Cliffs to Explore Strategic Options for renewaFUEL Facility
09/29/2011 - The Cliffs Board of Directors has approved a plan to idle operations at and seek a potential sale of its renewaFUEL biomass production facility in Michigan.
Cliffs Natural Resources Inc. announced that its Board of Directors has approved a plan to idle operations at and seek a potential sale of its renewaFUEL biomass production facility in Michigan. Cliffs indicated that the financial impact of the decision is estimated to be an approximately $30 million primarily non-cash, pretax charge in the third quarter of 2011.
“Over recent years Cliffs executed a strategy focused on expanding its portfolio of steelmaking raw material assets,” said David Blake, Cliffs’ Senior Vice President, North American Iron Ore, who has operational responsibility for renewaFUEL. “Cliffs continues to successfully grow its core iron mining business with a number of expansion projects underway. With this, it is essential that our management focus and allocation of capital resources be deployed where we can have the most impact for all stakeholders.”
The renewaFUEL facility was constructed to produce high-energy, low-emission biofuel cubes from sustainably collected wood and agricultural feed stocks.
Cliffs acquired renewaFUEL in 2007 and previously operated a pilot plant in Battle Creek, Mich. Construction of the production facility was completed in early 2011 and the plant went through its commissioning phase during the first half of 2011. The company said the plant, which delivered its first commercial supply of biofuel cubes in mid-July, has not performed to design capacity since initial production, nor at a production level that would justify continued operation.
The renewaFUEL plant currently employs approximately 30 fulltime individuals. Cliffs said it will make every effort to reassign these employees, where possible, to other positions within the Company.
“While we believe the renewaFUEL business model remains viable, the business is likely to have better prospects with a company more experienced in the area of biofuels that can develop renewaFUEL to its full potential,” concluded Blake.
Cliffs Natural Resources, an international mining and natural resources company, is a major global iron ore producer and a significant producer of high- and low-volatile metallurgical coal. Cliffs’ strategy is to continually achieve greater scale and diversification in the mining industry through a focus on serving the world’s largest and fastest-growing steel markets.
The company is organized through a global commercial group responsible for sales and delivery of Cliffs' products and a global operations group responsible for the production of the minerals the company markets. Cliffs operates iron ore and coal mines in North America and two iron ore mining complexes in Western Australia, ad also has a 45% economic interest in a coking and thermal coal mine in Queensland, Australia. Cliffs also has a major chromite project, in the pre-feasibility stage of development, located in Ontario, Canada.
