NEW YORK (TheStreet) -- Struggling mining company Cliffs Natural Resources (CLF) is controlling what it can to survive in a tough market by focusing on reducing its costs, easing some concerns related to the future of a major Canadian mine.
Cliffs Natural Resources is the largest iron ore miner in the United States and operates in Michigan, Minnesota, Eastern Canada and Western Australia. Cliffs Natural Resources also makes metallurgical coal.
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Both these raw materials are the core ingredient in steel, and they represent two of the toughest markets, thanks to a slump in iron-ore and coal prices.
The shares of the world's leading iron-ore coal producers such as BHP Billiton (BHP) , Peabody Energy (BTU) , Rio Tinto (RIO) and Vale (VALE) have dropped by between 13% and 47% this year on the back of weakness in prices.
Cliffs Natural Resources is no exception. The Cleveland-based company's shares have plummeted by 57% this year, trading at about $11 apiece on Wednesday.
Iron-ore prices have fallen to their five-year lows on excess supply and sluggish global demand particularly from China. Meanwhile, the fourth-quarter price for high-quality metallurgical coal is at its lowest levels in seven years.
The deteriorating prices have driven the 16% year-over-year drop in the company's third-quarter revenue when it released its results last week. Cliffs also reported a massive loss from continuing operations of $6.9 billion on a profit of $112 million last year, due mainly to $6 billion write-down of assets, including $4.5 billion related to Bloom Lake mine in Quebec, Canada.
That said, there are some major positives as well. For instance, in a weak pricing environment, Cliffs Natural Resources is seeking to support its earnings by clamping down on costs.
Cliffs has reduced its cash cost forecast for its Asia Pacific iron-ore and North American coal segments that have been weighing on the company's performance. The former had a 90% drop in sales margin, akin to gross profits, while the latter has been a loss-making business this year.
Additionally, for this year, Cliffs Natural Resources expects $20 million lower selling, general and administration expenses as compared with previous expectations and has said that its capital expenditure will come at the low end of its guidance of between $275 million and $325 million.