UPDATE 2-Miner Cliffs to slash 2014 capital spending, cut 500 jobs
By Nicole Mordant
Feb 11 (Reuters) - Under pressure from an activist shareholder, Cliffs Natural Resources Inc said on Tuesday it will slash capital spending, forego a planned expansion at a key Canadian mine and shut another mine in Canada, cutting about 500 jobs.
Cliffs, a Cleveland-headquartered iron ore and coal producer, said it plans to reduce its capital spending in 2014 by more than 50 percent to between $375 million and $425 million as it cuts back its Bloom Lake Mine expansion and idles production at its Wabush Mine.
The miner has recently been targeted by an activist shareholder who wants the company to be broken up and Cliffs to spin out its "riskier" international operations, including the Bloom Lake and Wabush mines, into a separate business from its strong cash-generating U.S. operations.
Cliffs acquired Bloom Lake as part of its takeover of Consolidated Thompson Iron Mines Ltd in 2010 but higher-than-expected costs at the mine have weighed on Cliffs' earnings. Cliffs delayed a planned expansion in 2012, and a year ago took a $1 billion goodwill writedown related to the Consolidated Thompson deal.
Globally mining investors have soured on big, expensive mining projects over the past two years after a series of high-profile cost blowouts, and as metals prices have dropped.
"Sharper capital allocation must drive our decisions. Today's announcement to reduce overall capital spending is an important first step," Gary Halverson, Cliffs' president and chief operating officer said in a statement.
Cliffs said it has "indefinitely suspended" the second phase of its planned expansion at Bloom Lake in Quebec and has made adjustments to parts of the mine plan, notably its tailings and water management strategy. Continued...