Additional charges are related to a delay in Cliffs’ expansion project at its Bloom Lake mine and another $100 to $200 million charge at its Eastern Canadian iron ore business segment. The company previously said that it would take a non-cash impairment expense of $365 million related to the sale of its 30% interest in the Amapa mine in Brazil. All the charges will be taken in the fourth quarter of 2012.
Cliffs paid nearly $5 billion for Thompson and the writedown reflects lower expected volumes and higher costs.
The company cannot afford these kinds of mistakes. Iron ore prices have been falling and adding insult to injury is not a formula for success. Similar transactions and charges recently cost the CEO of Rio Tinto plc (NYSE: RIO) his job.
Shares of Cliffs are down about 1% at $36.81 in a 52-week range of $28.05 to $78.85.