CLEVELAND, Nov. 19, 2012 Cliffs Natural Resources Inc. today announced a decision to delay portions of its Bloom Lake Mine Phase II expansion in Quebec and idle a portion of its production at two of its U.S. iron ore operations, Northshore Mining in Minnesota and Empire Mine in Michigan. The Company is adjusting its 2013 operating plans for its North American iron ore businesses to align with expected sales volumes. These production decreases are driven by increased iron ore pricing volatility and lower North American steel making utilization rates.
Joseph A. Carrabba, Cliffs’ chairman, president and chief executive officer, said, “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 today’s announcement, we are still committed to our investments in Canada and believe Bloom Lake will deliver significant long-term value over time.”
At Bloom Lake Mine in Eastern Canada, Cliffs is 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. Pre-stripping activities to develop the working faces of Bloom Lake’s ore body, supporting both Phase I and Phase II mine development will continue. Also, Cliffs will continue its environmental projects related to completing Bloom Lake’s water and tailings management system and ore storage facility. Depending on market conditions, Cliffs expects to complete Phase II construction in early 2014.
The delay of Bloom Lake’s Phase II construction decreases Cliffs’ Eastern Canadian Iron Ore 2013 sales volumes to 9 – 10 million tons from the previous expectation of 13 – 14 million tons. In 2013, the Company expects to achieve an annualized run rate of approximately 7 million tons for Bloom Lake’s Phase I facility.
Effective Jan. 5, 2013, Cliffs will idle two of the four production lines at Northshore Mining in Minnesota. Cliffs will also temporarily idle production at its Empire Mine in Michigan beginning in the second quarter of 2013 in the form of an extended summer shutdown. These production curtailments will impact approximately 125 employees at Northshore and 500 employees at Empire mine, respectively. Full-year 2013 expected sales volumes for U.S. Iron Ore remain unchanged at 19 – 20 million tons as previously disclosed by the Company.
Ms. Laurie Brlas, President Global Operations added, “Unfortunately the U.S. Iron Ore production curtailments will affect many of our employees. However, at this time, 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.”
Cliffs continues to work through its 2013 consolidated business plan and expects to disclose its full-year company-wide assumptions and expectations as part of its fourth-quarter 2012 results. The Company’s preliminary 2013 capital expenditures are estimated to be in a range of approximately $700 – $800 million.