The company blamed the lower revenues on decreased marketing pricing for metallurgical coal and iron ore, as well as a 24% decrease in sales volume from its US iron ore operations.

Meanwhile the Cliffs board has also been trying to fend off a bid from 5.2% shareholder Casablanca Capital to have six directors of its choosing elected to the Cliffs board.

The matter is pressing because the Cliffs annual general meeting is to be held on July 29.

The activist hedge fund sent a letter to Cliffs shareholders on July 10 saying that the shareholders had suffered a loss of 85% of the value of their shares since July 2011.

“While shareholders have suffered a massive loss, the current directors and management team, who in aggregate own less than 0.3% of Cliffs shares, appear to us to be focused on clinging to their positions rather than driving real change,” its letter says.

Casablanca is proposing Lourenco Goncalves to run Cliffs. Goncalves is a former chairman, president and CEO of Metals USA.

The Cliffs board sent a letter to shareholders on July 21 asking for shareholders to vote with its own board ticket.

In its letter, the Cliffs board says: “Surrendering a majority of the board will enable Casablanca to enact what we believe is a value-destructive plan, including a ‘fire sale’ of Cliffs’ assets at the bottom of the commodity cycle.”

The company’s reported loss could make things difficult for the incumbent management, although the tough commodity markets have made things tough for miners everywhere.

Cliffs’ costs of goods sold dropped 17% to $1 billion, primarily driven by reduced volumes, lower idle costs and favourable foreign exchange rates compared to the second quarter of 2013.

Lower revenues contributed to a 66% drop in consolidated sales margin to $92 million from $268 million in last year’s comparable quarter.

The consolidated sales margin also includes $18 million in lower cost or market adjustments in the North American Coal and Eastern Canadian Iron Ore business segments.

Cliffs president and CEO Gary Halverson said the company continued to take prudent and decisive actions in the face of continued commodity pricing pressures.

“During the quarter, our team cut costs across the board and reduced our capital expenditures, while enhancing our liquidity by successfully amending our revolving credit facility,” he said.

“We remain focused on controlling what we can control in a volatile environment and are confident we have the right strategy to operate and extract value from our assets.”

Year on year, the company cut capital spending by 77%, or $210 million, and improved cash costs per tonne rates across all its business segments.

The company’s second quarter selling, general and administration expenses were $56 million. That included $5 million in severance-related costs due to involuntary terminations during the quarter and $4 million related to the board room battle.

Excluding those two costs, second quarter 2014 selling, general and administration and exploration expenses dropped $15 million or 24% when compared to the previous corresponding period.

At the end of the quarter Cliffs had $360 million of cash and cash equivalents. That is up from the $263 million it had a year ago.

Long-term debt was $3.3 billion with $378 million drawn under its existing credit facilities at quarter end.

The company entered into an agreement during the quarter to amend its existing $1.75 billion unsecured revolving credit facility with its syndicate of banking partners.

The amended agreement replaces the existing leverage-covenant ratio with a debt to capitalisation ratio for the life of the facility. This will give Cliffs a more consistent source of liquidity.

The amended agreement also increases the earnings before interest, tax, depreciation and amortisation-to-interest covenant to a minimum requirement of 3.5 times versus the previous requirement ratio of 2.5 times.

With this agreement in place Cliffs’ liquidity at quarter’s end was $1.8 billion, up from the $1.5 billion at the end of the previous corresponding period.

For the second quarter Cliffs used $41 million in cash from operations versus generating $414 million in the 2013 comparable quarter.

This was primarily driven by unfavourable changes to working capital related to increased inventory on hand at Cliffs’ North American business segments, mainly due to the delay of the Great Lakes shipping season and reduced net income mainly attributable to lower pricing and shipments.

For the second quarter North American Coal sales volume was 2 million short tons, a 2% decrease from the 2.1Mt sold in the prior year’s comparable quarter.

The decrease was driven by lower sales domestically but was partly offset by increased low-volatile metallurgical coal sales and increased thermal coal sales.

North American Coal second quarter revenues per ton were down 31% to 72.84. A year earlier, Cliffs was selling a ton of coal for $104.89.

In iron ore the cash cost per ton in the company’s Asia Pacific Iron Ore business fell 16% to $53.38. This was mainly due to improvements in operations including pit redesigns, an overhaul of the mobile maintenance strategy, mining efficiencies and favourable foreign exchange rate variances.

Cash cost per ton in the US iron ore business was down 1% to $66.73. That was mainly driven by the absence of idle costs at the Empire and Northshore mines. Those operations were partially idled in the second quarter of 2013.

The loss of the idle costs was partly offset by increased energy rates and higher maintenance costs.

Cash costs per ton in the eastern Canadian iron ore operation were down 24% to $87.48.

This was mainly due to the absence of Wabush mine’s higher cost production and improved cash costs at the Bloom Lake mine.

While the company has taken a beating during the rougher commodity times, the way forward looks brighter.

Cliffs expects demand for its steelmaking raw materials in North America will be supported by continued improvements in the labour market, construction activity and motor vehicle production.

Demand for steelmaking raw materials in China is also expected to remain high as Chinese officials remain committed to achieving the targeted growth rate of about 7.5%.

However, increased seaborne supply could put downward pressure on pricing for steelmaking raw materials.