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Cliffs Natural Resources is cutting ties with the Bloom Lake iron ore mine, which Environment Canada said saw the breach of a tailings pond dam, resulting in charges and the fine.Fred Lum/The Globe and Mail

Cliffs Natural Resources Inc. is feeling more pain from its foray into Canada.

As the Cleveland-based company pulls up stakes at its money-losing Bloom Lake iron ore mine in northeastern Quebec after investing billions in what its chief executive dubbed a "disaster," the company's subsidiary has been hit with a record $7.5-million fine for environmental infractions at the site.

Bloom Lake General Partner Ltd. – in which Cliffs has a controlling stake – pleaded guilty on Dec. 18 to 45 offences under the federal Fisheries Act and the Metal Mining Effluent Regulations in the Criminal and Penal Division of the Court of Quebec, according to Environment Canada.

The fine is the largest penalty for environmental infractions in the country's history, Environment Canada said. Of the $7.5-million, $6.83-million will go to a federal fund that aims to direct money to environmental projects in the location where the incident took place.

Environment Canada said its investigation lasted more than three years. One major infraction involved the breach of a tailings pond dam that allowed more than 200,000 cubic meters of mine tailings and water to be released into fish-bearing waters.

Cliffs said last month it would begin laying off workers at Bloom Lake, about 30 kilometres southwest of Labrador City, Nfld., as it shuts down operations by year-end. A total of about 500 employees are affected.

Cliffs faces costs related to the Bloom Lake shutdown of about $700-million (U.S.) over five years. Cliffs and other mining companies have been hammered by falling global iron ore prices as demand for steel, particularly from China, declines. Iron ore is used to make steel.

Another Cliffs project in Canada – developing chromite deposits in Northern Ontario's so-called Ring of Fire – has also fizzled out, largely for lack of a provincial-government commitment to build rail infrastructure.

Last month, Cliffs' outspoken chairman and chief executive officer – Lourenco Goncalves – slammed his predecessors for their decision to inject billions of dollars into Canadian mining projects.

"I'm walking away from Canada big-time – Canada for Cliffs has not been a good thing," he told The Globe and Mail. "Misguided decisions all the way."

Mr. Goncalves took over as Cliffs CEO in August in a board shakeup orchestrated by an activist investor and has been spearheading a strategic retreat to its core activities in the United States.

Cliffs took control of Bloom Lake in the $5-billion acquisition of Montreal-based Consolidated Thompson Iron Mines in January of 2011. At the time, Cliffs already had a mine in Wabush, Nfld., which it is now also closing down.

When Cliffs bought Consolidate Thompson in 2011, iron ore prices were at $185 a tonne. They are now at about $65, far below Bloom Lake's operating costs.

Cliffs took a $6-billion writedown in October, largely because of Bloom Lake.

Cliffs and Environment Canada officials were not available to comment on Thursday.

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