Analyst: Cliffs made the right call in suspending Ring of Fire project

|By:, SA News Editor

Cliffs Natural Resources (CLF) made the right move in pulling out of the chromite project in Ontario’s Ring of Fire, RBC analyst Fraser Phillips says, since the project would have taken years to develop and the decision removes an uncertainty lurking over its shares.

The project required ferrochrome prices of $1.40/lb. to produce an internal rate of return in the 14%-17% range, but with prices closer to $1, Phillips believes the project economics were “questionable at best."

CLF can now focus on allocating its capital and resources to its core iron ore assets such as the Bloom Lake mine in Quebec, the analyst says.