Thomson Reuters






By Mike De Souza


OTTAWA, June 19 (Reuters) - Heavy dust clouds blowing from
Cliffs Natural Resources' abandoned Wabush iron ore mine into a
small township in the eastern Canadian province of Newfoundland
and Labrador is putting a focus on the liability of miners that
seek creditor protection and walk away from assets.


Iron ore and coal miner Cliffs Natural Resources Inc
announced in February 2014 it was shutting down its Wabush mine.
This year it sought creditor protection for its Canadian assets.





The fate of the deserted mine is in limbo until it is either
acquired by a rival or Cliffs is able to restructure and exit
creditor protection.


Local residents say the abandoned site has many open pits,
with drilling equipment, trucks and other equipment stranded on
the site.


"Now that the company has gone into closure, it is very hard
to maintain a relationship with them. From a corporate level, we
have not heard anything from them in almost a year, if not
longer," said Colin Vardy, mayor of the town of Wabush. "I'm
very disappointed. ... They haven't been paying their town
taxes."


Vardy said the company used to spray water on its tailings
to control dust, but now that the mine has been closed dust is
casting a pall around the town and causing health concerns.


The provincial environment department says air quality
monitoring stations show that pollution levels are still at low
risk levels, which may mean the dust is more of a nuisance than
a health risk. Vardy was skeptical.


"When I walk through the community and I can feel the dust
on my teeth and I can feel it in my mouth and I can feel it in
my nose," said Vardy, adding the town is urging the provincial
government to intervene and release funds from a security bond
paid by the company of about C$50 million ($40 million) to cover
mitigation costs.


Newfoundland Environment Minister Dan Crummell on Thursday
said the government has told Cliffs it is responsible to
remediate the land, despite being under bankruptcy protection.
He told the provincial legislature that Cliffs recently issued a
contract to revegetate the tailings area.


Both Cliffs and U.S. Steel have sought creditor
protection for their Canadian arms in a bid to isolate losses
and insulate their shareholders.


Critics say the creditor protection filings are thinly
veiled attempts by the companies to wash their hands of closure
costs and pension liabilities around their assets. U.S. Steel
has significant environmental clean-up costs around its Hamilton
operations.


Cliffs and U.S. Steel were not available for comment.


A spokesman for a Canadian watchdog group said the situation
shows miners need to have long-term plans, regardless of whether
they are using wet or dry tailings.


"Obviously you cannot rely on a plan that involves
sprinkling water forever on tailings to control the dust," said
Hugo Lapointe, program director for MiningWatch Canada.


Miners typically use either wet or dry tailings ponds to
store the waste material created during the mining process. Both
disposal systems present their own challenges.