Stephen Johnson, 62, was assumed yesterday as the new Board Director for Cliffs Natural Resources Inc (NYSE:CLF). Mr. Johnson will take part on the Board’s Audit Committee and the Governance and Nominating Committee, taking the board number to a total of 11.
“I am pleased that Steve is joining Cliffs’ Board. He is a proven leader and brings forth exceptional experience with large international construction projects. Steve’s strategic counsel will be important to our board as we execute future expansion and growth plans,” said Cliffs’ Chairman of the Board, James Kirsch.
Johnson has a hard road ahead because stock price has dropped 43% since the beginning of the year. Trouble has been made evident by the firm’s reduction of US operations, and the delay of Canadian expansion plans. Operations in Canada, however, are expected to resume after a recent agreement with AK Steel Holding Corporation (NYSE:AKS) that guarantees a stable cash flow.
The current agreement with AK Steel is expected to expire at the end of 2014. The new deal gives the company an opportunity to resume postponed plans, increase production levels, and take advantage of the new iron ore record price. Hence, the firm’s production is expected to rise from 7.2 million to 16 million tons per year.
The deal is especially important for Cliff because the iron ore segment is the most important to the firm. Future prospects are expected to remain positive as analysts speculate on higher iron prices for the short and mid-term. But, plans may be affected by the approval of the loan associated with the Roy Hill Iron Ore Mine, located in Australia.
Several US companies have come head-to-head concerning the activities of the Export-Import Bank. The loan means a push for the heavy machinery giant, Caterpillar Inc. (NYSE:CAT). However, Cliff argues the loan will raise the competition for domestic miners, and reduce the benefits derived from current rising iron ore prices.
Disclosure: Jodor Jalit holds no position in any of the mentioned stocks.