IGO to record impairment against nickel assets in strategy shift
IGO has been undertaking a strategic review in an attempt to revaluate its resources.
Canada’s provincial government of Newfoundland and Labrador said it has been officially notified by Cliffs Natural Resources (NYSE:CLF) of its plans to shut down the country’s third largest iron ore operation, Wabush Mines.
“We have all known for some time that the closure of the mine in Wabush was a possibility. However, this does not make it any easier for the workers of the mine and their families, as well as residents in the Labrador West area,” Natural Resources Minister Derrick Dalley said in a statement on Friday.
“Our government is aware of this and will continue to support those impacted,” he added.
Idling the mine in February has already cost the U.S. largest iron ore producer about $100 million. Roughly 500 workers employed at the site will be affected. Of the 50 employees still currently working at the mine, Cliffs said that number would be reduced to 10 before the end of the year.
The Cleveland-based mining and natural resources company is also looking to sell other iron-ore mines in Eastern Canada and Western Australia.
9 Comments
Geewiz
Oh how the “mighty” are falling.
Itabirite
Wabush never stood a chance; split operations (NFLD/PQ) low volume, partially oxidized, dry concentrate, severe water, recalcitrant union.
Sergo Cusiani
It is unclear if the owner still has the ownership after the mine stops.
Can anybody else with better planning skills take over the mine legally?
I believe, if the current owner stopped it, he failed to operated it in other words.
Is it going to be an abandoned mine?
In any case, there still be a long lasting environmantal problem with acid water leakage waiting to be resoved.
TheHappyMiner
Tailings and waste rock from iron mining operations are typically not acid generating…
And “better planning skills” won’t make up for the 40% reduction in iron prices over the past year.
Jan
Even Vale is looking to be under the pump. The purchase of their super ore carriers is an attempt to keep their shipping costs low to make up for distance. Australia not only has cheap ore but is also well placed to ship to Asia.
Jed
Once O’phony is out of office, the price of iron ore will shoot back up. Wabush will produce again.
LAMB
I expect that CLIFFS will declare Bankruptcy in the next year. I wonder why they are not trying to find buyers for these operations?
LAMB
In Canada, closing a mine and walking away without addressing the Reclamation is just not allowed. Cliffs will be on the hook for it and will lose their Reclamation Bond. A new owner would take on all the environmental responsibilities that CLIFFS had, so it would be to CLIFFS advantage to find a new owner. Seems like they are in a panic and not planning their exit properly.
Larry Southwick
Economics 101: What being a victim of low prices involves
There is nothing untoward going on here, just supply side costs reacting to decreased revenues on the demand side. As described on this website the last couple of months, Cliffs has shelved their Ring of Fire projects, written down $6 billion of assets, and are now closing their Wabush mine. Low iron ore (and coal) prices, sluggish demand in China, disrupted economics in the US and uncertainties with some aspects of Canadian operations all make it more difficult to turn a profit from these facilities and development projects.
No big secrets here, such downward pressures on prices and markets always require similar reactions from all companies. Thus higher cost operations have to be shut down. Uncertainties in development costs for ROF projects, along with rising First Nation demands, considerable infrastructure expenditures, and retarded schedules need to be reexamined. Eastern Canadian iron ore markets are more in China than US, which affect all the Labrador Trough properties.
In general we’re seeing a classic response to pressure on profits of streamlining operations and other costs, all of which require more review and evaluation to develop a new path forward. Many other mining companies are also seeing the need for slower development, and even one of the iron ore companies putting downward pressure on prices has taken a writedown. Another tried to sell
its mine and railroad in Labrador and got no viable offers.
But these growing pressures and a perceived need for more rapid action are why Cliffs stockholders elected six new members to the Cliffs board and installed a new Chairman and CEO, all from major investor Casablanca Capital. I know one of the new board members, and just his presence tells me they are all good men and true, focused on results. Casablancs wants a quick turnaround and that is what is happening. They did not get involved to conduct a fire sale with depressed assets.
So I would give them time. Wabush was idled back in February and the latest action simply cuts costs further. The Board and CEO know a lot more about the circumstances than anyone here, and indeed the facts that are known support what is being done as a potentially effective response to the new conditions.
A healthy Cliffs is vital to the development of both the ROF and the
Labrador-Newfoundland mines. All the non-company stakeholders need to keep this in mind.
Larry M. Southwick