As prices for iron ore continue in the recent slump, more mines are scaling back and even shutting down, including Cliffs Natural Resources’ Bloom Lake mine in Canada.

On Nov. 19, Cliffs Natural Resources announced that it is pursuing “exit options” for its Bloom Lake iron ore mine.

Cleveland-based Cliffs, the U.S.’s biggest iron ore miner, had been in talks with Charlotte-based steelmaker Nucor Corp. and two Japanese companies to fund an expansion at the Quebec mine, according to a person familiar with the matter, The Wall Street Journal reported.

Cliffs had said it needed an investment of $1.2 billion to ramp up production to a second phase, bring costs down, and make the mine profitable, but that seems less likely now.

Global oversupply and slowing Chinese demand growth have pushed prices to a five-year low of about $79/t ($72/st). Some analysts say the price could soon drop below $66/t ($60/st).

Despite the interest of partners “in Bloom Lake and its high quality ore, “the potential investment is not achievable within a time frame acceptable to Cliffs,” Cliffs Chief Executive Lourenco Goncalves told The Wall Street Journal.

If it has to close the mine, the cost to the company will be “in the range of $650 million to $700 million in the next five years,” Cliffs said.

Cliffs took a $6 billion write-down, mostly related to Bloom Lake. Consequently, it posted a loss of $5.9 billion, or $38.49 per share, in the third quarter, compared to a profit of $104 million, or 66 cents per share, a year ago. Its share price has declined by around 60 percent in the last year.
Cliffs is seeking to reshape itself as it faces declining prices for its core product, iron ore used to make steel, which have fallen in half during the past year. It’s also in a transition after a board coup this year orchestrated by activist hedge fund Casablanca Capital LP, resulting in Goncalves’ appointment in August.

A veteran metals executives from Brazil,Goncalves wants to refocus Cliffs’ business around five iron ore mines in Michigan and Minnesota, which sell to Midwestern steel mills that service the U.S. auto industry. It has hired bankers to sell iron ore assets in Australia, and is also looking to sell coal mines in West Virginia and Alabama.

Cliffs acquired the controlling stake in the mine when it expanded in Canada by buying Consolidated Thompson Iron Mines Ltd. in 2011 for $4.9 billion, just around when iron ore prices reached their peak at over $204/t ($185/st). The plan was to ship the ore to China. Now, because of oversupply, and a slowing in Chinese demand growth, prices are down to around $88/t ($80/st).

Costs at Bloom Lake, including operating expenses, were $117/t ($106.3/st) in the third quarter. That division lost $165 million in the first nine months of 2014, after losing $52.3 million over the same period in 2013. If the expansion had gone through, says Cliffs, Bloom Lake could have produced 12.5 Mt/a (13.5 million stpy) of high quality iron ore at around $55/t ($50/st), Cliffs has said.