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Two mining exploration camps are pictured in the proposed Ring of Fire development area, approximately 500 kilometres northeast of Thunder Bay, Ontario in this undated handout photo obtained by Reuters March 28, 2013.

Handout/Reuters

Cliffs Natural Resources Inc.'s decision to temporarily halt the feasibility work on its $3.4-billion (U.S.) chromite mining project in the remote Ring of Fire region of Northern Ontario may have an upside for the company.

The Cleveland-based iron ore giant says it is suspending environmental-assessment activities because of delays related to several issues, including land rights, unfinished agreements with the Ontario government and uncertainty over the federal environmental review in light of legal challenges by First Nation bands.

This is just the latest snag in the much-delayed chromite project dubbed Black Thor, which has become entangled in a complex set of issues on the regulatory, environmental, economic and infrastructure fronts.

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But this new delay might just be the breather that Cliffs, which is struggling with the impact of low iron ore prices at its operating mines, needs right now, some analysts say.

"We believe the temporary suspension of the project will limit the amount of money spent on it and allow Cliffs to allocate resources elsewhere," RBC Dominion Securities analyst Fraser Phillips said in a research note on Wednesday. He deems the halt "immaterial to our outlook."

He added that Black Thor's economics – chromite is refined into ferrochrome, used in the manufacture of stainless steel – are "questionable at current ferrochrome prices."

"The company was expected to spend [$400-million to $500-million] in coming years, therefore BMO Research considers the decision to suspend development as a positive move," BMO Capital Markets analyst Tony Robson said in a note on Wednesday.

On the other hand, Cliffs has spent about $500-million acquiring the chromite properties from junior resource companies as well as on initial project work, Mr. Robson said. The "suspension may trigger a writedown of the asset's carrying value."

The office of Tony Clement, Treasury Board president and Minister for Federal Economic Development in Northern Ontario, said in a statement: "This decision was made by a private company. Our Conservative government is focused on working with all stakeholders to ensure the potential of the Ring of Fire becomes a reality. We will continue to work with all levels of government, First Nations and other stakeholders to help maximize the economic opportunities for Northern Ontarians."

Bill Boor, Cliffs senior vice-president of global feroalloys, said in a news release: "We remain excited about this project ... however, given the current unresolved issues, we cannot and will not unilaterally move the process forward and must manages our resources appropriately."

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Mr. Boor added that Cliffs will continue to work with Ontario and First Nation communities with an eye on settling the issues.

Besides the mine itself, a 350-kilometre road must be built to truck the ore to the Sudbury region for processing and power lines must be installed. Government subsidies are deemed key for the transportation corridor to go ahead, but no commitments have so far been made.

Black Thor is one of several mining projects by different companies in the Ring of Fire area.

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