UPDATE: 500 workers affected as Wabush Mines idled

Published on February 11, 2014
Wabush Mines. — TC Media file photo

Cliffs Natural Resources is shutting down production at Wabush Mines, affecting 500 workers currently employed there.

The news was confirmed in an official statement by the company. The statement was not specific to the status of Wabush Mines, but instead focused on a more than 50 per cent slash in the company’s capital spending across its business year over year.

Premier Tom Marshall has issued a statement in response to the news.

“The decision by Cliffs Natural Resources to idle its mining and processing operations at the Scully Iron Ore Mine in Wabush is very disappointing. While we believe this was undoubtedly a difficult decision for Cliffs, our thoughts are with employees of the mine and their families during this challenging time,” Marshall said.

“I will be in Wabush this week with Ministers Dalley and McGrath for discussions with stakeholders. We will continue to further opportunities for development in Labrador West. We remain confident in the future of the mining industry in the region.”

Wabush Mines started pulling ore from the Scully Mine in 1965. The ore goes to a concentrating plant at site and is then moved, by rail, to Point Noire, Que.

The total number for workers being affected by the idling of the Scully mine includes both workers on the ground in Wabush and workers at the port.

The Cliffs operation in Labrador shipped about three million tonnes of iron ore concentrate in 2012, feeding mining royalties into the provincial coffers, in addition to offering worker employment.

In 2012, Cliffs idled its pellet plant citing high production costs and lower prices.

In that same year the provincial government recorded 19 million tonnes of iron ore shipments from the Labrador mines, or about 10 per cent more than the year prior. However, lower prices meant the overall value of those iron ore shipments dropped by 12 per cent.

The news of Cliffs’ capital spending cuts, in addition to the idling of Wabush Mines is notable for mine workers in the Labrador Trough.

In 2013, the company spent $862 million on capital projects. In 2014, the plan is for only $375-$425 million in spending. That change is attributable to cut backs for the company’s plans for the Bloom lake Mine in Quebec — another hit for Labrador Trough miners.

Provided here in full is the relevant excerpt from the company’s statement on its capital spending reductions, issued shortly after 6:30 p.m. NLT:

Wabush Mine

Cliffs' Wabush Scully Mine in Newfoundland and Labrador will be idled by the end of the first quarter of 2014. With costs unsustainably high, including fourth-quarter 2013 cash costs of $143 per ton, it is not economically viable to continue running this operation. As previously disclosed, Cliffs idled Wabush Mine's Pointe Noire pellet plant in June of 2013. Approximately 500 employees at both the Wabush Scully Mine and the Pointe Noire rail and port operation in Québec will be impacted by these actions.  

Gary Halverson continued, "Over the past three years we have seen 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. We do value the hard work of all our employees and are committed to easing the transition for the people and communities, including providing severance and other support services as a result of this decision."

Cliffs anticipates incurring idle costs related to Wabush Mine of approximately $100 million in 2014. Also, due to the idling of Wabush Mine, Cliffs' will record impairment and write-off charges of approximately $183 million, which will be reflected in its fourth-quarter 2013 results. Cliffs will continue operating the port at Pointe Noire in Sept-Îles, Que.




(Earlier story)


Speculation is circulating around the future or, more accurately, the potential closure of Wabush Mines.

The iron ore mine is operated by Cliffs Natural Resources.

There have been reports of a meeting this evening between company representatives and union officials.

A spokeswoman for the company has told The Telegram a statement is being drafted in relation to the future of the mine and should be expected within the hour. or before 7 p.m.

According to a news report first made in La Presse on Nov. 1, the Scully mine in Wabush was given 90 days to show its profitability or be closed.

The Telegram will post further information as it becomes available.