Cliffs Natural Resources Outlines $1 Billion in 2012 Capital Spending

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Researched by Industrial Info Resources (Sugar Land, Texas)--Miner Cliffs Natural Resources Incorporated (NYSE:CLF) (Cleveland, Ohio) last week announced that the company is planning capital expenditures of approximately $1 billion in 2012. Of this, approximately $300 million will be for sustaining capital and $700 million for growth and productivity improvement.

The company outlined some of the major areas and projects where the capital funds will be spent. This includes approximately $50 million at the company's West Virginia coal mines to increase high-vol metallurgical coal production capacity.

Most of the remainder of the $700 million has been allocated to iron ore projects. These include approximately $40 million to the company's project to expand the Koolyanobbing iron ore mine and processing in Western Australia. The project will expand production capacity from 8.5 million tons to 11 million tons. The project began in the second quarter of last year and is expected to be completed in the second quarter of 2012. Onyx Projects (Perth, Western Australia) is acting as EPC contractor on the project.

The largest amount of funding ($470 million) will be allocated to the Phase II expansion of the Bloom Lake iron ore mine and mill expansion in Quebec. The project will double the production capacity of the 30 million-ton-per-year iron ore mine and 19 million-ton-per-year mill to 16 million tons per year of iron ore concentrate. Construction of the expansion project is expected to be completed in mid-2013, with the ramp-up to full capacity completed in the first quarter of 2014. A Phase III expansion of the facility is in the very early planning stages and could increase production of iron ore concentrate to 24 million tons per year.

Cliffs also gave further spending details about the development of its three chromite deposits in Ontario. For additional information, see July 5, 2011, article - Cliffs Natural Resources Prepares to be North America's Sole Chromite, Ferrochrome Producer. A prefeasibility study of the project will be completed in the first half of this year, but Cliffs has made the following preliminary capital estimates based on the prefeasibility work to date:

• Mine development - approximately $150 million
• Near-mine concentrating plant - approximately $800 million
• Ferrochrome processing facility - approximately $1.8 billion

In the press release outlining planned capital spending, Cliffs said that "a number of additional studies, including feasibility, and other project milestones need to be achieved before the Company begins allocating a significant portion of capital to the project's construction. Based on the completion of these, Cliffs anticipates a majority of the project's anticipated capital requirements would be made in 2014 and 2015, with an early works program initiated prior to 2014 to maintain project execution timeline."

As part of our North American and International Metals & Minerals Project Database, Industrial Info is tracking more than $5.6 billion of under-way and planned projects belonging to Cliffs.

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