Cliffs Natural Resources, under new management out to cut costs, will close the office in Duluth that helps oversee its northern Minnesota iron mines.
The global firm — which employs about 1,850 people with a payroll of $256 million at mines in Silver Bay, Babbitt, Eveleth, Forbes and Hibbing — said it has no plans to cut workers at the mines. But after a hedge fund takeover, board shake-up and the appointment in August of new CEO Lourenco Goncalves, cost-cutting has become a priority for the Cleveland-based company.
"Cliffs has taken measures to reduce our cost structure, reduce our operational footprint and consolidate where it makes sense," spokeswoman Patricia Persico said in a statement.
The majority of the Duluth office's 31 employees will be moved to specific mines in Minnesota or offered jobs in Ohio, she said. The jobs are in supply chain, environment, safety, IT and public affairs. Three positions will be eliminated.
The changes at Cliffs are the result of a takeover by Casablanca Capital, a hedge fund that owns a 5.2 percent stake in the firm. Casablanca had argued for months that the firm should sell some of its overseas mines and focus on its U.S. iron ore business.
When it couldn't persuade the company's management to make those moves, the hedge fund persuaded shareholders in late July to give Casablanca a majority of the seats on the board, ceding control of the company to the hedge fund and its hand-picked CEO, Goncalves.
News of the Duluth office closure comes after the resignation of longtime board member Richard Riederer, who criticized Goncalves in his resignation letter for an "unwillingness to discuss options" and "bullying" board members who disagreed with him.
Riederer, who served on the board for 12 years, was the second board member to quit since the beginning of August. He said he thought Cliffs was on "the right path" before Goncalves' election to the board.
"You are now in a position to carry out what I believe is a short-term oriented plan to liquidate Cliffs assets in this very unfavorable pricing environment," Riederer wrote. "Since I do not believe that such an approach is in the best interests of shareholders nor do I believe that I will have any ability to influence that direction, I have made the difficult decision to resign."
Weighed down by money-losing operations in Canada and weakness in the global market for steel, the company's stock dropped from nearly $100 per share in 2011 to $16.60 per share on July 29, the day shareholders voted to give control to Casablanca.
Since the takeover, the stock price has fallen further, to $13.81 per share at market close on Wednesday.