Range mining giant Cliffs Natural Resources battles takeover today

Cliffs Natural Resources holds its annual board meeting later today, a fact that normally might rustle only a few grey eyebrows in the adminsitrative offices of one of Cliffs iron mines here in Northern Minnesota. But this one is different. Today, a hedge fund called Casablanca Capital will bid to take over the company during the annual board of director elections. If Casablanca, a major investor in Cliffs, wins 4-6 seats on the board they control the company.

It might be hard for us here in Northern Minnesota to grasp this situation. After all, the Cliffs-run mines at Hibbing, Eveleth, Babbitt and Silver Bay are having a pretty good year. It wouldn’t seem to most locals that Cliffs would need an overhaul. But Deleware-based Casablanca is a global operator, and they want to see more profitability worldwide from Cliffs Natural Resources.

John Myers reported on the Casablanca bid to takeover Cliffs Natural Resources in Monday’s Duluth News Tribune.

Cliffs is the descendent of one of Minnesota’s oldest mining company’s. Alongside U.S. Steel, Cliffs represents one of the twin titans of Iron Range mining (though there are other players like Arcelor-Mittal, Magnetation, and Essar Steel jockeying on the stage, too).

There is a duel crisis here. If Cliffs fends off the takeover bid, Wall Street is unlikely to reward them and cuts might be needed across the company.

If Casablanca wins, it’s hard to say how they will change operations in Minnesota. They’re bankers and brokers, not miners. It stands to reason they’ll want cost containment, more automation and more production. It’s possible they’d chop up the company and sell off parts, including perhaps the mines here on the Range. There would be reason to be nervous about major changes that could affect Iron Range mining employment in this kind of environment.

Or maybe nothing changes. But that’s never safe money on the Iron Range.