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I know these markets are brutal, and this company is hardly alone in trading near the bottom of a cavernous one-year trading range, but these cliffs of coal and iron ore are a central artery to the heart of the world's steel industry.

Perched on top of the world's industrial supply chain, miners like Cliffs Natural Resources (NYSE: CLF  ) will be the first to feel the pulse of global industry once a degree of normalcy returns to industry and commerce. Recovery is a different topic entirely, but I believe that a relative return to normalcy looms as frozen industries see stockpiles dwindling and even minimal stabilization of credit availability returns.

Under trying conditions, Cliffs logged $53.9 million in net income for the quarter despite a $209.1 million set of charges and writedowns. The company sacrificed some $90 million to back out of the Alpha Natural Resources (NYSE: ANR  ) merger, but in scrapping the deal retained crucial liquidity.

Gazing past the investment losses and currency hedges gone awry, Cliffs' recorded a 30% increase in cash from operations in the fourth quarter, and a 195% boost for all of 2008, to $853 million. Despite a very tough fourth quarter for the industry, Cliffs managed to increase its overall sales margin by 75% on strong iron ore prices, easily offsetting slightly negative margins from the North American coal unit. The company is scaling back production substantially, which will likely keep costs elevated, but management has demonstrated its adaptive prowess in the past.

With very positive cash flow, $179 million in cash and equivalents, and $750 million in available credit, I consider Cliffs Natural Resources among the best-positioned raw material miners to ride out this acute disruption to the markets of steelmakers like United States Steel (NYSE: X  ) and Nucor (NYSE: NUE  ) . I continue to keep all eyes upon Asia, including major steelmakers like POSCO (NYSE: PKX  ) , for the earliest signs of demand from a well-stimulated Chinese industrial machine.

In my opinion, Peabody Energy (NYSE: BTU  ) remains the king of coal, and Vale (NYSE: RIO  ) is the clear choice for iron ore, but Cliffs offers Fools substantial exposure to both resources under one roof (or sky, to be precise), which partially explains why I own shares of all three companies. With the Alpha deal scrapped, and shares looking oversold to this Fool, I believe the return of some normalcy could bring interest from potential suitors like Vale just as readily as it could establish a long-awaited rally in shares.

Further Foolishness:

The "Coal" tag within the Motley Fool CAPS community lists 21 coal companies. Find out what other investors are saying about the stocks you're watching, or share your Foolish thoughts with us. CAPS is free and fun!

Fool contributor Christopher Barker is the Nat King of Coal and the wild boar of iron ore. He can be found blogging actively and acting Foolishly within the CAPS community under the username TMFSinchiruna. He owns shares of Cliffs Natural Resources, Peabody Energy, and Vale. POSCO is a Motley Fool Income Investor recommendation. The Motley Fool has a disclosure policy.

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