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Montreal – U.S. mining giant Cliffs Natural Resources Inc. has “ring-fenced” its Bloom Lake iron ore mine under bankruptcy protection and no longer has any exposure to closing or clean-up costs, senior executives say.
After talks with potential buyers of the Bloom Lake assets over the past two months, it was decided the best action to take was to put them under protection of the Companies’ Creditors Arrangement Act (CCAA), Cliffs chairman and chief executive officer Lourenco Goncalves said Tuesday.
That means Cliffs’ Bloom Lake liabilities now stand at zero, he said on a conference call for analysts. Bloom Lake – in northeastern Quebec – is “the cancer that we have to take out” as Cliffs retrenches to focus on its U.S. iron ore business, Mr. Goncalves said in a telephone interview Tuesday.
The company said in November that it was “pursuing exit options” for its Eastern Canada iron ore operations, estimating its maximum exposure to close the Bloom Lake site at between $650-million (U.S.) and $700-million.
“We were going through chemotherapy and that didn’t do it. Now the [cancerous] limb has been cut off,” Mr. Goncalves said in the interview.
The outspoken Mr. Goncalves said in November that his predecessors made a huge mistake pumping billions of dollars into Canadian iron ore and other assets.
Cleveland-based Cliffs, the biggest U.S. iron ore producer, has spent about $6-billion on the Bloom Lake project over the past three years but never made a profit, he said at the time.
And the company said it simply could not afford the $1.2-billion in additional funds needed to expand the high-cost Quebec mine and make it more efficient.
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