Cliffs Natural Resources Inc.’s (CLF - Analyst Report) affiliate Cliffs Chromite Ontario Inc., has announced its decision to discontinue all developmental activities indefinitely at its Chromite Project. The project, located in the “Ring of Fire” region of Northern Ontario, will be suspended by the end of fourth-quarter 2013. Further, the project’s uncertain timeline and risks associated with the development of infrastructure led the company to decide against investing any additional capital.
Cliffs, in June 2013, temporarily suspended environmental assessment activities for the Chromite project due to certain unresolved issues. These included delayed approval of certain terms for the provincial Environmental Assessment (EA) process, unresolved land surface rights, unfinished agreements with the Government of Ontario and uncertainty regarding the federal EA process. The federal EA process remains uncertain due to current judicial challenges by some First Nations.
Based on the project’s indefinite suspension, Cliffs further decided to reduce the project team staffing and dissolve the Thunder Bay and Toronto and the exploration camp site. The company assured its employees that it will provide them with other opportunities to continue working at Cliffs.
Technical work including feasibility study, development and exploration activities and the EA activities will be stopped and no fixed time period has been scheduled to resume the activities. In the meantime, Cliffs, together with the Government of Ontario, First Nation communities and other interested parties will continue to explore potential solutions for resolving the critical issue of infrastructure for the Ring of Fire region.
Cliffs also supports the Province’s plan for a Development Corporation structure for financing and development of infrastructure, and intends to engage in future discussions related to it.
Cliffs is an international mining and natural resources company, a major global iron ore producer and a significant producer of high- and low-volatile metallurgical coal.
Cliffs released its third-quarter 2013 results on Oct 24. The company posted earnings from continuing operations of 65 cents per share, up 6.6% from 61 cents in the year-ago quarter. Consolidated net income was $104.3 million (or 66 cents per share) versus a profit of $85.1 million (or 59 cents) registered in the year-ago quarter, up roughly 23% year over year. Cost-cutting measures by the company and higher iron ore prices contributed to the increase in profit.
Sales for the quarter came in at $1,546.6 million, rising 0.1% from $1,544.9 million in the prior-year quarter. A 17% hike in global seaborne iron ore pricing led to increased sales in the quarter.
Cliffs expects healthy pace of steelmaking in China to support demand for its iron ore across the Eastern Canada and Asia Pacific businesses. The company predicts healthy demand for U.S. ore and North American coal despite weak steel production in North America. It anticipates pricing of its commodities to remain volatile.
Cliffs currently holds a Zacks Rank #2 (Buy).
Other companies in the mining industry with favorable Zacks Rank are Rio Tinto plc (RIO - Analyst Report), Vale S.A. (VALE - Analyst Report) and Alderon Iron Ore Corp. . While Rio Tinto holds a Zacks Rank #1 (Strong Buy), both Vale and Alderon Iron Ore carry a Zacks Rank #2 (Buy).