Photo by: Reuters
JOHANNESBURG (miningweekly.com) – The Bloom Lake mine, in Fermont, Québec, may close as NYSE-listed mining and natural resources company Cliffs Natural Resources pursues exit options for its Eastern Canadian iron-ore operations.
Cliffs chairperson, president and CEO Lourenco Goncalves said on Wednesday that despite the continued interest of the prospective equity partners in Bloom Lake and in its high-quality ore, the potential investment was not achievable within a timeframe acceptable to Cliffs. “With expansion no longer viable, we have shifted our focus to executing an exit option for the Eastern Canadian operations that [decreases] the cash outflows and associated liabilities."
The company previously disclosed that to make Bloom Lake viable, the development of the mine's Phase 2 was necessary and was estimated to cost $1.2-billion. In the event of a closure, the estimated costs were expected to be between $650-million and $700-million in the next five years.
Cliffs also stated that its subsidiary, Cliffs Quebec Iron Mining, along with Bloom Lake General Partner and The Bloom Lake Iron Ore Limited Partnership, recently lost an arbitration claim filed against a former Bloom Lake customer, relating to the August 2011 termination of an iron-ore sales agreement.
In November 2014, the arbitrators decided in favour of the former customer and awarded it about $71-million in damages as well as attorneys' fees and accrued interest from the date of termination of the offtake agreement in August 2011.
Cliffs Quebec Iron Mining was currently reviewing the award to determine appropriate next steps.
The Bloom Lake property forms part of the south-western corner of the Labrador Trough iron range and is in close proximity to several producing mines. As of the end of 2013, Bloom Lake employed 579 people, 40 of which were local.