Cliffs Natural Eyes Chromite Shipments to Asia

Cliffs Natural Resources (NYSE:CLF) is planning to ship its chromite produce from the Ring of Fire area in Northern Ontario to international markets, primarily China and Asia, in order to serve the growing demand from Chinese smelters. ^[1] Cliffs is the largest producer of iron ore pellets in North America and a major supplier of direct-shipping lump and fines iron ore out of Australia. It is also a significant producer of metallurgical coal and competes with other international mining and natural resources companies including Vale (NYSE:VALE), BHP Billiton (NYSE:BHP) and Rio Tinto (NYSE:RIO).

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May Face Regulatory Roadblock

To take advantage of the rising demand for chromite in developing nations the company is looking to ship its partially processed produce of chromite from Northern Ontario to Asia. Although Cliffs is looking to set up a smelter in Ontario, management believes that the demand from Chinese smelters will drive volumes for the produce, making the project economically viable for the company.

The primary issue the company will face in shipping the ore is the Ontario Mining Act, which stipulates that ore produced in the region must be processed in the region. The company is hoping that it gets a waiver on the act because the ore shipped will be partially processed into a concentrate form and a part of the chromite concentrate will be used in the company’s smelter in the region. The primary demand of chromite comes from steel smelters. The abundance of steel smelters in China makes it necessary for the company to ship the concentrate internationally to make production from the region viable.

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1. Miner plans on shipping chromite to Asia, CBC News [↩]