Major iron and coal producer Cliffs Natural Resources Inc. (NYSE:CLF) announced yesterday that this year its capital expenditures will total between $375 and $425 million, over 50 percent lower than the $862 million the company spent in 2013.
As quoted in the press release:
This decrease is driven by a significant reduction in the Company’s expansion and tailings and water management capital spending at its Bloom Lake Minein Québec. Cliffs also announced that it will idle production at its Wabush Mine in the Province of Newfoundland and Labrador by the end of the first quarter of 2014.
Gary Halverson, president and COO of Cliffs, commented:
Sharper capital allocation must drive our decisions. Today’s announcement to reduce overall capital spending is an important first step. Bloom Lake’s ore body is well suited for a global market that increasingly values quality and diversification of supply, but it also requires time and capital to be properly developed, built out, and operated to realize its full potential. Ultimately we must extract the highest value from Bloom Lake for our shareholders and operating Phase I preserves all possible options for this asset. Given the wide range of outlooks for iron ore prices, we reduced our 2014 capital expenditures at Bloom Lake Mine as we evaluate the best alternatives for this asset as part of our overall focus on enhancing value for shareholders.