this improved pit design carry over into the processing plant as well. This includes the modifications of the free slurry distribution, improvement of screening efficiency and installation of spiral to enhance water flow to name a few. Given all these improvements at Bloom Lake, we're expecting improved cash costs of below $80 per ton in the second half of this year. This is reflected in our lower full year cost per ton expectation at Bloom Lake of $80 to $85 from our previous expectation of $85 to $90.

Terrance Paradie (CFO), prepared remarks:

In ECIO, while revenue per ton decreased 21% to $87 per ton, Bloom Lake's revenue per ton only decreased 15% year-over-year. ECIO's prior year revenue per ton included pellet premiums associated with Wabush's product. At Bloom Lake the impact from lowered market pricing was partially offset by the favorable effect of lag pricing from Japanese customers of approximately $8 per ton. Also Bloom Lake realized approximately $9 per ton for its premium iron content during the second quarter of 2014.

Question by Aldo Mazzaferro from Macquarie:

Okay. If I could just ask quickly on Bloom Lake too. I saw you reduced the cash cost pretty nicely year-to-year, has there been any change in the cost to transport to the port? Or what is at running still $25 or so per-ton, or is that a good ballpark estimate?

Response: .... I think, mine to the port probably in the $13 to $15 range and then there will be handling charges, but it’s a lot lower than a $25. And then the shipping cost from port to dealer over to Asia is probably in the $25 to $30 range depending on the markets working on.