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ALLETE targeting lower end of 2016 earnings guidance

ALLETE targeting the lower end of its $3.10 to $3.40 EPS guidance based on taconiteproduction in its service territory which is now estimated at between 30 milliontons and 32 million tons or down from 35 million tons previously.

The company supplies power to taconite producers via subsidiaryMinnesota Power Inc. andcategorizes them as industrial customers. Revenue from electric sales to taconite/ironconcentrate customers accounted for 22% of the company's consolidated results in2015.

The steel industry, which uses taconite for production, is facingchallenges in light of dumping in the U.S. With demand from the steel industry impacted,taconite producers would be well within their rights to limit production and workon cost-cutting measures.

However, ALLETE executives said during the company's first-quarterearnings that there were "encouraging signs" related to steel dumping."According to the US Census Bureau, February 2016 year-to-date imports forconsumption of steel products are down approximately 40% compared to February of2015. Consequently, we are pleased that the import share of the domestic markethas fallen from a peak of 34% in March of last year to roughly 24% of this year,"ALLETE President and CEO Al Hodnik said.

Hodnik added that with auto production in the U.S. remainingvery strong, there was no lack of domestic steel demand. Also, Cliffs Natural Resourceshad announced that it plans to restart its previously idled Northshore and UnitedTaconite operations in Minnesota, which were positive indicators.

Despite these factors, the company believes that its full-yearearnings will likely be in the lower half of the earnings guidance. "[T]hisexpectation reflects our current view of industrial sales at Minnesota Power,"Hodnik said.

The company is also preparing for its next general rate caseat Minnesota Power which will be filed later this year. "We expect to havemore specific information when we release second-quarter financial results. We remaincommitted to maintaining reasonable and competitive rates for our customers whileproviding a fair rate of return to our investors," Hodnik elaborated.