The Northern Miner, first published in 1915, during the Cobalt Silver Rush, is considered Canada’s leading authority on the mining industry.
For anybody wondering what’s going to happen now to Cliffs Natural Resources’ chromite discovery in Ontario’s Ring of Fire region, all they have to do is read Casablanca Capital’s dissident letter to shareholders in the run-up to Cliffs’ July 29 annual general meeting.
Casablanca’s takeover strategy was to run an alternative slate of six directors on the “hedgefund platform” that Cliffs, under new management, would wield the broom over its multi-billion dollar expansion frenzy that it had just pulled off in iron and chromite.
Here is the excerpt imploring Cliffs shareholders to vote the Casablanca slate in, as the incumbent directors had to go: “The Directors are focused on their own interests at the expense of shareholders, cannot be entrusted to lead Cliffs and do not deserve a single vote after having destroyed $9 billion of value.”
Shareholders overwhelmingly agreed at the AGM and thus the slicing-and-dicing commenced. Here’s a key excerpt from analysts (Market Realist) that spelled the end of Cliffs/Casablanca’s infatuation with the Ring of Fire:
“In our view, spinning off international assets might not be possible because most of the international assets are losing money. So ‘fire sale’ might be one option, but even for that it might be difficult to find a buyer at this stage of the market environment…
“Cliffs’ chromite project, which is located in the Ring of Fire area of Northern Ontario, was idled by management in 4Q13. Its main reason was ongoing delays in the environmental assessment process, land rights, and negotiations with the province of Ontario.”
Nothing has changed. In fact, legal access to the discovery via road or rail is still mired in intense litigation. The environmental review is in limbo. And impacted First Nations are less than impressed with the Ontario bureaucracy’s latest reincarnation of the ill-fated Ring of Fire Secretariat — now in the form of a nascent Development Corporation.
The native reaction was immediate, as per Chief Cornelius Wabasse’s (Webequie First Nation) statement on Wawatay News:
“Minister [of Northern Development and Mines Michael] Gravelle called me before, giving me a heads up that they’ll be doing an announcement,” he said. “And I told him that I thought he said that we were supposed to be working together, to make that type of announcement.” Instead, Wabasse said, “Ontario is just moving forward without meaningful consultation and (without) working together side-by-side with First Nations.”
One wonders what appetite Cliffs has for weathering this storm up in Canada? “Fire sale” or not, it’s hard to believe that there will be many takers for what’s on offer.
For the rest of this article, click here: http://www.northernminer.com/news/commentary-ring-of-fire-sale/1003242916/