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Bloom Lake Mine, Quebec.

Cliffs Natural Resources Inc., the U.S. iron ore producer cut to junk by Standard & Poor's last week, said it's in talks with steel makers about selling a stake in its Bloom Lake mine in Canada.

Investors in the project would get a share of its ore output, chairman and chief executive officer Lourenco Goncalves said today in a telephone interview.

The Cleveland-based company acquired Bloom Lake when it bought Consolidated Thompson Iron Mines Ltd. in 2011. Since then, Cliffs has cut costs at the mine and indefinitely idled a second development phase amid declining iron ore prices.

"If we go with Bloom Lake phase 2, it will be with four big equity participants," Goncalves said. "I'm talking about steel mills that will take big chunks of our production."

Goncalves took over at Cliffs in August, the month after activist investor Casablanca Capital LLC won a proxy fight to change the company's board. He has announced a plan to buy as much as $200-million of shares and has sold a minority holding in a graphite mining company as part of a review of Cliffs' assets.

Casablanca has advocated selling Bloom Lake along with Cliffs' Australian mines and U.S. coal operations. The Australian assets have drawn interest from companies including Mineral Resources Ltd. and Mount Gibson Iron Ltd. people familiar with the talks said in September.

Slowing Demand

"I don't like to get rid of anything," Goncalves said of the Australian segment. "It's Ebitda-positive, it has life remaining there," he said, referring to earnings before interest, taxes, depreciation and amortization.

Cliffs is still pursuing a sale of a chromite-mining project in Canada, "as soon as I can," Goncalves said.

The shares rose 9.9 per cent to $9.07 (U.S.) in New York today. They are still down 65 per cent this year, the worst performer in the 19-member Bloomberg Americas Iron/Steel Index.

S&P said Oct. 7 it cut Cliff's credit rating three steps to BB- with a negative outlook, citing prices.

Swaps for steel making ingredient have dropped 37 per cent in Singapore trading this year as Chinese demand slows and producers in Australia ramp up output.