Cliffs Natural Resources Inc. said it will suspend its $3.3 billion chromite project in the mineral-rich Ring of Fire by the year-end because of uncertainties surrounding the development of infrastructure in the remote region of Ontario.
All technical work, including a feasibility study and exploration, will be halted by the year-end and no restart date is planned, Cleveland-based Cliffs said in a statement late yesterday. Offices in Thunder Bay, Ontario, and Toronto will close, it said.
The project was among the most advanced in the Ring of Fire, an area about 1,200 kilometers (740 miles) north of Chicago that holds deposits of nickel and copper that may be worth as much as C$50 billion ($48 billion), the Canadian government said in March. Cliffs’ plans received a setback when the Mining and Lands Commission of Ontario ruled against its proposal for an all-weather road to transport ore that would cross claims of another company active in the area.
Cliffs “will not allocate additional capital for the project given the uncertain timeline and risks associated with the development of necessary infrastructure,” the company said in the statement. “Cliffs will continue its work with the government of Ontario, First Nation communities and other interested parties to explore potential solutions related to the critical issue of infrastructure for the Ring of Fire region.”
Canada “remains committed to working with all our partners for the benefit of sustainable growth in northern Ontario,” Greg Rickford, the federal minister responsible for the Ring of Fire and development in northern Ontario, said in a statement.
Cliffs, the biggest U.S. iron-ore producer, had already suspended an environmental-impact evaluation of the project. On its website, Cliffs calls the site North America’s largest known deposit of chromite, which is used to produce stainless steel. The company said in January 2012 the estimated total cost to develop the project was $3.3 billion, including mine development, a processing plant and transportation infrastructure.
Noront Resources Ltd. is studying the Eagle’s Nest nickel, copper and platinum-group metals project in the Ring of Fire. Its plans won’t be affected by Cliffs’ suspension and it still intends to complete an environmental assessment by the year-end, Toronto-based Noront said in a statement late yesterday.
“Noront’s schedule is based on the Eagle’s Nest project being the first mine developed in the Ring of Fire,” the company’s Chief Executive Officer Alan Coutts said in the statement. “Our projections have not been dependent on the development plans of other mining companies.”
Cliffs fell 2.9 percent to $26.43 in New York while Noront dropped 9.1 percent to 20 Canadian cents in Toronto.