Cleveland-Cliffs
Encyclopedia
Cliffs Natural Resources , formerly Cleveland-Cliffs, is a Cleveland, Ohio
business firm that specializes in the mining and beneficiation
of iron ore and the mining of coal
. The firm is an independent company whose shares are traded on the New York Stock Exchange
. The firm has stated that it had approximately 4,000 employees and a 28% share of the iron-ore pellet market. After acquiring Consolidated Thompson Iron Mines in January 2011 for US$4.9 billion in a negotiated deal
(won't close until the 2nd quarter) Cliff's will control 10 iron ore facilities, 6 coal mines and a chrome project with the capacity to produce upwards of 46 million tonnes of iron ore pellets (30) and concentrate (16). Prior to the January 11 deal Cliffs owned 2-3% of the company, 19% of Consolidated Thompson is being purchased from Wuhan Iron and Steel Group of China. The deal gives Cliffs Natural Resources exposure outside of North America (Consolidated Thompson has long term deals with China's third biggest steel producer and two other Asian commodity broker
s. The company started producing (and receiving revenue from) coal only since the third quarter of 2007.
For the first nine months of 2010 coal made up 12.9% of total revenue ($421.1 million, down from 14.4% the year before) while iron ore contributed $2,615.7 million (80.3% compared to 80.5% in '09), the other 6.8% (up from 5.1% in '09) came from freight and minority interests (such as its 45% stake in a coking and thermal coal mine in Western Australia and the 30% interest in Brazil's Amapa iron ore project). Although revenue has generally been stable quarter to quarter (no extreme changes) gross income was wildly inconsistent, the result of expenses being high even when total revenue wasn't. Between 2007 and 2010 quarterly sales margin was lowest in each of the two quarters beginning 2009 (combined for $30.7 million despite revenue being over $700 million), combined they generated gross profit 2.5-3 times smaller than during any other single quarter. For the first nine months of 2010 total costs (goods sold & operating expenses) amounted to $2,216.8 million representing a 60% increase over 2009.
in 1850. Samuel Mather
and six Ohio-based associates had learned of rich iron-ore deposits recently discovered in the highlands of the Upper Peninsula region of Michigan. Soon afterwards, the first Soo Canal
opened in 1855, allowing iron ore to be shipped from Lake Superior
to Lake Erie
.
Technological improvements, such as the Bessemer furnace
, made it possible for the North American Great Lakes
to produce steel
on an industrial scale. The south shore of Lake Erie was close to a supply of coal
, making that region an efficient point for the construction of steel mills.
The final decades of the 19th century were a period of business consolidation from the partnership-sized businesses of an earlier generation to a new type of business firm, the stock-market-traded corporation
intent on maximizing market share
. The former Cleveland Iron Mining Co. was a survivor of this shakeout
, purchasing many of its competitors. One key merger in 1890, with Jeptha Wade
's Cliffs Iron Company led the combined firm to change its name to the Cleveland-Cliffs Iron Company.
The consolidated Cleveland-Cliffs invested substantial sums in operations to improve the logistics of iron-ore transport. In 1892, the firm built the Lake Superior and Ishpeming Railroad
to carry iron ore from the mines directly to company-owned docks on Lake Superior.
, the son of Samuel, guided Cleveland-Cliffs as president and later as chairman of the board during the period of 1890-1947, participating in the transition from the hard-rock iron ore of Upper Michigan to the soft hematite
of Minnesota's Mesabi Range
and adjacent lodes.
Under Mather, Cleveland-Cliffs was a leader in the development of the classic-type lake freighter
, a bulk-cargo vessel especially designed to carry Great Lakes commodities. The 618-foot (188 m)-long William G. Mather
, launched in 1925, is a surviving example of this ship type. For almost a century, the black-hulled Cleveland-Cliffs ships were familiar sights on the upper Lakes.
Demand for American iron ore hit peaks during World War I
, World War II
, and the post-WWII consumer boom. In 1933, Edward Greene (the son-in-law of Jeptha Homer Wade II) replaced William G. Mather as the head of the company. The Mather A Mine opened in the early 1940s and the Mather B shaft in the 1950s. As the Cold War
continued, reserves of mineable hematite dwindled in northern Minnesota
and Cleveland-Cliffs returned some of its focus to its traditional areas of interest around Marquette, Michigan
, where new deposits of magnetite
were opened. The first pellet plant was built at Eagle Mills in 1954, followed by the first grate/kiln plant at the Humboldt Mine in 1960. The Republic Mine was converted from a shaft mine to an open pit and concentrator in 1956 and a two-kiln pellet plant was added in 1962. The Empire Mine opened in 1963 and was expanded in the mid- and late-1970s; the Pioneer Pellet Plant was opened in 1965 to pelletize the underground ore from the Mather B Mine in Negaunee
. In 1974 the Tilden Mine opened in Ishpeming. This mine was and is the only mine in the world with the ability to produce both hematite and magnetite pellets.
In 1970, a high-grade iron-ore mine was opened at Pannawonica in the Pilbara region of Western Australia
, with a 200-km rail line to processing facilities at Cape Lambert
for which the residential township of Wickham
was built. A pellet plant was built but ceased operation before 1980, following a sharp increase in the cost of diesel fuel.
During the 1970s, Cleveland-Cliffs had sizeable interests in uranium and shale oil fields, as well as the oil and gas drilling industries. It also had holdings in the forest products industry. This interests were disposed of in the 1980s when the company refocused its efforts on its core iron ore business.
The periods following the recessions of 1974-75 and 1981-83 were harsh ones for the iron ore industry. Cleveland-Cliffs shrank its operations, closing the Mather B Mine and the Pioneer Pellet Plant and associated Ore Improvement Plant in 1979. The Humboldt Pellet Plant closed in 1981 and the Republic Mine was idled in 1981 and closed for good in 1996, when Cliffs began turning the associated tailings ponds into compensatory wetlands for its other properties. Over 50% of the Marquette Iron Range employees were laid off and, in 1984, Cliffs withdrew from the Great Lakes shipping industry.
enacted steel tariffs that helped domestically produced steel rebound.
In the years following the introduction of steel tariffs, a sharp increase in steel production in China and other developing countries led to a significant upswing in the price of global iron ore. This trend benefited Cleveland-Cliffs after the two lean decades that had preceded it. To remain competitive, Cleveland-Cliffs decided to expand globally and to diversify into other minerals, leading to the acquisition of iron-ore properties in Brazil and Australia and coal properties in Australia and the US.
In June 2007, Cleveland-Cliffs purchased its first domestic coal property. The coal company, called PinnOak, mines coal in Alabama and West Virginia and once belonged to U.S. Steel
. In line with its venture into coal, the company changed its name from Cleveland-Cliffs to Cliffs Natural Resources in October 2008.
On January 11, 2011 it was reported that Consolidated Thompson Iron Mines Limited agreed to a US$4.9 billion takeover by Cliffs Natural Resources ($200 million of that was already owned, the cost includes debt (In September 2011 Thompson reported $230.56 million in long term with $566.07 million in total liabilities). The deal, scheduled to close in the second quarter saves both companies a combined US$75 million in operating expense (partly due to many of their facilities being adjacent to one another). The deal gives Cliffs the large Bloom Lake iron ore mine in the province of Quebec, very close to Labrador.
.
They have also deposited material at Central Upper Peninsula and Northern Michigan University Archives
Cleveland, Ohio
Cleveland is a city in the U.S. state of Ohio and is the county seat of Cuyahoga County, the most populous county in the state. The city is located in northeastern Ohio on the southern shore of Lake Erie, approximately west of the Pennsylvania border...
business firm that specializes in the mining and beneficiation
Beneficiation
In mining, beneficiation is a variety of processes whereby extracted ore from mining is separated into mineral and gangue, the former suitable for further processing or direct use....
of iron ore and the mining of coal
Coal
Coal is a combustible black or brownish-black sedimentary rock usually occurring in rock strata in layers or veins called coal beds or coal seams. The harder forms, such as anthracite coal, can be regarded as metamorphic rock because of later exposure to elevated temperature and pressure...
. The firm is an independent company whose shares are traded on the New York Stock Exchange
New York Stock Exchange
The New York Stock Exchange is a stock exchange located at 11 Wall Street in Lower Manhattan, New York City, USA. It is by far the world's largest stock exchange by market capitalization of its listed companies at 13.39 trillion as of Dec 2010...
. The firm has stated that it had approximately 4,000 employees and a 28% share of the iron-ore pellet market. After acquiring Consolidated Thompson Iron Mines in January 2011 for US$4.9 billion in a negotiated deal
Negotiation
Negotiation is a dialogue between two or more people or parties, intended to reach an understanding, resolve point of difference, or gain advantage in outcome of dialogue, to produce an agreement upon courses of action, to bargain for individual or collective advantage, to craft outcomes to satisfy...
(won't close until the 2nd quarter) Cliff's will control 10 iron ore facilities, 6 coal mines and a chrome project with the capacity to produce upwards of 46 million tonnes of iron ore pellets (30) and concentrate (16). Prior to the January 11 deal Cliffs owned 2-3% of the company, 19% of Consolidated Thompson is being purchased from Wuhan Iron and Steel Group of China. The deal gives Cliffs Natural Resources exposure outside of North America (Consolidated Thompson has long term deals with China's third biggest steel producer and two other Asian commodity broker
Commodity broker
A commodity broker is a firm or individual who executes orders to buy or sell commodity contracts on behalf of clients and charges them a commission. A firm or individual who trades for his own account is called a trader. Commodity contracts include futures, options, and similar financial...
s. The company started producing (and receiving revenue from) coal only since the third quarter of 2007.
For the first nine months of 2010 coal made up 12.9% of total revenue ($421.1 million, down from 14.4% the year before) while iron ore contributed $2,615.7 million (80.3% compared to 80.5% in '09), the other 6.8% (up from 5.1% in '09) came from freight and minority interests (such as its 45% stake in a coking and thermal coal mine in Western Australia and the 30% interest in Brazil's Amapa iron ore project). Although revenue has generally been stable quarter to quarter (no extreme changes) gross income was wildly inconsistent, the result of expenses being high even when total revenue wasn't. Between 2007 and 2010 quarterly sales margin was lowest in each of the two quarters beginning 2009 (combined for $30.7 million despite revenue being over $700 million), combined they generated gross profit 2.5-3 times smaller than during any other single quarter. For the first nine months of 2010 total costs (goods sold & operating expenses) amounted to $2,216.8 million representing a 60% increase over 2009.
History: 19th century
The firm's earliest predecessor was the Cleveland Iron Mining Company, founded in 1847 and chartered as a company by MichiganMichigan
Michigan is a U.S. state located in the Great Lakes Region of the United States of America. The name Michigan is the French form of the Ojibwa word mishigamaa, meaning "large water" or "large lake"....
in 1850. Samuel Mather
Samuel Mather
Samuel Mather was born in Cleveland, Ohio and for many years was that city's richest citizen and a major philanthropist, particularly favoring Kenyon College. In 1847 his father had founded the Cleveland Iron Mining Company, and Mather was destined to follow him in the management of this company....
and six Ohio-based associates had learned of rich iron-ore deposits recently discovered in the highlands of the Upper Peninsula region of Michigan. Soon afterwards, the first Soo Canal
Soo Locks
The Soo Locks are a set of parallel locks which enable ships to travel between Lake Superior and the lower Great Lakes. They are located on the St. Marys River between Lake Superior and Lake Huron, between the Upper Peninsula of the US state of Michigan and the Canadian province of Ontario...
opened in 1855, allowing iron ore to be shipped from Lake Superior
Lake Superior
Lake Superior is the largest of the five traditionally-demarcated Great Lakes of North America. It is bounded to the north by the Canadian province of Ontario and the U.S. state of Minnesota, and to the south by the U.S. states of Wisconsin and Michigan. It is the largest freshwater lake in the...
to Lake Erie
Lake Erie
Lake Erie is the fourth largest lake of the five Great Lakes in North America, and the tenth largest globally. It is the southernmost, shallowest, and smallest by volume of the Great Lakes and therefore also has the shortest average water residence time. It is bounded on the north by the...
.
Technological improvements, such as the Bessemer furnace
Bessemer process
The Bessemer process was the first inexpensive industrial process for the mass-production of steel from molten pig iron. The process is named after its inventor, Henry Bessemer, who took out a patent on the process in 1855. The process was independently discovered in 1851 by William Kelly...
, made it possible for the North American Great Lakes
Great Lakes
The Great Lakes are a collection of freshwater lakes located in northeastern North America, on the Canada – United States border. Consisting of Lakes Superior, Michigan, Huron, Erie, and Ontario, they form the largest group of freshwater lakes on Earth by total surface, coming in second by volume...
to produce steel
Steel
Steel is an alloy that consists mostly of iron and has a carbon content between 0.2% and 2.1% by weight, depending on the grade. Carbon is the most common alloying material for iron, but various other alloying elements are used, such as manganese, chromium, vanadium, and tungsten...
on an industrial scale. The south shore of Lake Erie was close to a supply of coal
Coal
Coal is a combustible black or brownish-black sedimentary rock usually occurring in rock strata in layers or veins called coal beds or coal seams. The harder forms, such as anthracite coal, can be regarded as metamorphic rock because of later exposure to elevated temperature and pressure...
, making that region an efficient point for the construction of steel mills.
The final decades of the 19th century were a period of business consolidation from the partnership-sized businesses of an earlier generation to a new type of business firm, the stock-market-traded corporation
Corporation
A corporation is created under the laws of a state as a separate legal entity that has privileges and liabilities that are distinct from those of its members. There are many different forms of corporations, most of which are used to conduct business. Early corporations were established by charter...
intent on maximizing market share
Market share
Market share is the percentage of a market accounted for by a specific entity. In a survey of nearly 200 senior marketing managers, 67 percent responded that they found the "dollar market share" metric very useful, while 61% found "unit market share" very useful.Marketers need to be able to...
. The former Cleveland Iron Mining Co. was a survivor of this shakeout
Shakeout
Shakeout is a term used in business and economics to describe the consolidation of an industry or sector, in which businesses are eliminated or acquired through competition...
, purchasing many of its competitors. One key merger in 1890, with Jeptha Wade
Jeptha Wade
Jeptha Homer Wade was an American industrialist, philanthropist, and one of the founding members of Western Union Telegraph....
's Cliffs Iron Company led the combined firm to change its name to the Cleveland-Cliffs Iron Company.
The consolidated Cleveland-Cliffs invested substantial sums in operations to improve the logistics of iron-ore transport. In 1892, the firm built the Lake Superior and Ishpeming Railroad
Lake Superior and Ishpeming Railroad
The Lake Superior and Ishpeming Railroad , a U.S. railroad offering service from Marquette, Michigan, to nearby locations in Michigan's Upper Peninsula, began operations in 1896...
to carry iron ore from the mines directly to company-owned docks on Lake Superior.
History: 20th century
William G. MatherWilliam G. Mather
William Gwinn Mather was an American industrialist.Mather was born in Ohio and attended Trinity College for his undergraduate and MA degrees. Mather headed the Cleveland-Cliffs Iron Company for 50 years from 1890 through 1940. During his tenure he consolidated several mining operations and...
, the son of Samuel, guided Cleveland-Cliffs as president and later as chairman of the board during the period of 1890-1947, participating in the transition from the hard-rock iron ore of Upper Michigan to the soft hematite
Hematite
Hematite, also spelled as haematite, is the mineral form of iron oxide , one of several iron oxides. Hematite crystallizes in the rhombohedral system, and it has the same crystal structure as ilmenite and corundum...
of Minnesota's Mesabi Range
Mesabi Range
The Mesabi Iron Range is a vast deposit of iron ore and the largest of four major iron ranges in the region collectively known as the Iron Range of Minnesota. Discovered in 1866, it is the chief deposit of iron ore in the United States. The deposit is located in northeast Minnesota, largely in...
and adjacent lodes.
Under Mather, Cleveland-Cliffs was a leader in the development of the classic-type lake freighter
Lake freighter
Lake freighters, or Lakers, are bulk carrier vessels that ply the Great Lakes. The best known was the , the most recent and largest major vessel to be wrecked on the Lakes. These vessels are traditionally called boats, although classified as ships. In the mid-20th century, 300 lakers worked the...
, a bulk-cargo vessel especially designed to carry Great Lakes commodities. The 618-foot (188 m)-long William G. Mather
Steamship William G. Mather Maritime Museum
The Steamship William G. Mather is a retired Great Lakes bulk freighter now restored as a museum ship in Cleveland, Ohio, one of four in the Great Lakes region...
, launched in 1925, is a surviving example of this ship type. For almost a century, the black-hulled Cleveland-Cliffs ships were familiar sights on the upper Lakes.
Demand for American iron ore hit peaks during World War I
World War I
World War I , which was predominantly called the World War or the Great War from its occurrence until 1939, and the First World War or World War I thereafter, was a major war centred in Europe that began on 28 July 1914 and lasted until 11 November 1918...
, World War II
World War II
World War II, or the Second World War , was a global conflict lasting from 1939 to 1945, involving most of the world's nations—including all of the great powers—eventually forming two opposing military alliances: the Allies and the Axis...
, and the post-WWII consumer boom. In 1933, Edward Greene (the son-in-law of Jeptha Homer Wade II) replaced William G. Mather as the head of the company. The Mather A Mine opened in the early 1940s and the Mather B shaft in the 1950s. As the Cold War
Cold War
The Cold War was the continuing state from roughly 1946 to 1991 of political conflict, military tension, proxy wars, and economic competition between the Communist World—primarily the Soviet Union and its satellite states and allies—and the powers of the Western world, primarily the United States...
continued, reserves of mineable hematite dwindled in northern Minnesota
Minnesota
Minnesota is a U.S. state located in the Midwestern United States. The twelfth largest state of the U.S., it is the twenty-first most populous, with 5.3 million residents. Minnesota was carved out of the eastern half of the Minnesota Territory and admitted to the Union as the thirty-second state...
and Cleveland-Cliffs returned some of its focus to its traditional areas of interest around Marquette, Michigan
Marquette Iron Range
The Marquette Iron Range is a deposit of iron ore located in Marquette County, Michigan, largely in and around the towns of Ishpeming and Negaunee. It is a smaller counterpart of Minnesota's Mesabi Range. The iron ore of the Marquette Range has been mined continuously from 1847 until the present...
, where new deposits of magnetite
Magnetite
Magnetite is a ferrimagnetic mineral with chemical formula Fe3O4, one of several iron oxides and a member of the spinel group. The chemical IUPAC name is iron oxide and the common chemical name is ferrous-ferric oxide. The formula for magnetite may also be written as FeO·Fe2O3, which is one part...
were opened. The first pellet plant was built at Eagle Mills in 1954, followed by the first grate/kiln plant at the Humboldt Mine in 1960. The Republic Mine was converted from a shaft mine to an open pit and concentrator in 1956 and a two-kiln pellet plant was added in 1962. The Empire Mine opened in 1963 and was expanded in the mid- and late-1970s; the Pioneer Pellet Plant was opened in 1965 to pelletize the underground ore from the Mather B Mine in Negaunee
Negaunee, Michigan
Negaunee is a city in Marquette County in the U.S. state of Michigan. The population was 4,576 at the 2000 census. The city is located at the southwest corner of Negaunee Township. The city is home to the Michigan Iron Industry Museum...
. In 1974 the Tilden Mine opened in Ishpeming. This mine was and is the only mine in the world with the ability to produce both hematite and magnetite pellets.
In 1970, a high-grade iron-ore mine was opened at Pannawonica in the Pilbara region of Western Australia
Western Australia
Western Australia is a state of Australia, occupying the entire western third of the Australian continent. It is bounded by the Indian Ocean to the north and west, the Great Australian Bight and Indian Ocean to the south, the Northern Territory to the north-east and South Australia to the south-east...
, with a 200-km rail line to processing facilities at Cape Lambert
Cape Lambert
Cape Lambert is a port facility operated by Rio Tinto Iron Ore in the Pilbara region of Western Australia. It is located 40 kilometres north of Karratha.-Overview:...
for which the residential township of Wickham
Wickham
Wickham, formerly spelled Wykeham, is a small historic village and civil parish in Hampshire, southern England, located about three miles north of Fareham. It is within the City of Winchester local government district, although it is considerably closer to Fareham than to Winchester...
was built. A pellet plant was built but ceased operation before 1980, following a sharp increase in the cost of diesel fuel.
During the 1970s, Cleveland-Cliffs had sizeable interests in uranium and shale oil fields, as well as the oil and gas drilling industries. It also had holdings in the forest products industry. This interests were disposed of in the 1980s when the company refocused its efforts on its core iron ore business.
The periods following the recessions of 1974-75 and 1981-83 were harsh ones for the iron ore industry. Cleveland-Cliffs shrank its operations, closing the Mather B Mine and the Pioneer Pellet Plant and associated Ore Improvement Plant in 1979. The Humboldt Pellet Plant closed in 1981 and the Republic Mine was idled in 1981 and closed for good in 1996, when Cliffs began turning the associated tailings ponds into compensatory wetlands for its other properties. Over 50% of the Marquette Iron Range employees were laid off and, in 1984, Cliffs withdrew from the Great Lakes shipping industry.
21st century
In 2002, LTV Steel, a partner in the Empire Mine managed by CCI, closed and the Empire was idled for 6 months. Cleveland-Cliffs stock plummeted. President George W. BushGeorge W. Bush
George Walker Bush is an American politician who served as the 43rd President of the United States, from 2001 to 2009. Before that, he was the 46th Governor of Texas, having served from 1995 to 2000....
enacted steel tariffs that helped domestically produced steel rebound.
In the years following the introduction of steel tariffs, a sharp increase in steel production in China and other developing countries led to a significant upswing in the price of global iron ore. This trend benefited Cleveland-Cliffs after the two lean decades that had preceded it. To remain competitive, Cleveland-Cliffs decided to expand globally and to diversify into other minerals, leading to the acquisition of iron-ore properties in Brazil and Australia and coal properties in Australia and the US.
In June 2007, Cleveland-Cliffs purchased its first domestic coal property. The coal company, called PinnOak, mines coal in Alabama and West Virginia and once belonged to U.S. Steel
U.S. Steel
The United States Steel Corporation , more commonly known as U.S. Steel, is an integrated steel producer with major production operations in the United States, Canada, and Central Europe. The company is the world's tenth largest steel producer ranked by sales...
. In line with its venture into coal, the company changed its name from Cleveland-Cliffs to Cliffs Natural Resources in October 2008.
On January 11, 2011 it was reported that Consolidated Thompson Iron Mines Limited agreed to a US$4.9 billion takeover by Cliffs Natural Resources ($200 million of that was already owned, the cost includes debt (In September 2011 Thompson reported $230.56 million in long term with $566.07 million in total liabilities). The deal, scheduled to close in the second quarter saves both companies a combined US$75 million in operating expense (partly due to many of their facilities being adjacent to one another). The deal gives Cliffs the large Bloom Lake iron ore mine in the province of Quebec, very close to Labrador.
Archives
Cliffs Natural Resources has deposited many of its pre-1981 papers in the Historical Collections of the Great Lakes at Bowling Green State UniversityBowling Green State University
Bowling Green State University, often referred to as Bowling Green or BGSU, is a public, coeducational research university located in Bowling Green, Ohio, United States. The institution was granted a charter in 1910 by the State of Ohio as part of the Lowry Bill, which also established Kent State...
.
They have also deposited material at Central Upper Peninsula and Northern Michigan University Archives