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Cliffs Natural Resources’ decision to close the Bloom Lake operation will put 500 people out of work.Fred Lum/The Globe and Mail

The chief executive officer of mining giant Cliffs Natural Resources Inc. is taking aim at his predecessors for their decision to pump billions of dollars into Canada, saying every single investment it made here in recent years was a "disaster" that failed to produce any profit.

"I'm walking away from Canada big time – Canada for Cliffs has not been a good thing," Lourenco Goncalves, the company's chairman and CEO, said in an interview Thursday. "All these investments that the company made in Canada after the Wabush mine were a disaster."

"I'm not the type of guy that's too much of a Monday morning quarterback," he said. "But these [decisions] are very clear. Misguided decisions all the way."

Cleveland-based Cliffs, the biggest U.S. iron ore producer, has spent $6-billion (U.S.) in all on its Bloom Lake iron ore mine in northeastern Quebec over the past three years and "never made a penny" on the investment, Mr. Goncalves said. The company on Wednesday announced that it is "pursuing exit options" for its Eastern Canadian iron ore operations, evaluating its maximum exposure to close the Bloom Lake site at $700-million. The company will also close its mine in Wabush, Nfld., which had been in operation for more than 40 years.

The move at Bloom Lake came after the company decided it could not afford the $1.2-billion that was needed to expand the Quebec operation to make it viable.

Also, one of the three steel makers that the CEO approached to share in the expansion cost missed the deadline for a deal. Iron ore is used to make steel.

Cliffs has also spent about $550-million to buy and develop three chromite deposits in Northern Ontario's so-called Ring of Fire. That effort has gone nowhere, largely because the government has failed to produce the rail infrastructure required to get the mineral out, Mr. Goncalves charged. Another nickel-iron alloy project in British Columbia also failed to pan out, he said.

It has been a stormy time for Cliffs, which has been under pressure by activist investor Casablanca Capital LLS to spin off its foreign assets and deliver better returns for shareholders. Mr. Goncalves took over as CEO in August amid a larger board shakeup and he's now executing a strategic retreat back into its U.S. base. Cliffs' previous directors hadn't "demonstrated a shred of business acumen," Casablanca said.

Cliffs took control of Bloom Lake as part of its purchase of Montreal-based Consolidated Thompson Iron Mines in January, 2011. The $5-billion deal saw the company bolster its presence in Canada, adding Consolidated's assets to Cliff's existing operations in Wabush. At that time, iron ore commanded a price of more than $160 a tonne on world markets. The raw material now trades at less than half that price as Chinese demand continues to slow.

"It's the higher-cost producers in this sort of environment that are being squeezed," said Eric Lemieux, a mining specialist and adviser for Peartree Securities in Toronto. "Mining is challenging and when you're in the bottom of the cycle, it can be very hard to survive."

Production costs at Bloom Lake at the moment are running at about $80 a ton, Mr. Goncalves said. That compares to the company's U.S. facilities, which are cranking out the same material at a cost closer to $44 a ton, he said.

He said Cliffs also has to pay $15-million every quarter for tonnage it committed to but isn't using on the Iron Ore Company of Canada-owned Quebec North Shore and Labrador Railway. He considers it money he's just "throwing away."

Cliffs' decision represents a setback for the Quebec government's Plan Nord, a multibillion-dollar economic development strategy Premier Philippe Couillard is counting on to create jobs and stoke private investment. Some 500 people would be left without work at Bloom Lake, adding to the 100,000 jobs the province has lost over the past 12 months.

It also throws into question the business case for a new rail line between the Labrador Trough, where the mine is located, and Sept-Îles, the service centre and port town where the iron ore is loaded onto ships for export. Quebec is spending $20-million to study the feasibility of a new line to Sept-Îles to beef up the single link now feeding the city at the very time a key producer is pulling out.

"I consider this Cliffs announcement a warning," said Luc Dion, chairman of Sept-Îles's economic development board, noting that the Sept-Îles region has been hit by several negative developments already this year including the closing of the company's iron ore pellet plant. "It's been a chain of job and contract losses that's starting to be felt in the community."