Reuters citing Mr Joe Carrabba CEO of Cliffs Natural Resources as saying that the company will fall short of its production target for steelmaking coal this year after one mine was hit by a tornado and another shut down by a leak of deadly carbon monoxide.
He also said order books for iron ore, Cliffs' main product, remain strong with North American sales expected to be 29 million tons this year and a further 9 million tons in Asia-Pacific.
He added that "We've had disappointments with coal. We had setbacks with the tornado, but we're staying with coal because we believe met coal is here to stay.”
Mr Carrabba said Cliffs expects to resume mining at the Pinnacle mine in West Virginia during the fourth quarter after work was halted by the federal Mine Safety and Health Administration after carbon monoxide was detected in May.
He also said the company hopes to resume above-ground operations at the Oak Grove mine in Alabama in the fourth quarter after a tornado severely damaged the coal preparation plant there in April. Mining has resumed at Oak Grove, but only for stockpiling and it is not being shipped anywhere.
He acknowledged Cliffs would not reach its 2011 production target of just over 4 million tons of metallurgical coal.
Mr Carrabba said the urbanization of China, India and Africa was going on at an unprecedented rate and would drive demand for steel and its raw materials coking coal and iron ore for years to come.
During the interview, Mr Carrabba declined to give an outlook for second-quarter earnings which will include partial results for Consolidated Thompson for the first time. But he said the company would update its coal outlook in July as a result of the production shortfall.
Asked to characterize business right now, he said "Order books are still strong. We're seeing the seasonal softness that typically hits the steel industry around the summertime, but still, things are very strong.
He added that "Our outlook for the year, past the second quarter, stays where it was seasonal slowness, things always pick up in the back half of the year. In North America, we always earn the bulk of our money in the third and fourth quarters with the shipping season."
On the prospects for the steel industry, the Cliffs chief said more blast furnaces in the United States have recently come back on line after the recession with an average utilization rate in the 70% to 75% range.
Mr Carrabba said since steel demand from the home and commercial construction sectors was still weak. We're pretty comfortable operating the business in that range and quite frankly we're sold out in North America anyway.
He said that "So, if we did get higher demands it would put pressure on the iron ore and the coal business right now.”
(Sourced from Reuters)
