North America's largest iron ore pellet manufacturer, Cliffs Natural Resources (CLF +1.67%), will idle its Wabush Pointe Noire pellet plant in Sept-Iles, Quebec, by the end of the second quarter of 2013, the company said yesterday.
High production costs and lower pellet premium pricing -- conditions expected to persist in certain markets through the year -- were behind the decision, causing Cliffs to transition to producing only iron ore concentrate from its Wabush Scully mine in Newfoundland and Labrador.
Cliffs will adjust iron ore pellet production at the Wabush operation to meet the needs of the marketplace, said Joseph A. Carrabba, the miner's chairman, president, and CEO. "We are taking a long-term view of our investments in Canada. These measures address current market conditions and we look forward to advancing our work at Bloom Lake which is key to Cliffs' future."
Bloom Lake is a large-scale seaborne iron ore growth project in Eastern Canada. Previously, Cliffs said that reducing debt, lowering its dividend, disposing of non-core assets, and refinancing near-term debt maturities would position the miner to resume the next phase of expansion and accelerate Bloom Lake's significant earnings potential.
Even with the plant idling, Cliffs is maintaining its full-year sales and production volume expectations of 9 million to 10 million tons for its Eastern Canada business segment.
