Cliffs Natural Resources retreats from Canadian ‘disaster’ – by Nicolas Van Praet (Globe and Mail – November 21, 2014)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

MONTREAL — The chief executive officer of mining giant Cliffs Natural Resources Inc. is taking aim at his predecessors for their decision to pump billions of dollars into Canada, saying every single investment it made here in recent years was a “disaster” that failed to produce any profit.

“I’m walking away from Canada big time – Canada for Cliffs has not been a good thing,” Lourenco Goncalves, the company’s chairman and CEO, said in an interview Thursday. “All these investments that the company made in Canada after the Wabush mine were a disaster.”

“I’m not the type of guy that’s too much of a Monday morning quarterback,” he said. “But these [decisions] are very clear. Misguided decisions all the way.”

Cleveland-based Cliffs, the biggest U.S. iron ore producer, has spent $6-billion (U.S.) in all on its Bloom Lake iron ore mine in northeastern Quebec over the past three years and “never made a penny” on the investment, Mr. Goncalves said. The company on Wednesday announced that it is “pursuing exit options” for its Eastern Canadian iron ore operations, evaluating its maximum exposure to close the Bloom Lake site at $700-million. The company will also close its mine in Wabush, Nfld., which had been in operation for more than 40 years.

The move at Bloom Lake came after the company decided it could not afford the $1.2-billion that was needed to expand the Quebec operation to make it viable.

Also, one of the three steel makers that the CEO approached to share in the expansion cost missed the deadline for a deal. Iron ore is used to make steel.

Cliffs has also spent about $550-million to buy and develop three chromite deposits in Northern Ontario’s so-called Ring of Fire. That effort has gone nowhere, largely because the government has failed to produce the rail infrastructure required to get the mineral out, Mr. Goncalves charged. Another nickel-iron alloy project in British Columbia also failed to pan out, he said.

It has been a stormy time for Cliffs, which has been under pressure by activist investor Casablanca Capital LLS to spin off its foreign assets and deliver better returns for shareholders. Mr. Goncalves took over as CEO in August amid a larger board shakeup and he’s now executing a strategic retreat back into its U.S. base. Cliffs’ previous directors hadn’t “demonstrated a shred of business acumen,” Casablanca said.

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