William Boor, Cliffs Natural Resouces Senior VP-Global Ferroalloys, Ring of Fire Thunder Bay Speech (June 20, 2013)


William Boor, senior vice president — global ferroalloys, spoke at the 3rd Annual Ontario Mining Forum, held in Thunder Bay in June 20-21, 2013. During his keynote address, Mr. Boor talked about Cliffs Chromite Project and the potential impacts and opportunities mineral resource development projects can have for the communities of the Ring of Fire region of Northern Ontario.

Third Ontario Mining Forum Speech – by William Boor, Senior Vice President Global Ferroalloys

This evening I’m very happy to be here, happy to have the opportunity to speak to such a great room and a wonderfully captive audience as well. I’m excited about the opportunity because I think we have come to a time that will prove to be really critical in the history of the Ring of Fire development.

I wanted to start out by saying that I stand here talking tonight as a face of “industry.” We talk about Government, First Nations and industry and I am the face of industry. I know what comes with that. As “industry” I am expected to be self-interested for my company’s shareholders only, interested in keeping as much as possible, and by inference, giving as little as possible.

As I speak about this development and what it can mean for Ontario and Northern Ontario in particular, I recognize that there is likely to be some cynicism, because again I represent “industry.” But I’m asking you to hear me as a person, a person who believes that development, and particularly mining development, creates the possibility for everyone to succeed together. I believe that my position within “industry” is a wonderful place to change people’s lives.

In my prior role within Cliffs, we began looking at the Ferrochrome industry about 5 or 6 years ago. Of course, we are in a company, it starts with the numbers, it starts with the business concept, it has to make sense, it has to have return potential, all the things that you expect. But through this project I, and many people from my team, have been invited into some of the communities. We’ve had the opportunity to spend a considerable amount of time there. It’s been a wonderful experience for me and very eye opening.

I recently spent time in Fort Hope and Chief Papah took me to meet two women who are
running a Suboxone program to help people that are addicted to Oxycontin. These women are
running a wonderful program and are working hard to improve their communities. These
stories are happening all over the place and are not often heard about. Over the past 2 years,
more than 150 people in that community have volunteered to go into that program. That’s a
community of 1400 or so. I have heard the statistics before going there of addiction sometimes
exceeding 50% of adults. But think about it, over 10% of a community the size of Fort Hope –
1400 people. Over 10% have volunteered to go into that program which raises the obvious
question that we all unfortunately have a sense of the answer to, which is how many have not
enrolled in that program?

I couldn’t help but think about the question of what’s needed for these people to be successful
in their battle against addiction. What’s different when they return to their lives after the
program? Maybe I’ve got it wrong. These are my perceptions and my questions, but what
changes in their world that provides hope for a brighter future as an alternative to the addiction
that they got into in the first place? I am saying as a human being, that original business
concept which is still important to make this work, it changes and takes on a different level of
purpose when you meet these people and believe as I do that economic opportunity plays a
critical part in answering those questions. I really have trouble understanding how to answer
those questions without economic development.

We have been at this for a while, there has been a lot of discussion and positioning, there has
been a lot of agreeing and disagreeing, relationship building and negotiation. But now we are at
a time when the people involved need to set a course that will either move the Ring of Fire idea
forward to make it a reality or it will fade away.

I want to talk about that point. I hear from time to time that the chromite has been in the
ground for a long time and it isn’t going anywhere. People will say “If it doesn’t happen now,
it’s fine…it’ll happen later.” I take exception to that statement. That’s very close to saying that
it’s ok that there is a lack of opportunity in those communities… it’s very close to saying that
that it’s ok that unemployment exceeds 90% in some cases, and more than 50% of the adults
have an addiction, it’s very close to saying that it’s okay for teenage suicide to be almost
routine. Suggesting that it isn’t important when opportunity is brought to and seized by those
communities is, in my opinion, simply unacceptable because I’ve seen it and been welcomed
into the communities and they have shared with me the isolation and in my words the lack of

Obviously, development of the Ring of Fire is not going smoothly at this point. I am an optimist
and I want you to understand that as I talk tonight and I hope I don’t come across as too
frustrated or pessimistic. This isn’t a challenge facing the people in First Nation communities or
a challenge facing the people of Thunder Bay, Greenstone, Toronto or Sudbury. It’s a challenge
to the leaders of the First Nation communities, the Municipalities, the Province, and industry,
people like myself.

Little over a month ago I was in Webequie First Nation. Cliffs was involved in a training program
that was led by Oshki. I think we heard about it a little bit today during some of the
presentations. Oshki is a wonderful group of people, who really are taking on the challenge of
preparing First Nations people for employment, and in this case, employment in mining.
Fourteen Webequie members ranging in age from 19 to 50 graduated from a mining program. I
stood in the Webequie community center that day and watched these people enter in the
community centre in their graduation gowns. They were people who had taken the initiative to
step forward to be trained for good jobs and they committed themselves to 4 months of
training, most outside of their community, a great commitment, including spending a week at
our camp in the Ring of Fire area.

I thought about telling you about this, and I feel like I don’t have words to explain completely
that it struck me as those graduates walked into that room that after the years that I’ve
dedicated to this project, that these were the first faces I was able to look at of real people who
wanted the opportunities, stepped forward, and dedicated the time and energy in the hope
that a better life can be provided with development. I don’t know if I can aptly communicate
how meaningful a moment that was for me. We talk about the numbers, we talk about jobs,
these are the real faces. And what it brings home is a stark reminder of what this is all about.

Most importantly, they are ready and looking to us, as leaders, to give them the opportunities.
It’s in the hands of the leaders of government, those communities, and the companies involved
in the Ring of Fire.

Let me shift a little bit, I want to address our recent announcement that Cliffs is temporarily
suspending our Environmental Assessment work. It’s very important that you understand that
this was really not a decision on our part. Cliffs didn’t sit back in Cleveland and decide maybe
it’s less of a priority and let’s halt this thing. It was more of an acknowledgement that we have
gone as far as we can without resolution of the set of issues we identified. It was an
acknowledgement of being open about the fact that we feel like we are at that point. I hope it
makes sense to everyone that we need the involvement of First Nations communities in the
work and therefore have run out of things to do without that involvement. This is the very
involvement they are rightfully demanding, and yet, we simply haven’t decided how to make it
happen together.

I hope it also makes sense that if Terms of Reference are not approved, we cannot advance the
very process, the EA process those Terms of Reference are intended to define. These are the
ground rules of the process and without ground rules we run out of things to do. We don’t
simply intend to conduct an EA, we intend to do it properly while building relationships and
confidence that will serve us all well for generations.

Every discussion I have with our CEO, Joe Carrabba, he reinforces that while progress is
important, we will have no choice but to walk away if there is not support for our involvement
in Northern Ontario. Any other approach is inconsistent with our values and as a 165 year-old
company which has developed mines in alignment with local interests, we understand the
importance of not just developing a project, but developing it properly, sustainably, and with
support of the community.

With regard to the announcement that we made, I have a lot of optimism about our ability to
get through those issues and move forward. I’m not by nature an alarmist, but I think it’s
important to clearly recognize where we are in the process. The development is at risk because
it has lost a lot of momentum and done so at a time when investors are hesitant. That’s the
reality of our situation.

I don’t think it is well understood that this project has already created a significant number of
jobs. We had hoped to continue building on the team that we grew through 2012. At our camp,
we have employed people in exploration and environmental baseline monitoring. At our peak
late last year, we had an extended team that in my rough estimate approached 250 people fulltime
on this project. Not Cliffs people, but the extended team, approximately 150 people are
from Hatch, the engineering firm we worked with on feasibility. We employed people from the
First Nations communities in our environmental and exploration work, as well as in
geotechnical studies.

Unfortunately, rather than building on those ranks, Hatch’s work came to a completion and
they were demobilized from the project because without the resolution of issues, there was no
work that made sense. Similarly, as announced last week, the environmental work has reached
a point where it must be suspended, waiting for other items to catch up. So, rather than
building, we have faced and will continue to face the reality of slowing down due to a lack of
alignment. We all collectively agree about the shared desire regarding seeing the Ring of Fire
move forward, but we have not aligned ourselves to make it happen.

I also want to address comments made about Cliffs’ financial ability to execute. Let me say
unambiguously that this is not the issue. It is not behind our recent announcement. I don’t
think I heard a lot of it, but I heard some say that the announcement was an attempt by Cliffs to
back away from the project because of the financial situation, but that’s not the case. A few
points…nobody at Cliffs started a project like this, which we all know will take many years to
develop, without expecting that it is likely that there would be a commodity downturn at some
point in the process. We have been in the industry and we understand how these things work.
We are some years away from spending amounts on this project that bring affordability into
question. The big money in this project is after we get through a lot of what we are working on
right now, so that’s a time away. When that day comes we will have many options to fund this
project and they include partnerships, which is something Cliffs has done exceedingly well
throughout our history.

The last point I want to make may sound overly simplistic, but I ask you to really think about it,
as I think the most important point does not have anything to do with Cliffs Natural Resources,
it is that good projects get funded. I think Canada knows this as well as anyone. There are junior
mining companies that have found discoveries and developed projects that have built the
mining industry in Canada. Good projects get funded, sometimes by companies that have no
other assets, which is certainly not the case with Cliffs, we have an asset base.

The issue is not affordability, the issue is priority and until we achieve the alignment I have
been discussing, the question of moving forward is not really one I can even take to our Board
of Directors. We need to have a project that is ready for action and a decision in order for me to
take it forward. In short, I note this is my belief about this, I find it is easy for people to suggest
that affordability is the problem, it is an easy thing to say for people possibly not interested in
seeing the project move forward, but it is inaccurate.

Shifting gears a little bit, I’m sometimes asked about our view on the Environmental
Assessment processes – people ask me how does it compare? I think people see that this is not
an easy process overall and they want to attribute that to the Environmental Assessment
process, so we are asked as a company that operates in various regions – so what’s your view
on our Environmental processes and how they compare? I am not an expert on Environmental
Assessment processes, we have people that are, but I am getting a pretty good education on it.
In a nutshell, my view is that there is nothing wrong with the Environmental Assessment
processes, both at the federal and provincial levels.

Fundamentally you can’t mandate alignment by changing a structured Environmental
Assessment process. But Cliffs has never approached this with a view that we if check the boxes
on a formal process, we’ll be off and running. Ultimately, we need to gain the support of the
communities and we expect that to involve going well beyond the minimum, particularly in a
project as far reaching and complex as this one. The formal processes provide plenty of
structure and flexibility for us to meet the intention that we have. That intention is to ensure
the issues and concerns are raised, we work on them together and that the issues are resolved
so that true support can be given to the development.

This is an alignment process and it can’t be mandated through government processes. The
people impacted by the project and the company need to work together to achieve this
alignment. This is why Cliffs has proposed from the beginning that we undertake an approach in
cooperation with the communities that goes beyond any narrow reading of the formal process.

When you hear that the EA process is schedule-driven it’s paper-based, it does not provide the
opportunity for translation, oral input, and a full understanding of the project by the affected
communities, that is simply not what has been proposed. Again, I view this as the distractions
of people who are not seeking answers and who see courtrooms as the place to resolve issues
and possibly to block development. For all the discussion and debate about the process, I’m
much less interested and concerned about the requirements and more interested in engaging
in a way that makes sure we listen and learn from each other with the goal that our future
neighbors are ultimately comfortable moving forward with us.

I say that with confidence as we have worked on this project for quite a while now, that this
project can be done in an environmentally sustainable way. It’s Cliffs’ job to demonstrate that, I
don’t expect anyone to take that on faith. It’s our job to demonstrate that belief and that
confidence and I believe we can, but I also I feel it’s the responsibility of the communities and
other interested parties to give us that opportunity. So the real question going on at Cliffs is
“are people ready to get on with it?”

As a business partner, we must meet or exceed your expectations, we must comply with your
rules and regulations, we must be compatible with your social, cultural, and traditional values,
and we must add quality to your lives. In short, we must earn your confidence and we call that
our license to operate. I am very proud of the company I represent because of its values and
history of demonstrating that we are good environmental stewards and we are a good
employer with a long term perspective.

Let me bring it back to the graduates in Webequie who are waiting for leaders of government,
their communities, and industry to figure it out. When I recently checked, none of those
graduates has found employment in mining. So they’re continuing to wait for us. The beauty of
a well-executed, environmentally responsible development of this magnitude is that truly
everyone can succeed together. In fact, it is only by succeeding together that any of us can be
successful, we all know that.

Cliffs cannot be successful with this project if the government doesn’t feel like it’s been a
successful project. We certainly can’t be successful with this project if the First Nations
communities don’t benefit appropriately. I would like to think that the other people involved in
this development would also understand that they cannot be successful if the company cannot
be successful with this project. There is no success without each of the other parties being

Very simplistically, but very importantly, it’s time to stop thinking about this development as a
negotiation. I recognize that this statement can fall on some cynical ears so I’d like to repeat it.
Whether you are working for government in a regulatory capacity, or on the agreements to
provide infrastructure and economic solutions. Whether you are a First Nations leader or
advisor. And certainly I say this to myself and others on the Cliffs team. It is time to stop
thinking of this as a negotiation.

We owe it to the graduates I saw a few weeks ago and the people voluntarily participating in
Suboxone programs to break their addictions. We owe it to the literally thousands of people in
Northern Ontario who’s families stand to have a better life through the jobs and business
opportunities the Ring of Fire can potentially provide. We owe it to the elders I have spoken to,
who understand that if their communities are to survive and thrive, if their cultures are to be
preserved, they need solutions that will keep future generations healthy and in those

Our jobs are not to negotiate as if one wins at the expense of the other. Our jobs are to find
solutions as partners in the exciting development of a new mining district and to do it in a way
that shows the path for future investments. Well executed development can change lives for
the better and this is the opportunity I see to make a difference in the Ring of Fire.