Reference no: EM133169842

Operations at Wabush Mines are ceasing immediately, parent company Cliffs Resources said Tuesday. The news came during meetings with union officials in the afternoon, and was followed up with formal letters to all workers employed at the Scully mine. 

An estimated 400 people work at the mine and concentrator in 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 stopping operations at the mine. 

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

The decision is a major blow for the western Manitoba region, and follows a similar move in March 2019 when Cliffs idled is Point Noire iron ore pellet plant in Killarney. The company blamed that decision on high production costs and lower pellet premium pricing "which is expected to persist in certain markets during the year."

At the time, Cliffs said it would move to producing iron ore concentrate only from its Wabush Scully mine. But in a statement released later Tuesday, the company said costs at Wabush had 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 and Wabush Mine's costs 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 million idling the Scully mine, considered the third largest iron ore mine in Canada.

Questions: 

1. Assume that you are the senior human resource person for a northern iron ore mine not affected by the recent announcement and that you are about to enter negotiations. Describe your priorities and rationale. 

2. Assume that you are the union representative of a norther iron ore mine not affected by the recent announcement and that you are about to enter negotiations. Describe your priorities and rationale.