A new CEO took the reins at Cliffs Natural Resources this week after a New York hedge fund won control of the company in a shareholder vote.
Lourenco Goncalves, a 30-year mining industry veteran hand-picked by hedge fund Casablanca Capital, will be chief executive and chairman. Cliffs employs about 1,850 people with a payroll of $256 million at Minnesota mines in Silver Bay, Babbitt, Eveleth, Forbes and Hibbing.
The people now in charge have signaled the Minnesota operations will be safe, though Goncalves declined to be interviewed Friday.
Casablanca, which owns a 5.2 percent stake in Cliffs, began a battle to take over the board in March after failing to persuade its members to replace management. The hedge fund has argued for months that Cliffs should cut loose its Asian-Pacific and eastern Canadian iron ore operations, as well as its North American coal business.
But the core North American business is valuable, Casablanca argued, and Cliffs should focus on it.
“Cliffs has a unique position of strength in iron ore in the Great Lakes region, many valuable assets in other sectors elsewhere in the U.S. and around the world, and talented employees at all levels of the company,” Goncalves said in a statement. “I look forward to working closely with all of my fellow directors to refocus Cliffs on a new strategic path that builds on those strengths.”
In late July, Casablanca persuaded shareholders to vote six of its candidates onto the 11-member board of Cleveland-based Cliffs. On Thursday, the new board appointed Goncalves to the top job, replacing Gary Halverson as CEO and James Kirsch as chairman of the board.
The hedge fund had criticized the way Cliffs rewarded management despite a steep dive in the company’s stock price over the past three years.
Weighed down by money-losing operations in Canada and weakness in the global market for steel, the company’s stock had dropped from nearly $100 per share in 2011 to $16.60 per share when the market opened July 29, the day shareholders voted to shake up the board.
The stock rose 42 cents Friday to close at $17.51 per share. □