There Is Another Battlefront For Cliffs

On January 28, the hedge fund Casablanca Capital filed a Schedule 13D document with the Securities and Exchange Commission where it disclosed its 5.2% shareholding in Cliffs Natural and included a letter sent by the fund to the company’s board. The fund said that Cliffs should bundle its Bloom Lake project and Asia Pacific operations into an independent entity. According to the fund, Cliffs’ international business is exposed to the seaborne iron ore market and has a different risk/reward profile than its U.S. business where barriers of entry for other players are high. The letter included other proposals about increasing dividends and corporate structuring of the U.S. business. The fund’s thrust was on unlocking value for shareholders and boosting the stock price. [5]

Casablanca also wants Cliffs to divest its chromite and nickel projects to concentrate fully on its core U.S. iron ore business. If Casablanca mounts a proxy battle and gains control of Cliffs’ board, one can be sure that the company’s chromite assets will be sold off.