Wabush Mines shutting down

Operations at WabushMinesare ceasingimmediately, parent company Cliffs Resources said Tuesday.

The news came duringmeetings with union officials in the afternoon, and was followed up withformal lettersto all workers employedat the Scullymine.

An estimated 400 people workat the mineand concentratorin Wabush. A small number of staff and supervisors will stay on until mid-February to oversee the safety and technical side of slowing and eventually stoppingoperations at the mine.

Cliffs said the mine will be "idled," whichrefers to the process of not entirely turning off all power, should they or another company wishto restart operations in the future.

The decision is a major blow for the western Labrador region, and follows a similar movein March 2013 when Cliffsidled its Pointe Noireiron ore pellet plant inSept-Iles, Que. The company blamed that decision onhigh production costs and lower pellet premium pricing "which is expected to persist in certain markets during the year."

At the time, Cliffs saidit would moveto producingiron ore concentrate onlyfrom its Wabush Scully mine.

But in a statement released later Tuesday, the company saidcosts atWabushhad become"unsustainably high."

"It is not economically viable to continue running this operation," said Cliffs president and chief operating officer Gary Halverson.

"Over the past three years we have seen pricing drop andWabush Mine'scosts escalate, all while we have made significant capital investments into the operation.

"This is a regrettable but necessary decision. We simply cannot continue operating a high-cost mine while pricing and freight markets are so volatile. We do value the hard work of all our employees and are committed to easing the transition for the people and communities, including providing severance and other support services as a result of this decision."

Cliffs said it expects to spend about$100 millionidlingthe Scullymine,considered the third largest iron ore mine in Canada.