Mining and natural resources company
Cliffs Natural Resources Inc.
) has announced its decision to temporarily idle its Wabush
Pointe Noire pellet plant in Sept-Iles, Canada, by the end of
second-quarter 2013. The decision is due to high production costs
and lower pellet premium pricing, which are expected to persist
in certain markets throughout the year.
Product mix at Cliffs' Eastern Canadian Iron Ore business
segment contains iron ore pellets and concentrate. Cliffs plans
to temporarily shutdown its iron ore pellet plant at Pointe Noire
and shift to producing an iron ore concentrate-only product from
its Wabush Scully mine in the Province of Newfoundland and
Labrador by the end of second-quarter 2013.
The decision to temporarily idle the plant will impact roughly
165 families who were involved in the operations at the plant.
However, Cliffs will provide these employees with other
Cliffs forecasts sales and production volume of 9 million-10
million tons for 2013 at its Eastern Canada business segment.
This includes roughly 3 million tons of both iron ore pellets and
concentrate products from its Wabush operation and the remaining
expected sales volume from Bloom Lake mine.
Cash cost per ton at Eastern Canadian Iron Ore is anticipated
to be $95-$100, whereas cash cost per ton at Wabush is expected
to be $115-$120 for full-year 2013.
Cliffs, one of the prominent iron-mining companies along with
Alderon Iron Ore Corp
African Minerals Limited
), released mixed fourth-quarter 2012 results last month.
Cliffs' adjusted earnings for the fourth quarter missed the
Zacks Consensus Estimate. Cliffs swung to a loss on a reported
basis on sizeable charges. Revenues declined year over year on
lower pricing but beat the Zacks Consensus Estimate.
Cliffs expects the pricing environment to remain volatile in
2013. Cliffs remains hamstrung by lower iron ore pricing, partly
due to the slowdown in Chinese demand and oversupply in the
industry. The prices for commodities are expected to remain under
pressure due to the uncertain economic environment. Cliffs also
contends with higher labor and mining costs.
Cliffs currently retains a Zacks Rank #3 (Hold).
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