Bloom Lake iron-ore mine in Quebec now has a buyer after suffering massive losses

After crumbling down a year ago for suffering massive losses, Bloom Lake iron ore mine in Quebec finally has a buyer. The losses Bloom Lake incurred shows how the commodity meltdown has adversely affected the metals industry.

Financial Post reported that junior miner Champion Iron Ltd. will purchase Bloom Lake out of bankruptcy protection for an amount of $10.5 million. Champion will also assume the miner's $42.8 million worth of liabilities.

Champion's executive chairman Michael O'Keeffe said, "Bloom Lake is considered an exceptional opportunity for Champion, and one that would not have presented itself without the challenges of the current downturn in bulk commodities."

According to Bloomberg News, Cliffs Natural Resources Inc. bought Bloom Lake for $4.3 billion as part of the Consolidated Thompson Iron Mines Ltd. takeover back in 2011. That time, iron-ore prices hit $190 per metric ton. Just this January, Cliffs suspended the mine's production and looked for creditor protection.

Champion's acquisition of Bloom Lake comes after this week's announcement that Anglo American Plc and Freeport McMoRan Inc. is deepening their cutbacks as producers struggle to maintain income as metal prices hit its lowest in six years. BB&T Capital Markets analyst Garrett Nelson said, "Those are three very strong indicators that we are now in a point of severe distress for the industry."

Meanwhile, it was the commodity meltdown that gave Champion a "competitive" bid in the negotiations to buy Bloom Lake, said O'Keeffe in a report by Reuters. Champion shares went up 30 percent to 19.5 Canadian cents in the Toronto Stock Exchange after news of the acquisition broke out.

Meanwhile, Cliffs stock dropped 4.1 percent to $2.09 on the New York Stock Exchange. The take-over, which awaits court approval, will close in the first quarter next year.

Cleveland-based Cliffs planned to increase capacity and cut operating costs, but the decline in iron ore prices and the weaker demand for materials drastically increased the operating and capital costs.