Cliffs wins key court battle – by Staff  (Sudbury Star – August 6, 2014)

The Sudbury Star is the City of Greater Sudbury’s daily newspaper.

The company that once planned to build a $1.8-billion chromite plant in Capreol has won a key court battle. Last week, an Ontario Divisional Court set aside a decision reached by the Ontario Mining and Lands Commissioner in September 2013. In that decision, the lands commissioner denied Cliffs Natural Resources an easement for a road to reach its Black Thor chromite deposit in the so-called Ring of Fire area of northwestern Ontario.

Cleveland-based Cliffs wanted the easement, even though the land is owned by rival KWG Resources. Cliffs, which has halted all exploration on its chromite project, launched the appeal in October. The case was heard in Toronto in June.

The court’s decision means that Natural Resources Minister Bill Mauro will now decide if Cliffs gets the OK for a road into the Ring of Fire.

“Whether or not it is in the public interest to grant an easement for a road is a matter for the minister of natural resources to determine, after an environmental assessment and consultation with First Nations and other affected interests,” the court ruled. “It is for the minister to determine whether the easement should be granted in the public interest and on what terms.”

Cliffs wants to stake a 330-kilometre long corridor using mining claims from Nakina north to the exploration camps in the James Bay lowlands. However, KWG owns those surface rights and, through its Canada Chrome subsidiary, wants to use the corridor for a future railroad.

In a release, KWG said it is reviewing the Divisional Court’s judgment.

The court said KWG, through Canada Chrome, is still part of the process, noting its ruling does not stop the company “at the next stage to oppose Cliffs’ easement application or to ask for conditions that would protect its legitimate interests in its mining claims.”

Cleveland-based Cliffs had plans to open a chromite mine at its Black Thor deposit and send it to a plant in Capreol for processing, which would have created as many of 500 jobs here. However — due to a host of issues, including environment, native land rights and infrastructure — it has put those plans on hold.

In addition, Cliffs is beset by internal problems. Last week, Casablanca Capital triumphed in its proxy battle with the miner, putting the hedge fund in a position to replace Cliffs’ chief executive and sell off underperforming assets.

The vote outcome “is a culmination of years of frustration on behalf of shareholders,” said Garrett Nelson, a mining research analyst at BB&T Capital Markets.

Casablanca began a proxy fight in March against Cliffs, accusing the miner of destroying shareholder value through an ill-conceived expansion strategy. Cliffs shares have fallen about 85% in the past three years, at a time when iron ore and coal prices have plunged.

Other than naming a new CEO immediately, Casablanca will likely pursue the sale of three of Cliffs four operating segments, its Asia-Pacific iron ore business, its Eastern Canadian iron ore operations and its North American coal unit, said Nelson, the mining research analyst.

Nonetheless, Bill Boor, Cliffs’ vice-president of corporate development, said in a statement the company welcomed the Ontario Divisional Court decision. He said the ruling is an “encouraging development” toward making progress on building infrastructure to reach the mineral deposits in the Ring of Fire

Boor called the mining tribunal’s original decision “an unnecessary barrier” that held up development in the region.

“Basically, the Divisional Court ruled that the owner of mining claims has a right to explore those claims, but does not have surface rights to use the surface for any purpose or block others from using the surface for legitimate purposes.”

In addition, “this decision clarifies important issues of law under the Mining Act that otherwise could have had significant negative ramifications for development of any mining claims in Ontario.”

The company is awaiting a development plan to be put forward by the province. The Wynne government pledged to formally establish a Ring of Fire development corporation within 60 days of its July 3 throne speech and has backed that up with a $1-billion commitment for infrastructure.

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