CLEVELAND – Cliffs Natural Resources Inc. has delayed portions of its Bloom Lake mine expansion in Quebec while also idling some production at two of its U.S. iron ore operations.
The decision to stop work on the concentrator and load out facility at Bloom Lake puts 450 contractors off the job, Cliffs said Monday.
However, pre-stripping at the mine continues and Cliff’s 305 workers remained on the job as the company also plans to continue work on Bloom Lake’s water and tailings management system and ore storage facility.
The postponement will reduce Cliff’s Eastern Canadian iron ore sales volumes to between nine million and 10 million tons for 2013 compared with an earlier expectations for 13 million to 14 million tons.
Patricia Persico, Cliff’s director of global communications, said the company will monitor market conditions closely before making any decisions to restart the work.
“We anticipate seeing very similar conditions through probably the first part of the year and until it stabilizes, like other major iron ore producers, people have kind of been putting some things on hold,” Persico said.
“We want to preserve cash and continue to be a very strong, stable company so that when things do pick up we can move quickly.”
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In the U.S., Cliffs will idle two of the four production lines at Northshore Mining in Minnesota beginning in January and production at its Empire Mine in Michigan beginning in the second quarter of 2013.
These curtailments will affect 125 employees at Northshore and 500 employees at Empire.
Expected sales volumes for U.S. iron ore in 2012 were unchanged at 19 million to 20 million tons.
The company’s preliminary 2013 capital budget is expected to be in a range of roughly $700 million to $800 million.
BMO Capital Markets analyst Tony Robson called the changed “mixed” for the company.
“BMO Research notes that whilst its iron ore production forecast has been reduced, the announcement shows Cliffs is working hard to reduce costs at its operations and (this) could be seen as a positive move in order to retain dividend payments,” Robson wrote in a note to clients.