Cliffs mulls closing Bloom Lake iron ore mine for lack of buyers
Cliffs Natural Resources (NYSE:CLF) said Wednesday it is “pursuing exit options” for its Eastern Canadian iron ore operations, which is likely to result in the closure of its Quebec-based Bloom Lake mine.
The announcement comes only weeks after the U.S. iron ore producer, cut to junk status by Standard & Poor’s last month, revealed that three "big steelmakers" were in talks to invest in the project.
The company’s chief executive, Lourenco Goncalves, said in a statement that the foreseen “potential investment” in Bloom Lake was not “achievable within a time frame acceptable to Cliffs.”
Goncalves, who took charge in August after the Cleveland-based miner lost a proxy battle with hedge fund Casablanca Capital, wants the company to narrow its focus to five iron ore mines in Michigan and Minnesota.
The mine closure, estimated to cost $650 million to $700 million over the next five years, would be a major setback to Quebec’s economy and its government’s Plan Nord project, aimed to fast-track the extraction of natural resources in the northern part of the province.
Cliffs obtained Bloom Lake after acquiring Consolidated Thompson Iron Mines Ltd. in 2011. As of the end of 2013, the mine employed 579 people, 40 of which were local.
In October the company notified the provincial government of Newfoundland and Labrador it was closing Wabush Mines, which had been idle since February.
Cliffs dropped 14% to $8.78 at 9:39 a.m. in New York. The stock is down 67% this year.
Image courtesy of Cliffs Natural Resources.