Cliffs Natural Resources has completed the sale of its Logan County Coal assets in West Virginia to Coronado Coal’s affiliate Coronado Coal II for $174m.
The expected tax benefit from the deal is said to be between 20% to 25% of the previously disclosed $400m pre-tax loss. This represents an additional benefit of $80m to $100m for future cash savings.
In a separate announcement, Cliffs confirmed that active production at Bloom Lake has completely ceased and the exit from Eastern Canada is continuing according to the announced schedule.
The mine has transitioned to care and maintenance status and the last iron ore shipment out of the Port of Sept-Iles will be completed in early January.
Cliffs Natural Resources chairman, president and CEO Lourenco Goncalves said: "As Cliffs becomes a nimble company sharply focused on being the major supplier of iron ore to the American steel industry, with no US iron ore contracts re-setting any time in 2015 or 2016, no portion of our public debt maturing until 2018, and a strong 2015 economic forecast for the US, we believe that we are better positioned than any other iron ore mining company in the world to deliver profits in 2015.
"The sale of Logan County Coal, which included a meaningful tax benefit to the company, clearly demonstrates our ability to execute complex transactions despite an adverse M&A environment for commodity related transactions."
On 19 November, Cliffs Natural Resources disclosed that it was pursuing exit options for its Eastern Canadian iron ore operations, including the potential closure of Bloom Lake mine.
Previously, the company said that in order to make Bloom Lake viable, the development of the mine’s phase two was necessary and the project is estimated to cost $1.2bn.
Cliffs also estimated that closure of the mine could cost between $650m and $700m in the next five years.