Cliffs delays Bloom Lake expansion, cuts 2013 iron ore output
Cliffs Natural Resources (CLF-N) is applying the brakes on its iron ore operations in North America as fundamentals for the metal weakens, citing unstable prices and a drop in North American steelmaking utilization rates.
The international miner announced on Nov. 19 a year delay for its second phase expansion at the Bloom Lake mine in Quebec while curtailing production at two of its iron ore operations in the U.S. due to lower expected sales volumes in 2013.
At Bloom Lake, Cliffs has suspended work at the concentrator and load out facility, dismissing 450 contractors as reported by the Canadian Press. But it will continue pre-stripping and environmental work for the water and tailings management system and storage facility.
Assuming market conditions pick up, Cliffs aims to finish the second phase construction at the mine in early 2014, instead of 2013.
As a result of the delay, the Cleveland-based firm has lowered its Eastern Canadian iron ore sales volumes for 2013 to nine to 10 million tons, down from 13-14 million tons previously.
In the U.S., Cliffs will close two of its four production lines at the Northshore Mining in Minnesota on Jan. 5, 2013, putting 125 jobs on the line. It will then curb output at its Empire mine in Michigan in the second quarter of the year, impacting 500 workers.
Despite the upcoming changes, Cliffs forecasts its full-year 2013 U.S. iron ore sales volumes to remain at 19-20 million tons.
It estimates preliminary capital expenditures for 2013 of US$700-$800 million and is set to report its full-year company-wide expectations when it releases its fourth-quarter 2012 results.
A day after the delay was announced Cliffs lost 12% to close Nov. 20 at US$30.40. It has since recovered slightly to end Nov. 23 at US$31.23 per share.