Sometimes "the old way" of doing something is a good way. In decades past there was more vertical integration in steelmaking, with the producers having their own captive iron ore and metallurgical coal mines feeding the blast furnaces. Besides the obvious cost benefits there was an inherent, but less quantifiable, advantage on the quality of the feeds, i.e. iron ore and coke/coal. And of course, with larger scale operations the ore and coal producing arms of steelmakers were more effective in longrange planning and development.
Certainly, in a cost sense, Cliffs Natural Resources will not be an in-house supplier to any steelmaker. But, through it's now-broader scope, it can be one of the most responsive, efficient, and quality-sensitive suppliers.
As you'll see below, Resource Investors' internal analysis of the numbers indicates that the merger is a winner; the new firm should be a stronger supplier to the global steel industry.
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