U.S. mining company Cliffs Natural Resources has cast more doubt on the stability of the iron ore industry, with a decision to shut down work on a pellet plant in Quebec.

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Cliffs CEO Joseph A. Carrabba says production costs are related to a decision to idle a pellet plant in Quebec. (Cliffs Natural Resources)

Cliffs says it will continue to operate the Wabush Mines operation in western Labrador, but will idle its pellet processing plant in Sept-Iles, Que., by the end of May.

In a statement, the company said "its decision to idle its iron ore pellet operation is due to high production costs and lower pellet premium pricing which is expected to persist in certain markets during the year."

Patricia Persico, the director of global communications with Cliffs, said the company is shifting its focus in terms of what it produces in Labrador.

"We have to lower costs, so, within the Wabush operations, we've made a decision [that] we'll move from producing pellets to strictly concentrate and then sell that to the seaboard market, which goes out to Europe and Asia," she told CBC News Tuesday.

About 165 jobs will be lost in Sept-Iles when the plant closes in May.

In November, Cliffs halted its expansion plans for its mining property Bloom Lake, in northern Quebec, near the Labrador border. The area is one of Canada's most important sources of iron ore.

In a statement, chairman and CEO Joseph A. Carrabba indicated Bloom Lake remains a priority for the company.

"We are taking a long-term view of our investments in Canada. These measures address current market conditions and we look forward to advancing our work at Bloom Lake which is key to Cliffs' future," Carrabba said.

Persico says some of the people who will lose their jobs in Sept-Iles may be able to find work at Bloom Lake or in Wabush.