In a head-turning move, Cliffs Natural Resources (NYSE:CLF), a US-based iron ore producer, announced yesterday that by the end of 2013, its affiliate, Cliffs Chromite Ontario, will indefinitely suspend work at its chromite project in Northern Ontario’s Ring of Fire.
While the company still believes “in the value of the mineral deposits and the potential of the Ring of Fire region for Northern Ontario,” an “uncertain timeline and risks associated with the development of necessary infrastructure” have deterred it from moving forward. Bill Boor, the company’s senior vice president, strategy and business development, said that costs are also an issue.
Currently Cliffs has no restart date planned.
Though the news is surprising given the positive attention the Ring of Fire has received — former Ontario Premier Dalton McGuinty once described it as having the potential to “rival Alberta’s oil sands” — it also feels somewhat inevitable. The company suspended work on the environmental assessment for the project back in June due to “delays related to the environment assessment process, land surface rights, and negotiations with the Province of Ontario.”
More recently, the Mining Lands Commission found that Cliffs’ proposed Black Thor road, which was to transport chromite to market via land drilled previously by KWG Resources (TSXV:KWG) subsidiary Canadian Chrome, “breaches KWG’s right under Ontario’s mining law,” as per Mineweb.
As the year draws to a close, Cliffs will “reduce the project team staffing and close [its] Thunder Bay and Toronto offices as well as the exploration camp site,” according to Boor. Its hope is that those working on the project will be able to take on other roles at the company.
Shares of the company are currently trading down $0.79, or 2.9 percent, at $26.44.
Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.