Boston, MA 10/22/2013 (wallstreetpr) – The international mining and natural resources company Cliffs Natural Resources Inc (NYSE:CLF) is fighting for survival in the Ring of Fire in the northern Ontario. And if it cannot win, it says, it may as well quit, throwing into disarray the much touted mining project.
CLF is a major player in the Ring of Fire mining project; however, its progress in the project appears to be under pressure as it cannot penetrate the chromite deposit, and now it appeals for the government intervention. The U.S.-based miner is seeing great opportunity in the chromite mining activity in the Ring of Fire. For this reason, it is spending billions of dollars to get things moving forward, however, it has no all-weather roads on which to move to the deposit to carry out its activities. The reason for this setback is that a rival company has staked the land across which it has to build the road.
Things have been dragging on in this front and now the company’s chiefs for the project are talking about shutdown if all fails in the road construction to access the deposit.
But what does a shutdown of the Ring of Fire project mean? It means that CLF will have walked out of a very lucrative project, perhaps denying its investors an opportunity to partake in top dividend earnings from increased company’s income. But also, it could save the company billions of dollars in losses that would otherwise be incurred if the company chooses to take the more expensive approach to hit the deposit.
Also, for the host, there would be a squandered opportunity to unlock development potential and create more jobs in the cash trapped provinces.
Considering this loss-loss situation in the event of a pull out, it looks likely that the government is going to intervene to get the mining project going. And if it does, perhaps soon, the shares of CLF would definitely assume a highly powered rally considering that it is already sailing well. In the previous trading session on Monday, the company’s shares traded up 3.08% to hit $23.73, earning it $3.65 billion in market value.
