Bank files lawsuit against Cliffs over Bloom Lake Mine

The Bank of Nova Scotia, the Canadian bank that was the lender to Cliffs Natural Resources, has filed a lawsuit against Cliffs, seeking an award of more than $52 million for alleged breaches of loan obligations related to the miner’s Canadian Bloom Lake iron-ore mine.

After failing to secure new equity for the Quebec mine, Cleveland, Ohio-based Cliffs said in January said it would restructure Bloom Lake under bankruptcy protection, saying the operation had stopped generating revenue.

The Wall Street Journal reported that Cliffs, which announced the lawsuit in an U.S. Securities and Exchange Commission filing, had said late last year it was pursuing exit options for the mine as falling iron-ore prices made mine development increasingly costly.

In the filing, Cliffs said the lawsuit was filed by the bank on March 16 in an Ohio court and alleges the miner breached its obligations under certain equipment loans related to a master loan and security agreement.

The miner said it has met its payment obligations under the equipment loans.