Beginning July 1, the base compensation of Cliffs chief executive officer Joseph Carrabba and fee compensation for the entire board of directors will drop by 10%.

All the company’s executives at a level of senior vice-president or higher will also see a reduced paycheck, with their base salaries falling by 7%. Finally, all of Cliffs’ other salaried staff members will see a 3-5% loss of compensation as well as a suspension of all 401(k) company contributions.

Cliffs said the payroll changes would help it save an estimated $US15 million this year.

"While we currently have an enviable balance sheet and adequate financial flexibility, we believe the actions announced today will fortify and enhance these positions,” Carrabba said.

“There are high degrees of uncertainty in both our industry – particularly around the outcome of annual iron ore benchmark settlements – and the macroeconomic environment in general.

“As such, we have asked all of our stakeholders to make sacrifices that will better position Cliffs to weather the direst of economic scenarios, while at the same time positioning the company to take advantage of possible opportunities when the environment improves.”

The company said that some of these could include distressed asset or potential bolt-on acquisitions.

“In addition, the change in capital structure could provide Cliffs better access to capital markets that have not been available to the company in the past," it added.

Cliffs’ initiative also includes plans to sell 12 million shares of common stock in a public offering, pending market conditions, to fund such items as strategic transactions.

Additionally, the board of directors has elected to enact a 55% reduction in quarterly common share dividends to 4-8.75c – a move that could provide the company with $22 million in annual cash savings.