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U.S.-based Cliffs Natural Resources, which once had ambitious plans to open a chromite smelter in Sudbury by 2015, has announced that it will lay off about 500 employees and dramatically reduce spending.
“Sharper capital allocation must drive our decisions,” CEO Gary Halverson said in a statement. “(The) announcement to reduce overall capital spending is an important first step.”
However, on Thursday, Cliffs, which is facing against an activist investor who wants to break up the mining company, reported higher fourth-quarter profits helped in part by higher iron ore prices and a drop in the cost of goods sold.
The iron ore and metallurgical coal producer said net income rose to US $31 million, or 20 cents a share, in the three months to end-December. A year ago, it reported a loss of $1.6 billion, or $11.36 a share, when it wrote down $1 billion related to its 2011 acquisition of Consolidated Thompson Iron Mines Ltd.
Revenue was marginally lower at $1.52 billion in the quarter from $1.54 billion as lower prices and sales for coal were partially offset by a 10 percent increase in global seaborne iron ore pricing.
Cleveland-based Cliffs said its earnings included a previously-disclosed $183 million pre-tax charge related to the closure of its Wabush mine in Canada.
The company also recorded a non-cash goodwill impairment charge of $81 million related to its suspension of its chromite project in Northern Ontario.
Excluding various one-off items, Cliffs earnings were $218 million, or $1.22 per share, up from $89 million, or 63 cents a share, in the same period a year ago.
Analysts, on average, had expected the company to earn 77 cents a share on revenue of $1.45 billion, according to Thomson Reuters I/B/E/S.
Earlier this week, the iron ore producer said will cut capital expenditures to from $375 million to $425 million — a reduction of more than 50% compared with last year.
The company also announced that it will idle Canada’s third largest iron ore mine, Wabush, in Newfoundland and Labrador.
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