Thomson Reuters






(Recasts with CEO interview)


By Nicole Mordant


Feb 3 (Reuters) - An onerous transportation contract entered
by Cliffs Natural Resources' Bloom Lake iron ore
operation in Canada will be renegotiated under Bloom's creditor
protection filing, Cliffs' chief executive said on Tuesday.


Lourenco Goncalves said the contract with the Quebec North
Shore and Labrador Railway (QNSL) that has Bloom Lake on the
hook for $450 million has been stayed by a Quebec judge as part
of Bloom Lake's filing last week in Canada.


"It will be negotiated. When a contract is stayed it means
it is no longer valid," Goncalves said in an interview.


Asked if a renegotiation could help to make Bloom Lake's
assets more attractive to sell under the restructuring
proceedings, he said: "This is the correct conclusion."


The rail contract makes up more than half of Bloom Lake's
estimated closure costs of $650 million to $700 million. The
QNSL line is a unit of Iron Ore Co of Canada (IOC), which in
turn is controlled by global miner Rio Tinto.


IOC was not immediately available for comment.





CANADA SALES


Goncalves said he expects all or most of Bloom Lake's assets
to be sold under the creditor protection process, possibly this
year.


Cliffs was approached by "several interested parties" and
the Quebec government in the past two months over the sale of
Bloom Lake outside creditor protection, Goncalves said on a
conference call to discuss Cliff's fourth-quarter results.


"All things being considered we are very confident the Bloom
Lake Group will be done with CCAA within calendar 2015" he said.


The filing, which isolates Cliffs from losses in its Bloom
Lake operations and protects shareholders, comes at a time of
weak global iron ore prices.


He declined to give details of any potential buyers.


Cliffs said last October that it was in talks with three big
steelmakers about selling a 30 percent stake in Bloom Lake.
Goncalves had earlier this year identified the parties as
U.S.-based Nucor and two Japanese steelmakers, according
to a note by JPMorgan analyst Michael Gambardella.


But the sale process failed as the parties could not agree
on structuring a quick deal.


Chinese steelmaker Wuhan Iron & Steel, known as
Wisco, already owns a minority stake in Bloom Lake.


Bloom Lake is also looking to sell its idled Wabush iron ore
mine in Eastern Canada but was not under pressure to sell it,
Goncalves said.


Cliffs stock last traded down 3.3 percent at $6.74.

(Reporting by Nicole Mordant in Vancouver; editing by Chizu
Nomiyama and Meredith Mazzilli)