Cilffs to idle pellet plant in Canada

Cliffs Natural Resources Inc. announced today that it expects to idle its Wabush Pointe Noire pellet plant within the city of Sept-Iles in Quebec by the end of the second quarter of 2013. The Company indicated that its decision to idle its iron ore pellet operation is due to high production costs and lower pellet premium pricing which is expected to persist in certain markets during the year.

“Due to the dynamics in the marketplace, we are taking measures to adjust our iron ore pellet production at our Wabush operation while continuing to meet our customer commitments,” said Joseph A. Carrabba, Cliffs’ chairman, president and chief executive officer. “Unfortunately this decision will impact approximately 165 employees. We understand this is a hardship for our employees and their families. During this transition, we will be working with them including exploring other opportunities at Cliffs.”

The Company’s current product mix in its Eastern Canadian Iron Ore business segment is comprised of iron ore pellets and concentrate. Cliffs expects to idle production at its Pointe Noire iron ore pellet plant and transition to producing an iron ore concentrate only product from its Wabush Scully mine in the Province of Newfoundland and Labrador by the end of the second quarter in 2013.

“We are taking a long-term view of our investments in Canada. These measures address current market conditions and we look forward to advancing our work at Bloom Lake which is key to Cliffs’ future,” added Mr. Carrabba.

For 2013, Cliffs is maintaining its full-year sales and production volume expectations of 9 – 10 million tons out of its Eastern Canada business segment. This is comprised of approximately 3 million tons of both iron ore pellets and concentrate products from its Wabush operation with Bloom Lake Mine making up the remainder of the expected sales volume. Full-year 2013 cash cost per ton in Eastern Canadian Iron Ore is expected to be $95 – $100, down from the Company’s previous expectation of $100 – $105. For full-year 2013, cash cost per ton at Wabush is expected to be $115 – $120. The Company is maintaining its full-year 2013 Eastern Canadian Iron Ore revenue-per-ton expectation of $120 – $125. This revenue-per-ton expectation is based on the 62% Fe iron ore fines price assumption of $150 per ton used in the Company’s Feb. 12, 2013 press release.

“First and foremost, we must stabilize and optimize our entire business in Eastern Canada,” stated Laurie Brlas, executive vice president & president — global operations. “The current cost structure at Wabush is not sustainable and we are taking a disciplined approach to reducing our higher cost operations.  Today’s announcement is expected to improve our cash cost profile for the full-year in order to remain globally competitive in the iron ore market.”

The Wabush mine and concentrator are located near the town of Wabush, Newfoundland and Labrador, Canada, and the pellet plant and dock facility are located in Pointe Noire, Quebec.  The entire Pointe Noire complex is comprised of a pellet plant, railroad and port.  The Company will continue to operate the rail and port operations and proceed with its multi-year investment in the port’s expansion that includes a ship loader for large capesize vessels.  The Pointe Noire shipping facility serves the Company’s Wabush and Bloom Lake operations.