CLEVELAND (AP) â¿¿ Cliffs Natural Resources Inc. said Wednesday its third-quarter net income dropped nearly 86 percent as the mining company saw a steep drop in the price of iron ore, and higher labor and mining costs. Cliffs reported net income of $85 million, or 59 cents per share, in the July-September quarter, down from $601 million, or $4.15 per share, in the third quarter of 2011. This year's quarter included a $2.7 million loss after Sonoma Coal was booked as a discontinued operation. Revenue fell 26 percent, to $1.54 billion from $2.09 billion a year earlier. Prices for seaborne iron ore were 36 percent lower in the third quarter compared with a year earlier, Cliffs said. The Cleveland-based company sells iron ore in the U.S. and Asia. Iron ore is used in blast furnaces as part of the steel-manufacturing process. Iron-ore prices have fallen sharply as the global steel industry has struggled with tepid demand and plentiful supplies. . Cliffs' chairman, president and CEO, Joseph Carrabba, said the company is focused on the expansion of its Bloom Lake mine expansion in Canada, and on maintaining its dividend and investment-grade rating. He noted the volatility of iron ore prices. Cliffs shares fell 86 cents to close at $42.69 in regular trading. They dipped $2.88, to $39.81, in after-hours trading following the release of the earnings report.