CLF - Earnings call transcript Q1 2018

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Operator

Good morning, ladies and gentlemen. My name is Mariana, and I am your conference facilitator today. I would like to welcome everyone to Cleveland-Cliffs’ 2018 First Quarter Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. Harbor that statements made be of that forward-looking the you will today’s made XXXX. reminds Private within predictive the include are Safe Company certain Reform on comments call as Securities The Litigation of Act protections intended to

such reports the be that differ in replay. on time, can the Important for it like President which call XX-K Although, assumptions, this the Reconciliation could At which results At differ and Company discuss that materially. cause Executive conclusion will of archived Financial materially that on Flanagan, items. and believes are found releases to the to could are Regulation for available being available and the subject in Company news was excluding will forth results purposes broadcast forward-looking statements XX-Q Forms actual are the morning. The based and Vice Company set risks results on factors website cause also are is Chief call, the also Officer. its G cleveland-cliffs.com. reasonable I statements and uncertainties conference and filed SEC, website. within Today’s to available special on introduce earnings Tim at this release, certain be to would http//:clevelandcliffs.com published

Tim Flanagan

a first and I’ll off today for year. it quarter kick with see remainder of and Mariana, morning. expect of review joining to the thanks of financial this Thanks, the what to the us everyone the we discussion

pronounced business at were prices fracturing USIO's outstanding performance quarter and quarter beat of impact that selling favorable in we said, sales by mainly charges an new the our $XX the our adopted. of expected quarter carry accounting sales company deliver that expectation, volume the a of total consequence only was expected the lower considering half year sales change and typical stronger after customers from shipment standard carryover outcome inventories amount well the USIO, revenue especially $XX driven is APIO. of last recorded compared negative and is in exacerbated for the shipments the by adjusted better previous the seasonality. QX of as in the than allowed closure-related EBITDA sales achieved This next this about impact tons seasonally a million low likely this pellet face million cost ahead remarkable well always volumes to X.X results of EBITDA X.X that further the did of offset pick than phenomenal drastically pellet up over healthy by million we vessel to This was about performance. of an with recognition at because Our demand adjusted our That long shipping our light core of This recorded direct second quarter. what end long conditions of shipping will to March. the tons million for as to

XX.X million to tons. we of demand, some be last our long will end expectation built the we delivering full-year year. strong inventory sales do this Given To increased at volume of we've so, the

cost This from ton. per our of decreased primarily last lower continue the came comparable $XX In ton $XX quarter quarter. due year volume year's long year, per range slightly impact X% to methodologies cost guidance to range addition, cash in costs balance ton. full the than $XX standard expect better to long Through in DD&A on to the in the outsized per of our we cash

its hot impact year. improvement previous This of the came guidance, due in the long prior the unconsumed represented per XX% of steel over ton Our to our on largely inventory. pricing in value increase pellet price realization some also of of pellet and the demand $XXX a ahead rolled

sizable HRC report than Year-to-date originally more customer since a quite averages and expected, mix in our first in favorable are today's for per With last HRC, for $XX lift a the earnings our is for note per short quarter. boost prices the the realizations which ton premium. per pellet commodity and relevant $XX ton lower much price, metric IODEX Atlantic I'll the are $XXX prices per ton metric than

$XXX the on $X USIO pellet USIO be averages the revenue if the adopted IODEX ton. end Alternatively, as would our for $X yesterday's our realization then year that a carry year, $XXX forward full and the be Atlantic HRC revenue of price, Assuming higher we both rest reference, to to close the will realization of premium reported range. at per approximately would these long

noted in we on reflect with do our pricing guidance. be should view figures the therefore and internal not past, As not considered these

distances that decision Now we mine. to the of of to to moving particular both adjustments. on primarily we to the in of was move month, to are in consequence closure XXth ground. These drove the million was EBITDA mine, adjustments up levels closure mine recorded number million as of cost onto haulers permanent segment. production of X adjustment from adjusted This this realizations as of our rates. APIOs items our the by that sell we a to the June impacting standpoint lead million this, quarter. Increased year. of top rates Earlier contributed the action of as announced Asia-Pacific unfavorable triggered we based expected a price performance and well the ongoing as remaining iron and expect LCM EBITDA a production ore still the $XX negative of decision haulage negative two XX inventory in reduced committed accounting adjustments ore resources on strip expense by mining, in this negatively On operations, administrative course ratios well to cost and expected the economic of large for profiles ARO

lower-grade X in impairment cost. severance consistent for impairments past inventory the iron to we with items, they these Due addition, final from three our ore calculation adjusted and in nature excluded asset recorded million practice. EBITDA In X on products million and in were of supplies, XX fixed million

our these in X-K costs. weeks the $XX $XXX demobilization to charges in do ago, $XXX cash related and charges we discontinued be noted were our million, first under a that charges be impairments, already taken to We range non-cash these expect contract future closure including accounting the of write-offs results. will thus reduced As and amount. of future within million to Approximately shown the operations two P&L terminations, future expected filed in quarter by expect

cash this not changed closure would spoke amount obligations has months we on not which our cash materially not related capital dollar about million within of would it Project. quarter, of conference year. coming million the the sale XX% total the assets the net the the we ago the asset disclosure last $XX other assumption Last since the the top this spent cash $XX will of first reported did gave to figure, and On include cost, net case. assumptions overall estimate quarter, We X-K the after expect our three that about we other million mitigation be two strategies. to HBI from to year-end of of offsetting remains in the my expenditures. our of sales proceeds the The settled was I top years the in net range obligations a of We in of obligations, wrap majority amount expected $XXX mitigation obligations with cash up million in as XXX call. of the XX% those strategies, net and remarks XX to

the in the is further remain packages. foundation from the outflow With capital assumption changed, refined it progress XXXX as upgrades overall project As spending I capital we've finally, slightly scope we our Northshore sustaining but with has cadence not and progressed over for year $XXX spend. of remarks. construction, And and time completion lowered that, works million. overall will bit budget expected we Lourenco our civil on the mid-XXXX our his from previous expected for with million unchanged. to Lourenco? we pass This guidance down to the view $XXX to our on and this the have attributable The

Lourenco Goncalves

us everyone and joining Thank morning. for you, thanks Tim, to this

remarks revenue long ton. per my about first closed be lot the with to this We of excited saying realization has Cleveland-Cliffs in a our start $XXX me business Let a U.S quarter year. that ore iron

per on And In transformation my by Our our selling in prices long when started in price with Cliffs pellet best costs metric of three-year sold best reported our also I ton, margin X, of performance EBITDA our $XX our XX%. for layer I quarterly quarter, our opening seaborne August long far August since with remember an margin started $XXX ton. per ore began. of here XX% were you ton was iron When per USIO XXXX, EBITDA since $XX XXXX.

$XX more per quarter, a Now most prices the in than pellets generating yet, stronger And lower were seaborne at ore recent $XX higher EBITDA metric are iron at selling we and ton. margins. prices

generate have business for free Over cash our seeds amount the to to past enormous years, the and three expand future. we of flow planted the

more Cliffs. within company take Lakes but high We transformed our our pellets least expertise, our of that's the last this not have barriers favorable entry, into including to to markets, Great contracts pellets, lot to full quality one the technical sell advantage of a able to strength and now

of anyone? resilience the domestic things the by the we truly that ore high are in matter, by market, as we the of the the company. in the these of Our worldwide, iron used the sales things China. truly contracts value recognized almost Cliffs pellets steel growing not influenced Why are things years and these were as at the matters are have implemented our scarcity ago, and such appetite turnaround, for Three the core base that adopted strategy, were for in

lead a The from contracts. steel world Higher is to equipment, including of a a the and machinery importer pellet we During metric price steel domestic the have and in a is stronger in steel saw the any domestic-produced demand standpoint demand Cliffs restrictions prices imports energy. the largest automotive, should improved on several benefited and in the healthy and steel steel quarter, construction, pricing. that sectors price HRC the clearly given our used realization steel for U.S.

increase the even as is pellets. is small a pellets are enter. this inventories. continuous Canadian a have With this expectation sold needed with Cliffs what to dollar We million them, This worldwide pellet in furnaces let economy the our in in The The pellets the development In expected IOC, we further of work of China. real of the United entity. is fourth company their contracts. shipment for expect from supports of is for strategy Europe a pellet demand tons fluctuations long-term much like we Tinto-owned the in pellets adding sale to us last increased the we market demand the strong March, in pellets did strive dynamics robust problem. stoppage is eager demands second quarter-over-quarter as our manufacturing premium, to to global volumes continue which for tightness the quarter time, supplying centered gave depleted Lakes. another barriers healthy year heavier a serve quarter high week at the today to our pellets around, All higher blast saw us volume increase critical of not replenishing not the in This a for will than scarcity and same pellet At were in and have and deliver for and we our Recent year. sale we what seaborne metric and of the the to we industry to are produced QX Rio starting prices. volume first to we The this markets. resilient also could, Atlantic to pellet increased XX.X seeing Great States, customers a long us well XXXX, a the

APIO the has a felt first to we the Since continue While asset. industry of Asia-Pacific forever, never my same the be plan been have about job a part of steel non-core vital day market. to we here, the domestic

producers with situations, trade always ore Australia-China to start As never APIO care a I that believe like clear, operation. have eventually felt abandoned low-grade the with comfortable Cliffs pollution made about I maybe China nonviable and would in

time. Lake over end not to I ores then actually to did mining With happen from benefit Chinese are moved fortunate profitable, operations higher which the that long toward profitable of the earlier. we there. Cliffs, asset Blue viable USIO grade as as were APIO APIO. we our and efficiently exit did very We able at the business had we We four When two through that, first were in and segments quickly came coal of that

of and is final it that unprofitable, strategic exiting our my we’re was This well. initial business is quickly APIO on exit that agenda. efficiently as Now a

have activity So mining as seized initiative we tonnage. all additional and officially of this sell past Sunday, and to forgone

rail already on gone the a crush, the second the remaining assisting This and to is the inventory will quarter. workforce sell have percent We and KordaMentha brought third-party in of process. begin mitigation we with

assets a will with the dumper. be divesting real that including trucks railcar, car number of We we have rotary value and

As in QX. results team, million noted One $XX talk reported alive who morning, probably segmented in but I discontinued final without the our your General will be APIO anyone negative nor phenomenal these entity this record. QX. we comes June and in my gratitude this of we thus With decision shipment and can’t APIO the the Australia. would in QX be Jason Manager, adjust Grace, specific the kept great be closure -- my about would assets this will on from EBITDA, have work part about in losing EBITDA is else APIO, the than dedication, the consistently the clean operation am and and comment longer to regret team in kept possibly ongoing report team business -- To last only APIO sorry therefore expressing entire operations longer starting I With sincere would reverted of the efforts. press our safe our a of that, for treated no segment as and our entire

Toledo, miss You will will ago, Australia. weeks Back in about be Ohio. official U.S. two celebrated the one thing into of groundbreaking I the HBI the we our plant

into are I'll are you not we the Q&A. don’t real The as iron appreciate the primary has pellets electric begin from of doubts Mariana works, about flow Great we our will by real outside well have only of are I Cleveland-Cliffs. has all the it, business the physical the it profitable on you. permits quarter we arc direction have in QX mid-XXXX. approved being almost XXXX needed piling, The also Lakes feedstock ore the to up, start pellets Toledo looks and towards low-silica pellets to envisioned We actually buy at record time, for be a for have Thus This and are and and is already with progress Northshore have is which quickly by at attribute, in HBI producers pellets will With to foundation along XXXX almost important of have or deliver grateful who our and setting results. third pellets schedule. to right that have of contracts project was the and the at end the or company. DR-grade the always pellets we DR-grade that been DR-grade zero but real HBI steel work to generation the to good. furnaces the market currently control great picture, months can't produce even were by us right our we we us ago in nothing in two produce only work pellets. other back tested year. with remaining will The to really ahead domestic because Today, you out need this our all, To already right and more When pellet will to lower headed far detain resilient. last that's so can business trustworthy non-core buyers. awarded puts working the customized-HBI team is and for wrap the don’t most prices. rely most who allow However made different it of the able in track to will doing completely a segment pellets. if things Northshore and that, operating of selected turn to we living, civil to the are EBITDA Even started on sources company for skeptical cash leave generating we you deliver one

Operator

comes Lucas [Operator Instructions] with FBR. from question B. first Pipes Your Riley

open. Your is line

Lucas Pipes

to team, little balance a wanted Lourenco on sheet. and I your touch bit

first $XXX So I about think million you ended was of quarter the cash.

to robust. So the project generating way then flow. the going On you I are growth look funded at, I this your it looks lot you numbers, look and free extremely of at fully for and a year be guidance my cash

capital? I of you're your example could share issue a think terms last or seems it to in would cash Could allocating appreciate you maybe issued that. of thoughts repurchases go was what kind you wondered that maybe I year? have back convertible on that problem, and for about thinking So you the

Lourenco Goncalves

our changed here. way business of never doing we've Lucas,

Our primary care be our of use HBI Project. off of will cash this year course taking

that We are doing very well.

care maturity less care in spending want of going do are the right, going eminent, million actually take and maturities of year of lot money XXX generating to our time. take XXXX XXXX, to anticipating that of are in said, were next are to free right you than not are are being we This but assumption; be We conservative we debt that we our and at have absolutely we flow. we this cash a

Beyond X maturities. and of this priority, HBI care our taking debt XXXX XXXX

way dividend overtime, it capital of can't will very dividend the going then process to have that it. that that annual time, stop I grow and been driven we various communicating in my the shareholders, that of to returning stakeholders blast shareholders just a primary are those believe the way initiating start and that the too and are should do that doing celebrate will At going much. we now are telegraphing the beginning to thinking dividend. the special be not will right general, in well because We We we company EAF. this about to be be, with I our to towards we furnaces USIO-company establishing a And

in companies best be States. in will generator all the United operating the We among mining cash flow business and steel the

So, these of care way business terms in to very cash and moving we predictable. of we boring reliable very because will we're going very But we're go the take how terms are in are forward. of

Tim Flanagan

consistent talking as and organization is, months been add I Lucas, have $X that we've the The what a to to an I’d last for Street target just XX XX net mean, well, as approximately with we of about debt to billion.

as So we've very prefunded a fact last expectations debt with number previously, than this forecasted that Project us would've that we substantial year you so our to about HBI think rapidly generate the cash we amount the are in of gets going more that just otherwise December, much what are. net what back to line

Lourenco Goncalves

we're we million, of we got important debt Oh, And today And strategically a than did minority I what then a the acquired earlier and a talking not Cleveland-Cliffs the acquired guidance land we and tend what the knows were stock. of is And if CEO acquisitions, year This box. we've today lot in That making work at be not appreciate and I company position this -- position lot that. been three go a had are We that $X end the that billion the said. U.S. and generates very doing that L.G. X a we acquired end overtime, acquisitions spent year, last We minority company trading It as out dynamic actually, the just business, the of for net got We with that’s forget a not got checking to more that I Minnesota. it. is would about. because shareholder. a Nashwauk at billion does long-term end to work This And strategic the three ArcelorMittal the and the of what board $X by cash close We understands we the of million, he little lot accomplished at $XXX Yes, is money. these a it profits. done Empire generates don’t is generates cash. about that But Lourenco goal. people. bought the for the of stock. a in people about. would not of patient buying-the-sky thus than at had Tilden. have year, the in spent he Steel that’s

Lucas Pipes

in bit range I how X.X want year? full a catch then to end that year, on the million full in So, ties for produced performance on cost of QX you lower you little below and were very a the just tons. strong

So, chunk I good target. mean, annual production that’s your pretty of

range? cost visibility bit maybe would perspective. on on side? So where within shakeout Are I the you do little being maybe could you have you appreciate the your a conservative

Lourenco Goncalves

are things Lucas, first worse. wonder maintained. little just do with we quarter very have more assets spend to our well do, little a we to do a that if we of why a money might stuff When all, show look to skip not

to do a our all and what So, predictive do throughout have maintenance we mature power very of implementation mining, plants. and we of we operations, have

are So, shape the as our in far as equipments. condition of assets, we our good

phenomenal a that on very of we comfortable time. to pellets. a have that, believe job high-quality cost we cost in are do produce of initiatives terms also going With in cost at inflation, and hundreds a mitigating we positions We

the $X. the It bites, in in but about our shape, think more cost range, feeling will in $X we we the pursued to and are anticipate, has the the that pellets to good are staying this large only price toward continue will We we not our or appreciate, to with margins Lucas. margin phenomenal are buying about be are ballpark, of but the margins less cost we’re and

Lucas Pipes

tons to see the as over but more position one you good last guidance. the lot out sold plays you course a will it your year, anticipated. of very how one, Maybe We relative QX in said than

some related wondering somebody customer, I it shipping -- at also your season customers someone think little push to inventory the earlier, but what opening the to of I I so like mentioned was your think a tons situation release year. out last extent bit

the So if strong you on inventory you up fundamentals? back QX And a from and comment you put deliberation? the an can industry perspective, given on maybe said maybe on position impact full year very could the on also has the

Lourenco Goncalves

in Look, at year. of by low furnace end our were the and last inventory large, blast clients, they

So, that it's to that. think see you when easy like

Our inventory; USIO XXXX, the inventory. at end pellets to with business X.X Lucas ended likes X.X and end year in tons inventory. in million the million of were X at million at of any At end tons we given with of XXXX, we tons

it’s bad life's award. of they much -- they Cliffs they They going because that so take can that them. So, that trust a to know we’re do care

that. but So, of they were because not they were low, bothering

to the course, Of -- I more contracts sold way physical same pellets love little even I'd lot that's that but I QX, pellets same they in in love work. a more QX a sold more in because have the expensive the

two paying. they how steel of United businesses States. they would others year things, because business to and steel, cautions for don’t, this in importing more how as But from, these so these will how consumption are and guess, good. they're happens are good, adjust Service I will well. much their XXX, fine I’m lot tons forward will continue to they they importing, if very good they Section prices be getting centers demand and with many what year, this a is high continue high will good will a be much So, be are be All year be going where matter no

XXX,XXX always pellets tons can end exactly increased the tons X anyone our to X into than notice, what sales with you included. inventory. forecast, up million in dip million. that up We more even So, or more or in sales is already we this We of have little can if

very not exceptions point, United So, see from I from can the that's of I'll need this the Good at the envisioned. tell getting the year of demand, XXX. will will then but galvanize point. a and very importing prices, lot you, market volumes in to because or give I they is Section not a lot it's that's using well. this there doing left Vietnam to don’t that best of all that a And any have going you about moment in even we're solid we're on be be them good that centers service they the that galvanize concerned without steel States at

good in the a dynamics market now. right So, it's

Operator

Your Woodworth Credit Suisse. from with comes Curt next question

Your line is open.

Curt Woodworth

question in into busheling relation the and the Venezuela pig a more those The think global to U.S. going markets to have years I HBI. first of going iron is tons any one. past U.S. XX towards mills just X lot down HBI shifted that's In from don’t I transitioned million of feed. think is and the Obviously, many

you can think on would pig to relative it? used value confidence iron larger So just on gives you question you it generically that see And think the you busheling and you What be priced to I basis however how guess would is. market? a a, shift back HBI say, and about comment U.S. in

Lourenco Goncalves

an fact badly. all units iron domestic that mangers of the acquire Curt, virgin thesis units the confirms the just import First need virgin to iron they continue

you're that Venezuela even shift -- HBI of was this with They they business, really from Venezuela years. the never history supply became reliable that? Because and PI. towards So, was start worse then they anytime recent a of right. source in of completely in Why

great a supplier not a was totally that Venezuela earned became our supplier. So, reliable

Russia, some could few they they tons could they new Ukraine, is towards in right shift sources even sure shift get, even from sources the could domestic Middle-East and they the showing get in are now. sources So the they get Egypt that buyers, they that

and is can pig they iron commercial that it is. up getting are This get. they said, So, this being commercial what is HBI, it in what is produced mass

it while from that phosphorus HBI Russia it or comes HBI that in and the India that is So, Ukraine from what Pakistan, in sulphur compression the update or the resistance came is. comes from

So, going most really for about difficult the automotive. supply to of end are HBI we specs are high that SBQ. serious are EAFs EAF really producing producing that serious about

be are we selective very clients. going our So, to in

are And are that lower together. commercial markets reach even to now completely benefit to this will clients type quality of these use allow feedstock. margin. to out when going going even they make a we are reach of We They

and lower will all can you and noise ongoing, we a -- part are because developing noise We know quietly. to to to I that. I because partners, get about a and project to do our about am are what disclose are we talking see give start part lot now commercially. that, plan margin. I because we make business a going of didn't We to right doing on selective be just didn't very going That’s didn't we that didn’t a We because finance are HBI. what's Conversations got what of

going to that have now make conservative. make the to tons, margin past, a will In the are bigger I than with Curt. said right be pellets we X.X you X tell I'd very lot We margin pellets. This a was

make going than We are that. to more

Curt Woodworth

then free your alone. a over and on USIO cash million your given funded year allocation XXX And generating I on this follow-up of business just point instance for core to Lucas' capital HBI, bet

all? you North market. American potential groundbreaking, at you the of HBI comment? capacity you tons a the take think any I next to I million tax And you obviously So, you Would years. are two to you mean additional coming the other replace look XXX X.X the million project? unit, Are evaluating that have of benefits going to DR HBI then another out of pellets mentioned going share at in look at

Lourenco Goncalves

about value-over-volume a anything world they at first in facility Yes, else do had more that we of metric and we that. point, anyone -- look, this concern have entire have used HBI the once that the before used we are -- the lot

in So year. concern you down they of now. Ohio, is a talking HBI groundbreaking the to first you Ohio. has my is in right comes. huge cash talk ceremony, months flow My others of Ohio, our have I second lot Minnesota not the generating the to did HBI concern support about I’m want one. having three our this facility officials But whenever not second great of project first that’s the and Toledo. My in those need But my we all Together second the to that have don’t lose support six been I’m Congressmen these road get and things the converts Senators concern kinds those if crystal the And conservative. the to supporter I’m I in Governor issue? could know you Why when bonds Kasich, me. without elected to because asking yes, been talking a and basically issue funded have ball, might start a me be So also I talking Minnesota I local because with even you and in did December, there. to

to our the and this going of is what about funds the had the it nine of And reward did we that’s in XX we largest capital extremely about tenth near we shareholders. cheap. the hedge shareholders are it company thinking long-term number I on number And a And I’m any to us, very did company. though ahead we right have investors the way positive I’m right start Company. By XX. got now. transaction and we So, to circumstances. was that for returning

I that. things dividends like So and like

[ph] State all are guys. Street, and The Blackstone, these other ones Capri

Operator

comes Seth question with Rosenfeld next Jefferies. Your from

Your line is now open.

Seth Rosenfeld

spot start weeks bit guess on I touched or to out, the of you stronger to three your guidance uptake better have realized but to understand scales math my I the like over in the last year guess ago would than Clearly at I on I forecast of you price market given time prices. development own realized couple course full that and know really of explain contracts ore. Couple been To of the doesn’t prices from that long realized and came guidance months, ago, results, our expectations month’s a $XXX term the into $XX, a U.S but the a trends of bit, for already perhaps this QX.

to So, moving And couple can your how more course about ASPs sensitivity forward? changed of your talk the last that months? cost over you or that mix the freight bit the little how a per impact and perhaps will perhaps of

Lourenco Goncalves

glad here winter, don’t Lakes. will be I ship we vessels In the the to, through thing. is the

a able to only likely with and that previous not in that world, we've the loaded and a then were the business of we they have we us the used rail to that end stuff. one enterprise, we us. have not And one the we’re and treated. us that improved the shift that rail a best the to lot at managed of But client better one and so only that than rail doing We rail. contract is as great a with makes the client And placed things the than negotiated contract in Algoma. for we that Algoma And averaging we lot other have is because contact rail contract for at are is and a shipments top were to are planning stuff year, this was the client day, the of commercial that, last with is contract lot we added of already Well, what clients our knew X.X we started and third that better point, we before. contract towards Well, at Algoma, rail, a contract even we're at way then contract on Algoma weather our vessels port. going takes

as to as delivering ore clients. start to improved, weather So we’re able soon the our

can days that but of are with as month links of the a amount So, unfortunately the the contract that proven. last of and who the the in those that has is delivered March, real not one to lot and the one ships it's once contracts -- clients they're of tons, we do specific one, we are more the ten Algoma

they improved to and then we did much to quarter. quality price the a in it as real So business, the in rolled other can hot that back -- realization our pellets -- improve business, first as not in in important do I that was did. mention not were that the that thing back back More lot

to So even that rail goes contract benefit Oklahoma. am the was that like over already to I going

just in the rolls quarter. prices contracts the So enormous happened the is hot appreciation be first would that based to alone on that that

Seth Rosenfeld

that ASP. on and guidance me, on your tons had X.X But follow-up I a excuse pedantic that Just tons this. X million think that What’s if you you're $XX if rail million I at achieving XXX to uplift? the pricing ASP, realized at last And stride and our a realized the XXX? tons scales ahead actually between well that and of contract can we contract average disparity non-rail the was am group the targeting about price just assume in being XXX,XXX

Lourenco Goncalves

days prices, contracts that were top just actual rolled we are the If we be million XX. we on that, the XX Okay, anticipating we tons to the not X all. vessels way had rail much of at we're would than rail send again, X we above the lower done million assuming so the price are alone then at last And of a March of of hot realized. hot rolled in at X to able Lakes

there double the So, that. hot the the rolled had price a and same was that digit influenced that contract

Operator

question with comes Your next Matthew Goldman from Korn Sachs.

is line open. Your

Matthew Korn

there competing speaking Other news alluded your to a and then what's other bit near regulatory the attention from to the and What any Cleveland-Cliffs? the wise, What's we the do you property pay where is You it claims? term can decisions of some timing some court need perspective, you there little party, coming guess share around I Nashwauk in stake region. for before, most updated that the are in there deadlines?

Lourenco Goncalves

the other land XXX% few also other inside we acquired XXX% we long-term acquired Chippewa. parcels. XX% in over Nashville acquired And was several entered the of of we sold there, minerals leases the land, very land that several and superior was for the parcels and Superior to we and Minerals. acquired by property, owned XX% of we And Look, in parcels

Chippewa, having XX% am and XX% owns few out Chippewa of -- those XX% Superior sold sold to Cliffs So I instead sorry parcels.

own Chippewa We parcels. have those XX% Cliffs and XX%

XX% much changed, the only owner. The never pretty it. that's So

the So first thing. that's

to acquisition going to we conviction because And we a good in that. are that are purchase is are much a asking a determination in May. the because rule we that make final Delaware to so have have on pushing final have rule to a going are that about determination, We that have we our Judge

the what, to that. up end things that's this most what not watch a you thing to with one be of So important it's should but watching, like going of who is is

Cliffs. And Let's to assume will whatever that real to hire the mining, Then deploying they were of what That pellets. to I do what. they are so the that the selling restarted ended having in steel They too not sell know real restart that supposed with stock really people stock to to $X in what other to there. to billion this you debut They happened domestic in need don’t China. you will compete KiTek. pellets And tried a market, ago, but was is thing, long have people, the that? expanding finish it. They -- in scroll this in long pellets against not U.S. fact and new are up sell

that’s the badly. for people are tried it, that’s what are because like don’t still not easy is And Essar doing Essar have especially and that they building so pellets. that build fail the guys these was XX-or-so models So know and business for in for they to they like Minnesota, years,

bottom is bad the That's is that for good what line. us. them So for

that that so the águila we we the much we the every story. [indiscernible] day. care is and are And eagle taking walking watch I but like mean of properly that’s end, at other supports, too will So in has Venezuela don’t are Spanish, thing prevailing so that the is prevail guy that and caminando

Matthew Korn

me bigger Let then just picture. turn

cumulating there from a policy won't is you this providers adding of matter steel today, what is matter foreign concern, timing, today? ask more up seeing the that out driving be but So shipment the So levels you that with certain of demand what's boost unforeseen the good not markets, you, strong to want in steel buyers now steel isn’t that feel pretty markets, of significant I orders, far, we're That far concern from from the makes will month, there market. hear as gives total be as in What bringing things I results confidence? that friction. new are the what your in a they're more of stepping a this steel demand. orders concern that foreign suppliers a so won't shifts terms of there a kick the

Lourenco Goncalves

economically, automotive have this, that in this manufacturing buys that American high believe stable been the time believe really very and very, that in to day, automotive about I level ultimate a are end future. Other has talk is continue production then large continue about the conviction the take a the market United at domestic and at the we automotive go steel. because States big They unit that, a part be back. the than will don’t of of will the market. of that impact economy. This be we conviction United to will some my powerhouse the The will If things things of about the import. price. and They XXX, for in States by industry know car they that

wheels. but So, doesn’t a change ton you they one One time seeing from car you Every steel car, a anything that see relax, ton of the standpoint. tell like is don’t to steel. are in Matt, of you realization

a bucks. galvanized of XXX is on price XXX XX% the steel, ton X So old of bucks

that they're much are will They what’s to studious even that brand should So complaining is else, at the about be who currently only be the have said of call complaining will top top to blips. but all and I talking other good share. to deal fair research because good, analysts. they the in that’s nobody of very also is of that you this new to that’s They quarter noise, going used okay. that The probably selling don’t $X,XXX, conviction a that, that clients two contract. range this why On their economy car so The people that names, reported just underlined well story, I States. that is already this are tax figure now complaining my the in rest after a they to year want the they good everybody United And cars. in both talk eliminate they’re lot very, deny you, the that they can cut, the your buy these are their after if views to $XX,XXX to continues to like the be because with things cost cost get nobody one is very, this on everything that you

rest what’s that’s is the on, noise. going So all just

Operator

Your Gambardella next question from with comes Morgan. J.P. Michael

now is line open. Your

Michael Gambardella

tonnage Project. surrounding the Just your of do own potential terms some and the their sources have potential a the captive in of project you question for users DRI. How HBI market of

do think you of the project? market what size So is a for your

Lourenco Goncalves

a market in for million market X.X And the I year. DRI, of speak we Great are iron is that’s as HBI, the this, year, Out a United in Lakes. States, tons pig billion tons Mike, approximately X.X metric million the metric metric am aiming. the X tons

they and the So South a is -- of locations their in lot facility in the one because that point, this than the served terms they has captive Trinidad. production better is at are other in in that one locations in HBI when Lakes Nucor, into Louisiana their Great

in [indiscernible]. might their to but river and can Lakes. the be Great going guide we’re up local has in a say Mississippi, that they cost send DRI can that the do Yes, all in the the You that

with confidence we're Dynamics, we’re have very BlueScope, thing in Big North and to. thing I thing thing confident, in be that to Star other high Steel language, same confident the am highly Same Great several talking Lakes. So with supplying Nucor same same with I going that bankers' with River,

have don’t tons that’s market only have We we actually million X.X X So million a for tons. year a everyone. for

not some, for for have everyone. to going We’re

that’s potential everybody, to why not clients. So selective talking we’re talking we’re to

Michael Gambardella

for you’re contracted that coming you HBI iron feed to contracts going ore Project, will now producing off or your the give availability to incrementally iron Okay the obviously into some HBI iron all ore you Project? and on feedstock ore. be your the Are

Lourenco Goncalves

No, steakhouse. What look ore is Pellet the Australia product. pellets. it's is New like a ore is something manufacturing is we iron meat. Iron first of it's our Brazil, street and all, iron it's York that not producing produce ore raw at

better, like So, want to Luger, you lot catch. it's take Peter a it's

place then thing. the The is It question down still what are that the arc happening of ongoing. for is States been electric we taking another absolutely and to and do. furnaces has the decade. making you shutting yes, shift that's are United furnaces So, ask before. blast were in that's that's because furnaces happening right And the Blast

that not furnaces take more that then are United prices and for creating going between producing we steel creating a more competition end and we the So, to of force duration be the the we to will to of friction care up States. blast EAFs EAFs in

are in the of client replacing business. market type blast the with clients the We actually in furnaces EAF

transforming market blast -- going some And pellets die migrate and those of migrate the pellets ultimately, to blast from facility The from have supplying be They will furnace are going sides and ultimately So, DR-grade to rest providing it. and have appreciation quality and go not the fact balance going weakest clients. is determine ones good of but going ability to the in pellets we going that. to to be are the blast high is sheet end DR-grade toward who the furnaces. who from deny demand will be the both going HBI I'm EAFs the EAFs we their going our they old replacing blast of away. that nobody now furnace will push They feedstock. to don't someone supplying have in that determine there that the have the we can do into die, and is the the are to the attrition will the competition is the I'm to will is just They survival But of be that supply who going What it. and HBI stuffs. are to be price steels. do to matter a support

Michael Gambardella

and need pellets pellets feed you before incrementally contracts But you pellets can product to XXXX for for more terminate start do have going to when you're HBI that say project? your just now into project the that right XXXX,

Lourenco Goncalves

going way, then shut to of of Look. it's by will By be and and going produce tons I'm going down more X.X the that incrementally to to turning are not pellet, we tons Mike. HBI. million million now produce time, producing, regions we us X.X pellets

direct it going very is But supply supply. in furnace that everyone well supply, continue to and blast it'll the ramp-down by now will for thought transition blast So, pellets furnace side we be to and this time. ramp-up be are a a

current business. pellets demand domestic are the HBI We the HBI with be going demand that's profitable market DR-grade than for supplying produce to because will to be And why more pellets in is the even us asking for very our ourselves -- the we asking demand is furnace is The what the not are thoughtfully market blast it. is for exactly shift for that's production, DRI and asking the towards more asking here. for to doing

Michael Gambardella

pellets with that pellets. contracts Now, just is business And booked you the I where understand Project, your and are I'm when HBI to going fully you do XXXX -- current start curious, you in get out you flexibility the that will question is, that -- another to feed into ask the feedstock way do by from? have XXXX, you pellets contracts that HBI? give And maybe ample today to

Lourenco Goncalves

with clients we that with different date. different Yes, expiration have contracts different

We have all that.

up more marketplace, create in friction do saying planned The when to excellence If the that mitigate don’t end back. with Mike goes to we furnace down business. well important the not never that, are and we that. we're to course, and point down, producing going smaller blast Of just for you're comes our we more is most are something going

a because showing actually are runway are that. that has We Cleveland-Cliffs starting we just

scratching just the HBI We now. are surface with

of That’s We why predecessors, of run have they have had no keep ones XXX XXX years had here that what a not did they are for that of they we because years, company, but they ago, we blast when out the this years or runway you around years Cleveland-Cliffs. the legacy did were know XXX furnaces with when more X.X a doubt to ones have I that thought, this my line if and they same ore. very pelletizing strategically

the same thing. doing are more We or less

had Decision and same good the is this predecessors and trying strategic what Unfortunately, good four start, a I deliver don’t that because fruit long-term rationale. years had I losing the my us, behind that and to do start. gone. we down the quarters us. make business. This write-off to to is three bad doing so The I completely is we're do to had bear behind This are bad, down all shut had decisions I three they We the to today, I did, do not road. to the

forward. a very boring are to be company We going going

appreciate so a We will And for with this for marketplace. minutes. to and with our this profitable think are Bye reached we the call. of we care and Alright, we so so dialogue to great be through I end take predictable going you to that, totally us, be continue that from Thanks guys I forward undeniable now. stay the continue and all hour to shareholders, two bondholders. look I and our Cliffs have this have day. of again as me for

Operator

call. This today's conference concludes

now You disconnect. may

Cleveland-Cliffs (CLF) 20 Apr 182018 Q1 Earnings call transcript