Scotiabank Files Lawsuit Against Cliffs Over Canadian Mine Loans

By Judy McKinnon 

Cliffs Natural Resources Inc. said Thursday that Canadian lender Bank of Nova Scotia has filed a lawsuit against it, seeking an award of more than $52 million for alleged breaches of loan obligations related to the miner's Canadian Bloom Lake iron-ore mine.

After failing to secure new equity for the Quebec mine, Cleveland, Ohio-based Cliffs said in January said it would restructure Bloom Lake under bankruptcy protection, saying the operation had stopped generating revenue.

A Bank of Nova Scotia spokeswoman wasn't immediately available to comment on the lawsuit, nor was a spokeswoman for Cliffs.

Cliffs, which announced the lawsuit in an Securities and Exchange Commission filing, had said late last year it was pursuing exit options for the mine as falling iron-ore prices made mine development increasingly costly.

In the filing, Cliffs said the lawsuit was filed by the bank on Monday in an Ohio court and alleges the miner breached its obligations under certain equipment loans related to a master loan and security agreement.

Cliffs said the bank, one of Canada's five-biggest lenders, is seeking $52.6 million plus interest and expenses. The miner said it has met its payment obligations under the equipment loans.

Ben Dummett contributed to this article.

Write to Judy McKinnon at [e-mail]

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