Cleveland-Cliffs (CLF) Raises FY08 Iron Ore Revenue-Per-Ton Outlook

July 9, 2008 7:55 AM EDT

Cleveland-Cliffs Inc (NYSE: CLF) announced that due to the recently announced iron ore settlements between major Asia-Pacific iron ore producers and consumers, as well as the rising price of hot band steel, the company now sees its Asia-Pacific Iron Ore segment achieving average revenue per tonne of approximately $102 in 2008, compared to Cleveland-Cliffs previous guidance of $89 per tonne.

Cliffs expects costs per tonne in Asia-Pacific Iron Ore of approximately $55. The increase from the Company's previous expectation of $53 per tonne is primarily the result of higher expected royalty payments related to higher than expected year-over-year price increases, along with increased energy costs. Production volume is expected to be 7.8 million tonnes, with expected sales volume of 8.0 million tonnes.

Cliffs said it now expects an approximate 34% increase in adjustment factors related to steel pricing, using an annual average hot band steel price of $750 per ton, up from the company's previous assumption of $700 per ton.

This new expectation results in an estimated change in revenue per ton from $81 to $85 per ton for 2008. The Company said each $10 change from $750 per ton in the average hot rolled steel price at certain steelmaking facilities will result in a change in average realization of $0.24 per ton.

Cleveland-Cliffs FY08 North American Iron Ore costs rise from $53 to $56 per ton.

In 2008, Cliffs expects to have equity production of approximately 23 million tons and sales volume of 24 million tons as it sells through some inventory.

Cliffs also indicated that, assuming no change in World Pellet Prices in 2009 and no changes in producer price indices or steel pricing, average realized 2009 price per ton for its North American Iron Ore segment would be approximately $107.

Cleveland-Cliffs, Inc., a mining company, produces iron ore pellets and supplies metallurgical coal to the steelmaking industry primarily in North America.

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