Cliffs Natural Resources Inc. plans additional investments to extend the Empire Mine and other holdings.
Cliffs projected full-year 2012 capital expenditures expectations include approximately $1 billion. Of that, about $300 million is sustaining capital and $700 million is growth and productivity-improvement capital. The 2012 capital budget is an expected 12% increase over the 2011 capital expenditures of approximately $880 million . The company says this amount was less than its previous estimate of $900 million and an original 2011 budget of $1 billion .
According to ta press release from the company, in addition to the anticipated $300 million of 2012 sustaining capital, the company expects significant growth and productivity projects:
U.S. Iron Ore
In its U.S. Iron Ore business segment, Cliffs anticipates spending $60 million in 2012 related to its previously disclosed project to extend the life of Empire Mine to 2015. This project is expected to allow Empire to continue producing at a rate of approximately 3 million tons of iron ore annually through its remaining mine life.
Eastern Canadian Iron Ore
In its Eastern Canadian Iron Ore business segment, Cliffs anticipates spending the following amounts related to growth of its operations:
$470 million related to Bloom Lake’s Phase II expansion to 16 million tons
$45 million related to port and rail upgrades in Eastern Canada
Asia Pacific Iron Ore
In its Asia Pacific Iron Ore business segment, Cliffs anticipates capital spending of approximately $40 million related to the ongoing capacity expansion of the Koolyanobbing Complex in Western Australia to 11 million tons.
North American Coal
In its North American Coal business segment, Cliffs anticipates capital spending of approximately $50 million related to growing high-volatile metallurgical coal production capacity from its continuous mining operations in West Virginia .
Preliminary Capital Estimates for Cliffs Chromite Project in Northern Ontario
As previously disclosed, Cliffs controls three large chromite deposits in Northern Ontario, Canada . With a timeline to begin production in 2015 from its wholly owned Black Thor deposit, Cliffs is currently in the prefeasibility study phase of the project. As part of prefeasibility, the Company continues to evaluate many factors, scenarios and strategic alternatives that may ultimately impact future investment and timing of the project.
At the time of Cliffs’ initial investment in chromite assets in 2009, the Company predicated preliminary comments for capital requirements on a baseline expectation of a project annually producing approximately 600,000 tons of ferrochrome. Subsequently, and after significant additional prefeasibility work, Cliffs now anticipates an expanded project annually producing 1 million tons of export chromite ore concentrate in addition to the original 600,000 tons of ferrochrome.
Preliminary capital estimates for the project, based on prefeasibility work completed to date, include the following major engineering components:
Mine development — Approximately $150 million
Near-mine Concentrating Plant — Approximately $800 million
Ferrochrome Processing Facility — Approximately $1.8 billion
Cliffs also estimates that an integrated transportation system, including an all-weather road servicing the project, would require further investment totaling approximately $600 million , which was not included in Cliffs’ initial investment estimate. However, because this transportation system is provincial infrastructure required for the general use of remote northern communities and other Ring of Fire mining projects, Cliffs anticipates its commitment to invest in the all-weather road would be partial, with the balance to be contributed by other industry participants and government entities.