* To take non-cash charge in the year-ended Dec. 31
* Shares down 2 percent
By Krishna N Das and Swetha Gopinath
Jan 24 Cliffs Natural Resources Inc said
it would write down the value of Consolidated Thompson Iron
Mines Ltd by $1 billion as it expects lower volumes and higher
costs in the business bought for more than $4 billion two years
Rival miners Rio Tinto Plc and Vale SA
have recorded billion-dollar charges over the past two months on
weak demand for commodities such as iron ore, coal and aluminum,
and analysts expect BHP Billiton Plc and Anglo American
Plc to follow.
"There's been a lot of consolidation in the past two years,
commodity prices have moderated and global growth is lower than
what people expected," said CRT Capital Group analyst Kuni Chen.
"So, you're beginning to see people writing down their
Cliffs, the largest North American producer of iron ore
pellets used in making steel, said on Thursday the goodwill
impairment charge will be recorded as a non-cash expense for the
year ended Dec. 31, results for which will be announced on Feb.
The company's net income for 2011 was $1.62 billion.
Cliffs's shares fell 2 percent to $36.40 in morning trade.
The stock has shed 52.9 percent of its value since hitting a
year-high of $78.85 in late January last year.
The acquisition of Consolidated Thompson, now known as
Cliffs Quebec Iron Mining Ltd, gave Cliffs a mine and processing
plant near Bloom Lake in Fermont, Quebec. Wuhan Iron & Steel Co
, China's third-biggest steelmaker, owns a fourth of
the property. ()
The Bloom Lake mine, located in the Labrador Trough mining
region, has reserves of about 640 million tonnes of iron ore and
an annual production capacity of 8 million tonnes.
Cleveland, Ohio-based Cliffs bought Consolidated Thompson to
expand its capacity to feed the then growing hunger for iron ore
Demand and prices, however, have fallen in recent months due
to lower appetite for steel from China, the world's largest
producer and consumer of steel.
Benchmark 62-percent grade iron ore is
forecast to average $125 a tonne this year, compared with $128
last year, according to the median estimate of a Reuters poll of
Cliffs said a weak demand-related delay in expanding the
Bloom Lake mine added to the charge it is taking for 2012.
"I don't think (the charge) is a huge surprise to people,
given that they changed their plan (in Bloom Lake) and delayed
some of their capital spending. Plus you have lowered long-term
iron ore price expectations," said Chen.
Cliffs expects to incur $100 million to $150 million of
other charges related to its Eastern Canadian Iron Ore business,
which derives its revenue from sales of iron ore pellets and
concentrate to Asian steel producers.
The company said it expected to also record an impairment
charge of $365 million in its fourth-quarter results in
connection with the 30 percent stake it sold in an iron ore
operation in Brazil earlier this month.