Cliffs Natural Resources Inc.
January 2014
FORWARD-LOOKING STATEMENTS
This presentation contains forward-looking statements within the meaning of the federal securities laws. Although the Company believes that its forward-looking statements are based on reasonable assumptions, such statements are subject to risks and uncertainties relating to Cliffs' operations and business environment that are difficult to predict and may be beyond Cliffs' control. Such uncertainties and factors may cause actual results to differ materially from those expressed or implied by forward-looking statements for a variety of reasons including without limitation: uncertainty or weaknesses in global economic conditions, including downward pressure on prices, reduced market demand and any slowing of the economic growth rate in China; trends affecting our financial condition, results of operations or future prospects, particularly the continued volatility of iron ore and coal prices; our ability to successfully integrate acquired companies into our operations and achieve post-acquisition synergies, including without limitation, Cliffs Quebec Iron Mining Limited (formerly Consolidated Thompson Iron Mining Limited); our ability to successfully identify and consummate any strategic investments and complete planned divestitures; the outcome of any contractual disputes with our customers, joint venture partners or significant energy, material or service providers or any other litigation or arbitration; the ability of our customers and joint venture partners to meet their obligations to us on a timely basis or at all; our ability to reach agreement with our iron ore customers regarding modifications to sales contract pricing escalation provisions to reflect a shorter-term or spot-based pricing mechanism; the impact of price-adjustment factors on our sales contracts; changes in sales volume or mix; our actual economic iron ore and coal reserves or reductions in current mineral estimates, including whether any mineralized material qualifies as a reserve; the impact of our customers using other methods to produce steel or reducing their steel production; events or circumstances that could impair or adversely impact the viability of a mine and the carrying value of associated assets; the results of prefeasibility and feasibility studies in relation to projects; impacts of existing and increasing governmental regulation and related costs and liabilities, including failure to receive or maintain required operating and environmental permits, approvals, modifications or other authorization of, or from, any governmental or regulatory entity and costs related to implementing improvements to ensure compliance with regulatory changes; our ability to cost-effectively achieve planned production rates or levels; uncertainties associated with natural disasters, weather conditions, unanticipated geological conditions, supply or price of energy, equipment failures and other unexpected events; adverse changes in currency values, currency exchange rates, interest rates and tax laws; availability of capital and our ability to maintain adequate liquidity and successfully implement our financing plans; our ability to maintain appropriate relations with unions and employees and enter into or renew collective bargaining agreements on satisfactory terms; risks related to international operations; availability of capital equipment and component parts; the potential existence of significant deficiencies or material weakness in our internal controls over financial reporting; problems or uncertainties with productivity, tons mined, transportation, mine-closure obligations, environmental liabilities, employee-benefit costs and other risks of the mining industry; and other factors and risks that are set forth in the Company's most recently filed reports with the Securities and Exchange Commission. The information contained herein speaks as of the date of this release and may be superseded by subsequent events. Except as may be required by applicable securities laws, we do not undertake any obligation to revise or update any forward-looking statements contained in this presentation.
1
2
Cliffs Natural Resources (NYSE: CLF) (Paris: CLF) is an
international mining and natural resources company. A member
of the S&P 500 Index, the Company is a major global iron ore
producer and a significant producer of metallurgical coal
CLIFFS NATURAL RESOURCES - A LEADING, GLOBAL IRON ORE MINER
Cliffs is executing a strategy designed to increase scale and
diversity and focused on serving the world’s largest and fastest
growing steel markets
Iron
ore 81%
Coal
13%
Other
6%
With core values of environmental and capital stewardship,
our colleagues across the globe endeavor to provide all
stakeholders operating and financial transparency as
embodied in the Global Reporting Initiative (GRI) framework
U.S.
36%
China
34%
Canada
12%
Other
18%
GLOBAL MARKET EXPOSURE
(2012 REVENUE OF $5.9 BILLION)
REVENUE BY PRODUCT
Source: Company filings and presentations.
3
Building scale through diversification
• Multiple Revenue Streams
• Product Diversification
• Geographic Presence
Operational excellence
• Safety
• Technical Competencies
• Operating Efficiencies
Global execution
• Competencies of the Firm
• Outlook of Personnel
• Global Scalability
Shareholder returns
• Shareholder Value
• Risk Management
• “Earning the Right to Grow”
CLIFFS’ STRATEGIC IMPERATIVES
4
GLOBAL FOOTPRINT - FOCUSED ON SCALE, DIVERSITY AND GROWTH
Note: The volumes listed above represent Cliffs’ production capacity as reported in the Company’s 2012 Form 10-K. 1 Wabush current annual capacity. 2 100% of Bloom Lake Phase I capacity. 3 100% of Bloom Lake
Phase I and Phase II capacity. 4 Based on Cliffs’ equity share of annual rated production capacity, converted to million metric tons.
END MARKET KEY
North America
Asia Pacific
Europe
11mt
25mt4
9mt
PRODUCT KEY
Iron Ore
Coal
Chromite
6mt1
14mt3
7 mt2
5
U.S. IRON ORE
• Pioneers in developing the beneficiation and pelletizing process
• Largest merchant supplier of iron ore pellets to U.S.-based steel mills
• Significant portion of U.S. Iron Ore volume contracted for the next decade
• Cliffs’ U.S. mines are well capitalized, well maintained and run by world-class operators
CLIFFS EXPECTS TO SUSTAIN ITS LONG-TERM VOLUMES IN U.S IRON ORE
U.S. IRON ORE
PROVEN & PROBABLE MINERAL RESERVES
Tilden
247mt
Hibbing
83mt
Northshore
361mt
United Taconite
126mt
Empire
6mt
823
Million
Tons
(IN LONG TONS)
(MILLION METRIC TONS1)
14
23 25 22 21
22 - 23
2009 2010 2011 2012 2013E 2014E
CLIFFS’ USIO SHIPMENTS
Source: Company filings 1 Converted from long tons.
Source: Management estimates, company filings and earnings releases 1 Excludes sustaining capital
$739
$900 Remaining
2011 &2012
2013Outlook
TargetedPhase I
cash costs
Long-term
EASTERN CANADIAN IRON ORE
6
BLOOM LAKE CAPITAL EXPENDITURES ($ MILLIONS)
CASH COSTS ($ PER METRIC TON)
$90-$95
$70-$75
Mid-$60s
Phase II expansion
Phase II expansion1
BLOOM LAKE WABUSH
• Successfully idled the pelletizer in the second quarter 2013
• Number of processing lines in the concentrator expected to be reduced
• If $100 cash costs at Wabush are not achieved by year-end, a more permanent solution will be considered
• Currently selling Wabush's iron ore concentrate product on a short-term spot basis
7
ASIA PACIFIC IRON ORE
• Tripled sales volume through expansion projects and acquisitions
• 2012 execution of a large-scale expansion project completed on time and on budget
SALES VOLUME1
(MILLIONS OF METRIC TONS)
4
12
2005 2012
1 2005 sales reflect Cliffs’ 80% ownership of Portman Limited
89 88 96 93
88 89
77
2006 2007 2008 2009 2010 2011 2012
PROVEN & PROBABLE RESERVES
(MILLIONS OF METRIC TONS)
• Maintained reserve base despite significant sales volume growth
NORTH AMERICAN COAL
NORTH AMERICAN COAL SALES VOLUME (MM SHORT TONS)
0.9
0.3
0.9
0.4 0.3 0.3
0.7
0.3
1.1
0.3
1.3
0.2
1.5
0.2
1.8
0.1
1.7
0.1
1.9
0.2
1.4
0.2
0.000
0.500
1.000
1.500
2.000
2.500
Q1 '11
Q1 '11
Q2 '11
Q2 '11
Q3 '11
Q3 '11
Q4 '11
Q4 '11
Q1 '12
Q1 '12
Q2 '12
Q2 '12
Q3 '12
Q3 '12
Q4 '12
Q4 '12
Q1 '13
Q1 '13
Q2 '13
Q2 '13
Q3 '13
Q3 '13
• Sharpened focus on metallurgical coal
• Significant sales volume growth achieved through the successful completion of several large capital projects
• Substantially lower cash costs through project execution and new management
• Recent sales volume increases driven by higher premium metallurgical coal sales
Metallurgical Thermal
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1,547 1,489
1,141
1,536 1,545
1,198 1,220
903
1,297 1,347
Q3 2013 Q2 2013 Q1 2013 Q4 2012 Q3 2012
Revenue COGS
Q3 2013 HIGHLIGHTS & CONSOLIDATED RESULTS
HISTORICAL CONSOLIDATED FINANCIAL HIGHLIGHTS1
($ IN MILLIONS)
1Source: Company filings
SALES MARGIN
76%
$349M
OPERATING INCOME
YTD SG&A EXPENSE
$224M
194%
$168M
17%
YTD EBITDA
$1.1B
• Announced Gary Halverson as President and Chief Operating Officer.
• Achieved lower cost-per-ton rates across all business segments, and reduced exploration and SG&A expenses, excluding special items.
• U.S. Iron Ore strong sales volumes expectation of 22 – 23 million tons in 2014.
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CURRENT PENDING DECISIONS
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BLOOM LAKE – PHASE II DECISION
WABUSH – OPERATION’S FUTURE
• Future volume & EBITDA
• Stabilization of phase I
• Tailings investment
• Rail take or pay contract
• Future iron ore pricing
• High quality producing asset
• Sound logistics in place
• High cost structure
• Challenging labor conditions
• Future iron ore pricing
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LIQUIDITY AND CAPITAL STRUCTURE
Source: Company filings. 1
1
TOTAL DEBT AND CREDIT FACILITY1
(OUTSTANDING, IN BILLIONS)
$3.9
$4.1
$3.4
$3.3 $3.3
Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013
$0 $0 $0 $0
$1,750
$500
$0
$900 $700 $800
2013 2014 2015 2016 2017 2018 2019 2020 2021 2040
DEBT MATURITY PROFILE
(IN MILLIONS)
$36
$195
$287 $263
$299
Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013
CASH & CASH EQUIVALENTS
(IN MILLIONS)
BBB- / Stable
Baa3 / Stable
IRON ORE PRICING VOLATILITY EXPECTED – LONGER TERM FUNDAMENTALS INTACT
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• Developing markets’ iron ore and steel demand remains strong
• Inflation in Australia, Brazil and China
• Marginal cost producers are expected to set pricing floor
Constructive long term
iron ore trends
• Resource depletion, reduced quality and decreasing yields
• Lack of suitable infrastructure and qualified labor
• New supply delayed during 2H 2012 due to volatility
• Government intervention is restricting supply expansion globally
New supply sources challenged by rising
costs, capital constraints and delays
$40
$80
$120
$160
$200
Nov-08 Jul-09 Mar-10 Oct-10 Jun-11 Jan-12 Sep-12 May-13 Dec-13
IRON ORE 62% FE FINES, CFR CHINA SPOT PRICE (US$/METRIC TON)
$134
Source: Platts
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SERVING THE RIGHT MARKETS – CHINA & U.S.
CHINESE ANNUAL CRUDE STEEL PRODUCTION AND WEEKLY IRON ORE INVENTORY
MIL
LIO
N M
ET
RIC
TO
NS
Source: Bloomberg, World Steel Association
MIL
LIO
N M
ET
RIC
TO
NS
91
58
80 86 89 87
15 9 13 13 14 12
0
20
40
60
80
100
2008 2009 2010 2011 2012 2013E
U.S. Canada
Source: World Steel Association
STEEL PRODUCTION
• China's crude steel production continues to be healthy, with year-to-date 2013 annualized run rate averaging over 750 million tons
• Iron ore inventories at the Chinese ports are at multi-year lows
• In the U.S., strong positives have the potential to drive growth for the remainder of 2013
• Consumer spending has strengthened
• Labor market appears to have started an upward trend
• Housing is recovering
A BALANCED END-MARKET MIX ENABLES CLIFFS TO GENERATE HEALTHY CASH FLOWS FROM ITS U.S. BUSINESS AND BENEFIT FROM CHINA'S GROWTH
40
60
80
100
120
400
500
600
700
800
Jan-08 Sep-09 Mar-11 Aug-12 Dec-13
Weekly port iron ore inventory Annual crude steel production
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SUMMARY
• Focused on improving our cost profile through reductions across the Company
• Managing capital spending with discipline
• Enhance balance sheet strength to ensure that our current debt profile is maintained or improved
• Secure the longer-term sustainability of our core operations through long-term sales contracts and prudent capital allocation decisions
• Looking forward to the mining experience, expertise, and leadership Gary Halverson will bring as the new President and COO.
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2012 PERFORMANCE
U.S. Iron Ore
Asia Pacific Iron Ore
Eastern Canadian Iron Ore
North American Coal
17%
22%
15%
46%
2012 Revenue
• 2012 volume increase driven by
completion of Koolyanobbing expansion
project.
• 2012 margin decline driven by reductions
in market pricing combined with increased
stripping costs and logistics costs.
• Volume increase in 2012 attributable to
2011 operational issue at Pinnacle and
tornado damage at Oak Grove along with
strong production performance.
• 2012 margin driven by fixed-cost leverage
improvement and cost reductions at low-
volatile mines.
• 2012 volume decline driven primarily by
specific customer financial circumstances.
• 2011 margin favorably impacted by
arbitration settlements.
• Due to reductions in market pricing, limited
tonnage was delivered in export market in
2012.
• 2011 volume increase attributed to
Consolidated Thompson acquisition
(3.9mm tons).
• 2012 margin decline driven by reductions
in market pricing combined with higher
spending on contractors, repairs and
maintenance.
1 Million metric tons; 2 Million long tons; 3 Million short tons.
U.S. Iron Ore
North American Coal
Eastern Canadian Iron Ore
Asia Pacific Iron Ore
($mm) 2010 2011 2012
Revenue $478 $1,178 $1,009
Sales margin 133 291 (121)
Shipments1
3.3 7.4 8.9
($mm) 2010 2011 2012
Revenue $1,124 $1,364 $1,259
Sales margin 566 700 311
Shipments1
9.3 8.6 11.7
($mm) 2010 2011 2012
Revenue $438 $512 $881
Sales margin (29) (58) (2)
Shipments3
3.3 4.2 6.5
($mm) 2010 2011 2012
Revenue $2,444 $3,510 $2,723
Sales margin 788 1,679 976
Shipments2
23.0 24.2 21.6
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Q3 2013 OUTLOOK
U.S. Iron Ore
• Sales volume of 21 million long tons
• Cash cost per ton of $65 - $70
• Depreciation, depletion & amortization of $6 per ton
Eastern Canadian Iron Ore
• Sales volume of 8.5 - 9 million metric tons
• Cash cost per ton of $100 - $105
• Depreciation, depletion & amortization of $19 per ton
Asia Pacific Iron Ore
• Sales volume of 11 million metric tons
• Cash cost per ton of $65 - $70
• Depreciation, depletion & amortization of $15 per ton
North American Coal
• Sales volume of 7 million short tons
• Revenue per ton of $100 - $105
• Cash cost per ton of $85 - $90
• Depreciation, depletion & amortization of $17 per ton
2013 Segment Expectations
SG&A and other expenses
• Full-year SG&A of $215 million
• Other outflows of $65 million
− Exploration & drilling programs: $15 million
− Chromite project: $50 million
• Depreciation, depletion & amortization of $575 million
Cash flows and capex
• Full-year capex of $950 million
2013 Revenue Price Sensitivity
• Based on YTD iron ore pricing of $135/ton, the
following is the sensitivity to a $10 change in the
benchmark price across our iron ore business
segments1:
− USIO: $110-$115 (+/- $1) per ton2
− ECIO: $110-$115 (+/- $2) per ton3
− APIO: $110-$115 (+/- $2) per ton4
Other 2013 Guidance
1 The year-to-date iron ore price is the average 62% Fe seaborne iron ore fines price (CFR China) as of September 30, 2013. Cliffs expects to update the
year-to-date average iron ore price and the related sensitivities for its respective iron ore business segments in future reporting periods. 2 U.S. Iron Ore tons are reported in long tons. 3 Eastern Canadian lron Ore tons are reported in metric tons, F.O.B. Eastern Canada. 4 Asia Pacific Iron Ore
tons are reported in metric tons, F.O.B. the port.
2014 Sales Volume Guidance
• U.S. Iron Ore: 22 – 23 million long tons
• Eastern Canadian Iron Ore: 5.5 – 6 million metric tons
for Bloom Lake
• Asia Pacific Iron Ore: 10 – 11 million metric tons
• North American Coal: 6 – 7 million short tons
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Cliffs Natural Resources Inc.
January 2014
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