CLEVELAND – Cliffs Natural Resources Inc. will take US$1.5 billion in non-cash writedowns in the upcoming fourth-quarter, including US$1 billion related to delays and unanticipated costs following its acquisition of Consolidated Thompson Iron Mines.
The iron ore and coal mining company bought Consolidated Thompson and its majority stake in the Bloom Lake open pit iron mine in Quebec in 2011 for $4.9 billion.
The global economy has slowed since then and demand for steel and iron has fallen, pushing down iron ore prices.
“The impairment is primarily driven by the project’s anticipated lower long-term volumes and higher capital and operating costs,” it said in a statement ahead of the release of its fourth-quarter and full-year results on Feb. 13.
“The previously announced delay of the Phase II expansion of the Bloom Lake mine also contributed to the impairment.”
The decision to stop work on the concentrator and load out facility at Bloom Lake puts 450 contractors off the job. It also announced in November the idling of some production at two of its U.S. iron ore operations.
The company also expects between $100 million and US$150 million of other charges related to its Eastern Canada iron ore business segment.
Elsewhere, the company plans to reduce the value of two tax-related assets in Australian and the United States by a total of $542 million.
The Cleveland, Ohio-based miner also said terms of the sale of its 30 per cent stake in an iron ore project in Amapa, Brazil, will result in a $365 million pre-tax impairment charge in the quarter.
Cliffs is a major producer of iron ore and metallurgical coal with operations in North America and Western Australia. It also has an Ontario chromite project in the feasibility stage of development.
On the New York Stock Exchange, its share lost 27 cents at $36.91 in Thursday morning trading.