THUNDER BAY – Breaking News – Cliffs Natural Resources first stepped back from the Ring of Fire officially last November. The company explained in shutting down its operations in Northwestern Ontario that the company was “suspending operations”.
Now it appears the company is taking another big step back from the chromite discovery in Northern Ontario. Cliffs Natural Resources has been facing pressure from an investor who is seeking to break up the company.
Moody’s is saying that would not be beneficial. Moody’s says that Cliffs’ actions in the past twelve months that have including cost cutting spending reductions along with reducing debt levels. Those efforts have resulted in a stronger credit portfolio for Cliffs.
Moody’s reports that Cliff’s Asian-Pacific operations are providing the company with diversification and cash flow to the company which are helping to reduce Cliffs Natural Resource’s $3.9 billion debt load.
Moody’s states in a report reduced on January 28 2014, “Given its strategic objectives for positioning the company for future growth, we believe Cliffs will continue to exhibit a conservative approach to its capital structure and remain focused on cost reduction and managing to a neutral cash flow position while making necessary capital investments.”
Cliffs Walking Away Faster from Ring of Fire?
Part of the change has been in Northwestern Ontario’s Ring of Fire. Cliffs Natural Resources first “suspended operations”.
In November 2013 Cliffs Chromite Ontario Inc., announced that the company will suspend indefinitely its Chromite Project in Northern Ontario by the end of the fourth quarter of 2013. The Company determined that it will not allocate additional capital for the project given the uncertain timeline and risks associated with the development of necessary infrastructure to bring this project online. In June of this year, Cliffs suspended the environmental assessment activities because of pending issues impeding the progress of the project.
The company was citing difficulties in accessing the resources.
At the time Cliffs reported, “We continue to believe in the value of the mineral deposits and the potential of the Ring of Fire region for Northern Ontario. As we’ve assessed the current challenges in the region and the costs to continue on the current path, we decided to suspend the Chromite Project indefinitely,” said Bill Boor, senior vice president, strategy & business development. “Unfortunately, we will reduce the project team staffing and close our Thunder Bay and Toronto offices as well as the exploration camp site. We understand this is a hardship for our employees and their families. During this transition, we will be working with this talented team of professionals to explore other opportunities at Cliffs.”
Cliffs Selling off Ring of Fire Assets – Sources
Now it appears that Cliffs will do more than simply suspend operations. The company, according to sources, will completely pull out of the Ring of Fire. It is stated that Cliffs is offering up the company’s camps and other assets in the Ring of Fire for sale.
Minister of Northern Development and Mines, Minister Michael Gravelle has repeatedly stated that “We must get it right” when referring to the Ring of Fire. Minister Gravelle announced a Ring of Fire Development Corporation in Thunder Bay in December.
The Ring of Fire development is continuing with Noront Resources Inc., and KWG Resources.
Cliffs Natural Resources Cliffs intends to announce unaudited 2013 fourth-quarter financial results after the U.S.-market close Thursday, Feb. 13. Interested parties are invited to listen to a live broadcast of a conference call with securities analysts and institutional investors to discuss the results on Friday, Feb. 14, at 10 a.m. ET. The webcast link will be available on the homepage of Cliffs’ corporate website, www.cliffsnr.com.
Moving Forward on Ring of Fire
The Ring of Fire is likely to move forward with Noront Resources Inc. taking a bigger lead role on the project.
Noront Resources Ltd. (TSX VENTURE:NOT) has completed a coordinated Federal/Provincial Environmental Impact Statement and Environmental Assessment Report (“EIS/EA”) for its Eagle’s Nest Project.
Work on the EIS/EA Report was initiated by Noront in 2009 and includes baseline environmental studies that examine the mine site, the access road corridor and a railcar loading site. The studies were designed to comply with requirements set out in the EIS Project Guidelines provided by CEAA, and are consistent with the Terms of Reference submitted by Noront to the MOE.
“Completion of a draft EIS/EA Report marks an important milestone for Noront,” said Alan Coutts, CEO of Noront Resources. “We believe that Eagle’s Nest will be the first mine developed in the Ring of Fire and this brings us one step closer toward achieving that goal. We look forward to receiving comments from the provincial and federal governments as well as any other interested parties.”
What is Noront Resources Doing Right?
A key difference for Noront Resources has been the company’s ability to engage, listen and respect the First Nation communities and Chiefs as they have worked on the project. Increasingly in Northern Canada the ability for mining and forestry companies to work with First Nations communities is going to be a key component of bringing a project forward to a successful mine development or forestry project.
First Nations communities, looking over the history of resource development on their territories are looking to gain a share of the resource bounty and a key percentage of the jobs that the project has to offer.
Some critics of Cliffs Natural Resources say that the iron ore giant seemed to figure they could dictate the direction in Ontario both all levels of government including the federal, provincial and First Nations governments.
That process is one of the factors that has impacted Cliffs in Ontario.
Noront Resources and KWG Resources have remained more engaged with working with governments, and with First Nations.
Next Steps?
The Ontario and the federal government have not put forward an agreement toward the proposed Ring of Fire Development Corporation. Either have Noront Resources or Matawa First Nations.
With the fading from the scene by Cliffs, it is likely that some of the proper engagement on the Ring of Fire can now move forward faster.
For the original version of this article, click here: http://www.netnewsledger.com/2014/01/30/cliffs-natural-resources-walks-away-from-ring-of-fire/