Cliffs Natural Resources Inc. to Pursue Exit Options for its Eastern Canadian Operations
CLEVELAND, Nov. 19, 2014 /CNW/ — Cliffs Natural Resources Inc. (NYSE: CLF) announced today that it is pursuing exit options for its Eastern Canadian iron ore operations which may result in the closure of the Bloom Lake mine.
Lourenco Goncalves, Cliffs’ Chairman, President and Chief Executive Officer said, “Despite the continued interest of the prospective equity partners in Bloom Lake and in its high quality ore, the potential investment is not achievable within a time frame acceptable to Cliffs. With expansion no longer viable, we have shifted our focus to executing an exit option for Eastern Canadian operations that minimizes the cash outflows and associated liabilities.”
The Company previously disclosed that to make Bloom Lake viable, the development of the mine’s Phase 2 was necessary. The investment was estimated to cost $1.2 billion. In the event of a closure, the estimated closure costs are expected to be in the range of $650 million to $700 million in the next five years.
Cliffs stated also that the Company’s subsidiary, Cliffs Quebec Iron Mining Limited, along with Bloom Lake General Partner Limited and The Bloom Lake Iron Ore Limited Partnership, recently lost an arbitration claim they filed against a former Bloom Lake customer relating to the August 2011 termination of an iron ore sales agreement. In November 2014, the arbitrators decided in favor of the former customer and awarded it damages in an amount of approximately$71 million as well as attorneys’ fees and accrued interest from the date of termination of the offtake agreement inAugust 2011. Cliffs Quebec Iron Mining Limited is currently reviewing the award to determine appropriate next steps.