Tuesday, November 20, 2012
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Cliffs Natural Resources to idle two U.S. iron ore sites, delay expansion in Canada
By SCOTT SUTTELL
10:00 am, November 20, 2012
Cliffs Natural Resources Inc. (NYSE: CLF) said it will delay expansion at a mine in eastern Canada and will idle some production at iron ore operations in Michigan and Minnesota, moves that are due to what the company called “increased iron ore pricing volatility and lower North American steelmaking utilization rates.”
Cleveland-based Cliffs said idling production, effective Jan. 5, 2013, at Northshore Mining in Minnesota and Empire Mine in Michigan will affect about 625 workers — 125 at Northshore and 500 at Empire. Cliffs employs a total of about 7,400 people worldwide.
"Unfortunately the U.S. Iron Ore production curtailments will affect many of our employees,” said Laurie Brlas, Cliffs' president of global operations, in a statement. “However, we believe it is prudent and necessary to match our production volumes with market demand. We will remain operationally flexible to ramp up production volumes throughout the year if the demand increases."
She said the company's 2013 expected sales volumes for U.S. iron ore remain unchanged at 19 million to 20 million tons.
At Bloom Lake Mine in Quebec, Cliffs said it's “suspending certain components of the Phase II expansion, including the completion of the concentrator and load out facility. As a result, construction related to these activities will cease and third-party contractors will be demobilized effective immediately.”
The delay will decrease Cliffs' eastern Canadian iron ore sales volumes in 2013 to 9 million to 10 million tons from the previous expectation of 13 million to 14 million tons, the company said.
Depending on market conditions, Cliffs said it now expects to complete the Bloom Lake Phase II construction in early 2014.
Joseph A. Carrabba, Cliffs' chairman, president and CEO, said in a statement, “Disciplined capital allocation is core to our operating strategy, and reducing higher-cost production will enhance our financial flexibility in both the short and longer term. Despite (Monday's) announcement, we are still committed to our investments in Canada and believe Bloom Lake will deliver significant long-term value over time."
Cliffs' announcement prompted Goldman Sachs to downgrade the mining and natural resources company to a “sell” from “neutral.”
AI
