MEE Massey Energy Co.

Cliffs Natural Resources Inc. (CLF) resumed the under ground mining operations at its Oak Grove mine in Alabama, which was hit by severe weather, including a tornado storm on April 27th. However, the company was not be able to ship coal from the site resulting from the damage caused to the above-ground facilities.

The company stated it will still assess the damage caused to surface operations and also the impact on its full-year outlook.

The Oak Grove mine extracts coal from the Blue Creek seam containing metallurgical or coking coal, used in steelmaking. It produced between 0.9 and 1.4 million tons of coal per year over the last five years.

Last month, Cliffs posted record revenues and earnings for the first quarter of 2011. Net earnings of $423 million or $3.11 per share in the first quarter were 449%, above last year’s $77 million or 57 cents. Earnings surpassed the Zacks Consensus Estimate of $2.25 per share.

Quarterly revenues came in at $1.2 billion, up 63% year over year. The increase was driven by certain factors, such as higher pricing in each of Cliffs’ business segments and the favorable effect of Cliffs’ previously disclosed negotiated settlement with ArcelorMittal (MT - Analyst Report).

The company anticipates global steel production to continue to grow in 2011, primarily driven by emerging economies such as China, India and Brazil.

Cliffs is a major global iron ore producer and a significant producer of high- and low-volatile metallurgical coal. Cliffs' strategy is to continually achieve greater scale and diversification in the mining industry by serving the world's largest and fastest growing steel markets.

Cliffs faces stiff competition from CONSOL Energy Inc. (CNX), Massey Energy Co. (MEE) and Peabody Energy Corp. (BTU).

We maintain our Neutral recommendation on Cliffs with a short-term Zacks #3 Rank (Hold) on the stock.

 
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