UPDATE 2-Miner Cliffs names Goncalves CEO, cancels coal mine plan

Thu Aug 7, 2014 6:36pm EDT
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(Adds reversal of decision to close Pinnacle mine, analyst comment, closing share price)

Aug 7 (Reuters) - Cliffs Natural Resources Inc, an iron ore and coal producer, said on Thursday that Lourenco Goncalves, a former steel company executive, was named to run the company after activist investor Casablanca Capital triumphed in a proxy battle.

The Cliffs board of directors named Goncalves as chairman, president and chief executive officer, effective immediately.

In a separate filing later on Thursday, Cliffs said it has reversed a decision by its previous management team to idle the Pinnacle coal mine in West Virginia unless market conditions improve.

Goncalves was the preferred CEO candidate of Casablanca, the hedge fund investor that last week succeeded in getting a majority of its nominees appointed to the board.

Goncalves, a former CEO of Metals USA Holdings Corp, a manufacturer of steel and other metals, said in a statement he intended to refocus Cliffs "on a new strategic path" that builds on its strengths.

Analysts said Goncalves could pursue the sale of three of the company's four operating segments: its Asia-Pacific iron ore business, its eastern Canadian iron ore operations and North American coal unit.

The new management's decision to keep the Pinnacle mine operating appears to be so they can try to sell it, a move that could be difficult under the current weak conditions in the metallurgical coal market, RBC Capital Markets analyst Fraser Phillips said in a note to clients.

Keeping the mine running would have a negative impact on earnings unless costs are reduced, Phillips said.   Continued...