Cliffs Natural Resources Inc. on Tuesday announced it will close its Wabush Scully Mine operations in Newfoundland and Labrador, Canada, because the mine's operating costs are too high.
Cliffs said the operations will be closed by the end of March.
"With costs unsustainably high, including fourth-quarter 2013 cash costs of $143 per ton, it is not economically viable to continue running this operation," Cliffs said in a statement Tuesday. Cliffs had already idled Wabush Mine's Pointe Noire pellet plant in June 2013.
About 500 employees at both the Wabush Scully Mine and the Pointe Noire rail and port operation in Quebec are affected by the closures. The Wabush mine and concentrator have been open since 1965.
Cleveland-based Cliffs, which has been under pressure by some investors to increase its dividends and cut costs, also said it will spend far less money this year building out its Bloom Lake mine project in Quebec.
Cliffs is among Minnesota's largest taconite iron ore operators, owning and operating North Shore Taconite in Silver Bay/Babbitt and United Taconite in Eveleth/Forbes. It also is a co-owner and operator of Hibbing Taconite and owns the Empire/Tilden operations in Michigan's Upper Peninsula.
"Over the past three years we have seen (iron ore) pricing drop and Wabush Mine's costs escalate all while we have made significant capital investments into the operation. This is a regrettable but necessary decision. We simply cannot continue operating a high-cost mine while pricing and freight markets are so volatile," said Gary Halvorson, Cliffs' president and chief operating officer.
The company did not say if closing the Canadian operation would have any impact on its U.S. operations. But in past statements the company has praised its Minnesota operations for their relatively low cost-per-ton for taconite production. The company announced in October it would re-open two idled lines at Northshore.
In addition to its Canadian operations, Cliffs also has iron ore mine sin Australia and coal mines in the U.S. The company will release their fourth quarter financials at the end of the business day Thursday and field questions from industry analysts on Friday.
The company said it plans to scale back capital expenditures in 2014 by more than 50 percent, from a planned $862 million to about $400 million, mostly by scaling back at Bloom Lake. While the company said it still has plans for expanding Bloom Lake, officials said global demand and pricing for iron ore doesn't justify that expenditure at this time.
Wabush has been described as Canada's third largest iron ore mine.