Cliffs Natural CEO says mulling creditor protection in Canada

Wed Nov 19, 2014 6:47pm EST
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By Euan Rocha and Shubhankar Chakravorty

(Reuters) - U.S.-based Cliffs Natural Resources may seek creditor protection in Canada to insulate itself from closure costs and liabilities at its Canadian operations, its chief executive said on Wednesday.

Lourenco Goncalves, who took the helm at Cliffs in August, told Reuters a filing in Canada to protect it from liabilities related to its Canadian operations is "absolutely" on the table.

The move would mirror the route taken by U.S. Steel, which sought creditor protection for its money-losing Canadian operations two months ago.

Earlier on Wednesday, Cliffs said it might have to close its Bloom Lake iron ore mine in Quebec at a cost of up to $700 million as it struggles to find funds to expand the project as a way to make it more financially viable.

Goncalves said that a closure was already in the works, but he was not in a hurry to seek creditor protection.

"I just don't need to be in a hurry, because I'm not out of there today and I'm initiating an orderly process to cease our operations there," he said. "It is still an ongoing concern."

Cliffs shares closed 20 percent lower at $8.17 on Wednesday.

Nearly two-thirds of the closure costs are tied to a rail contract with QNS&L, a unit of Iron Ore Co of Canada, which in turn is controlled by global miner Rio Tinto.   Continued...