Cliffs Natural to idle iron ore mine as prices remain weak

Mon Mar 11, 2013 7:24pm EDT
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March 11 (Reuters) - Cliffs Natural Resources Inc said it will idle its Wabush Pointe Noire plant in Quebec by the end of the second quarter to reduce costs as iron ore prices remain weak.

The Cleveland-based producer of iron ore and metallurgical coal said the idling will affect about 165 workers in Canada.

Weak demand from China, the world's largest producer and consumer of steel, along with a persistently oversupplied market has sent iron ore prices down.

Iron ore and coal are crucial in making steel.

"The current cost structure at Wabush is not sustainable and we are taking a disciplined approach to reducing our higher cost operations," said Laurie Brlas, executive vice president and president of global operations.

Cliffs expects to idle production at its Pointe Noire iron ore pellet plant and transition to producing only iron ore concentrates from its Wabush Scully mine in Newfoundland and Labrador by the end of the second quarter.

The idling will push down cash costs per ton to between $95 and $100, in its Eastern Canadian Iron Ore business, from its previous forecast of between $100 and $105, the company said.

However, Cliffs backed its full-year sales and production volume forecast of 9 million tons to 10 million tons from its Eastern Canada business.

In November, Cliffs said it would delay portions of its Bloom Lake Mine Phase II expansion in Quebec and idle some production at two of its U.S. iron ore operations, Northshore Mining in Minnesota and Empire Mine in Michigan, affecting about 625 employees.

Shares of the company closed at $23.83 on the New York Stock Exchange on Monday.