Cliffs Natural Resources Inc. shares sank Thursday on the company's decision to indefinitely suspend a chromite mining project in Ontario by the end of the year.
The Cleveland-based mining company has been struggling to get the necessary land rights and infrastructure, such as roads and power, in place to support development of the remote project, located in the mineral rich Ring of Fire region.
Cliffs said in a statement late Wednesday that it will not allocate additional capital for the project "given the uncertain timeline and risks associated with the development of necessary infrastructure to bring this project online." The company suspended environmental assessment of the project in June because of the anticipated roadblocks with the project at that time.
The company said Thursday that it will reduce project team staffing and close its Thunder Bay and Toronto offices, as well as the exploration camp site.
Cliffs spokeswoman Patricia Persico said that the company does not have an exact measure at this time of how many employees will be laid off. It employees roughly 7,000 people total.
The company has spent $500 million on the chromite mining project thus far, including $350 million spent several years ago to acquire three chromite deposits there.
Citi analyst Brian Yu said that the move came as little surprise as Cliffs had already cut its capital spending budget following an adverse decision by the Land Commission of Ontario on roads to be used for the project. The suspension of the environmental assessment was also an indicator that it may not move forward.
Shares fell 77 cents, nearly 3 percent, to $26.46 in afternoon trading amid a broader market uptick.
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