North America’s largest iron ore producer, Cliffs Natural Resources, said Tuesday it will idle its Wabush mine and freeze the expansion of its Bloom Lake mine, both in Canada, because of reduced iron ore prices. Cliffs said it expects its total capital expenditure in 2014 to be in the range US$375-425 million, less than half its 2013 spending of $862 million.
At Bloom Lake, Cliffs said it will indefinitely suspend the phase II expansion and limit operations to phase I, which means output this year of 5.5-6.5 million metric tons. Phase II would have increased production capacity to 14 million mt/year by 2014. Cash costs at the mine are expected to be $85-90/mt in 2014, and Cliffs said it would idle phase I if pricing significantly decreases “for an extended period of time.”
Wabush’s Scully mine in Newfoundland & Labrador will be idled by the end of 2014’s first quarter. Wabush’s pelletizing plant at Pointe Noire, Québec, was idled in June 2013. Cliffs said that Wabush Mine’s cash costs have escalated while prices have dropped. In the fourth quarter of 2013 costs reached an “unsustainably high” level of $143/mt, it said.
“We simply cannot continue operating a high-cost mine while pricing and freight markets are so volatile,” said Gary Halverson, Cliffs president and chief operating officer in a statement announcing the closure. Wabush sold 700,000 metric tons of iron ore concentrate and 450,000 mt of pellets during the July-September quarter of 2013, its most recently reported result.
