Cliffs Natural Resources presentation

Editor's Notes

• #8: CLF share price down from record highs in 2011 Investor confidence waning Dividend is cut $1 billion in equity issued Took back buy back of debt signal and investors responded negatively – debt trading at huge discount Casablancas plan (with New CEO) to lead a turn-around with a multi-step plan: Divest infrastructure Includes: leaving Canada, potentially leaving Australia Sell non-core assets: Logan County Cole Double dividend: Increase investor confidence in commitment to turn around (signaling effect) Reduce costs (SG&A, exploration)
• #15: Divest from all Canadian operations
• #16: Divest from all Canadian operations
• #17: Divest from all Canadian operations
• #24: This is a no brainer but it bears repeating Iron ore estimate for pellets – premium: $100 metrix tonne – we don’t foresee, because of future likely demand, that a significant decline will affect share value – this number here is only based on current production levels in US iron ore operations
• #25: Forecasted to stay low or go lower ($50) Obviously we trade at a premium (iron ore pellets)
• #26: Divest from all Canadian operations
• #27: Divest from all Canadian operations
• #28: BEST CASE: sell the assets, buy back shares/debt with proceeds: increase shareholder value CURRENT CASE: hold assets, close the mine and take the hit WORST CASE: invest in operations and continue to see losses WORST CASE: Bankruptcy
• #35: Discussion about the institutions and processes for environmental impact assessment brought out a number of differing views depending upon regional circumstances. In Yukon, the "Development Assessment Process" (DAP), in the view of First Nations, could give them an even greater role than they have under either the Canadian Environmental Assessment Act or the Yukon environmental assessment processes. At present, however, negotiations seem stalled, and with a deadline of February 1997 for completion, doubts are growing about DAP's future. For the Inuvialuit, the screening and review procedures developed under the Inuvialuit Final Agreement (1984) are believed to serve the region quite well. The current mining initiative at Darnley Bay, should it come before the Screening Committee and Review Board, will raise the possibility of mine development impacts on caribou calving to the south of the community of Paulatuk, outside the proposed national park. Similar concerns may be faced by the Inuit to the east of Bathurst Inlet, where the Boston gold deposit, located in the calving grounds of the Bathurst herd, is being explored. It is important to distinguish here between difficult issues and the ability of the assessment processes to deal effectively with those issues. In dealing with assessment, the focus of CARC's investigation will be the process rather than the "difficult choices" among activities and impacts. In those jurisdictions with claims-based EIA structures and procedures, the issue of the independence of the EA bodies from the political and administrative arms of aboriginal society has been raised. Of particular interest is whether reaching an impact and benefits agreement before an EA decision constrains the range of choices the EA body can consider. The resolution of this issue may not mean that all impact and benefit agreements must await EA decisions, but some clarification of roles, responsibilities, timing, and co-ordination is needed. As more land claims are settled, with new EA organizations and processes, the issues of independence and rigorous analysis will continue to be raised. Another EA issue that surfaced in the Western Arctic is the harmonization of EA processes where development proposals transcend land-claim boundaries. In addition, there is the task of harmonizing aboriginal EA processes with those of federal and territorial/provincial jurisdictions. ------------------ Universal concern for the social, economic, and cultural impacts from all stages of mineral development is juxtaposed against a keen interest by aboriginals in participating in the benefits of economic development. For many aboriginal people, the challenge to integrate "culture and economics" means trying to infuse resource development decisions with the customs, traditions, and values of their societies. For others, the challenge is to plan in ways that limit the "boom and bust" swings in market economies. For still others, the issue is to prevent social pathologies and all the socio-psychological problems these conditions bring upon communities, especially among children. As women, in particular, give testimony to these cultural issues, there is a sentiment in some quarters that women can and should play more central roles in development decision making. After the miners are gone, people from the various northern regions will remain and still will need to find ways to sustain themselves and their families. CARC's NMP research team has centred on the concept of "healthy communities," believing that environmentally sustainable development depends on sustainability in social, economic, cultural, and political (self-governing) realms. This suggests that both social impact assessments and socio-cultural community planning should be part of the overall mineral development process. Opportunity The Northern Minerals Programme will attempt to assess the state of both these concerns in the Slave Geological Province (SGP). As aboriginal communities in other jurisdictions wish, these initiatives could be expanded to examine cultural. economic. and social issues outside the SGP. ---------------------------- People everywhere spoke of environmental protection -- protecting the land, protecting wildlife and habitat, protecting communities and their cultures, protecting the futures of their grandchildren, protecting important harvesting areas and environmentally significant regions and processes, and protecting their sacred places. All of these are intertwined. Many communities depend significantly on caribou for food, and all acknowledge the challenge that mining brings to the calving grounds, river crossings, migration routes, and wintering sites. These concerns were raised for the Porcupine, Bluenose, Bathurst, Kaminuriak, Melville Peninsula, and George River herds. Opportunity The interest of these communities and organizations coincides with that of CARC's Northern Minerals Programme. There clearly is an opportunity to broaden the focus on environmentally significant and protected areas to include an examination of comparative regional approaches to protection and management through sustainable use of renewable resources. --------------------------------- Increased levels of anxiety and/or expectation in the community, particularly if local knowledge is not used in gathering data Changes in wealth distribution due to community members’ involvement in data gathering Community conflict due to ‘divide and conquer’ tactics by companies Health and Safety impacts on workers and local communities Disruption of local livelihood activities Disruption of family life, in creased violence against women, substance abuse, increased pressure on women for family responsibilities Inceased conflicts among community members Show an almost universal concern for the protection of the natural environment, and insist that exploration and development be undertaken in such a way as to minimise the impacts on the nonhuman world; ß Insist that their Local/Traditional Ecological Knowledge (Lo/TEK) be accorded epistemological status in the development of Environmental Impact Assessments and the design of mitigation and remediation measures; ß Demand a share in the financial benefits of resource developments on their traditional territories, especially where these developments may damage traditional economies such as trapping or hunting, and that they be compensated for such damage; ß Where a land claim is outstanding, have a strong preference to resolve the claim, or at a minimum to have signed Impact Benefit Agreements, before any development goes ahead. Aligned with Cliffs’ Human Rights Policy is the fair consideration of indigenous peoples. Given the increasing globalization of our operations, Cliffs’ relationships with local populations are essential for corporate citizenship. Engagement with indigenous populations near our active and proposed mine operations to establish and foster relationships is critical to the way Cliffs does business.  Mutually beneficial agreements with such groups creates cultural awareness, establishes a foundation for economic independence in the communities, and educates us on the responsibilities associated with culturally sensitive heritage sites.
• #36: When we advance developments in Canada within areas that affect Aboriginal communities, we seek to work collaboratively so affected communities can benefit. We also seek to create opportunities to enhance the social well-being and economic prospects for these communities. Additionally, we support land-use planning initiatives that First Nations communities undertake, working with them to address associated recommendations.   Bloom Lake Impact and Benefit Agreement At our Bloom Lake operations in Quebec, we have established an Impact and Benefit Agreement (IBA) with the Innu community of Takuaikan Uashat Mak Mani-Utenam.  This agreement covers a range of aspects including employment, workplace, Innu business opportunities, protection of the environment and preservation and promotion of Innu Culture.   We work with the Innu Takuaikan Uashat mak Mani-Utenam community to build trusting working relationships. Together we have established a coordination committee, which has the primary responsibility for building and maintaining good relationships between all parties, along with achieving the agreement outcomes.   To promote and inform the Innu community on different aspects of our operations, we also support a member of the Innu nation who writes a monthly newsletter, published in Innu and French, that keeps the community apprised of Cliffs’ initiatives.   Bois Forte Tribal Representatives Visit Hibbing Taconite In September 2013, three representatives from the Bois Forte Band of Chippewa visited the Hibbing Taconite mine in Minnesota. The group toured the mine, plant, tailings basin and reclamation sites. They also visited the Hill of Three Waters, where three major watersheds diverge. The site was also used by Ojibwe Indians many years ago for council meetings prior to battle.   Recognizing the importance of this site, our Hibbing Taconite operation has left the area untouched. We also provide access to Native American tribal representatives when asked. The Bois Forte representatives performed some of their native rituals at the site and shared information about their culture with tour guides from Hibbing Taconite and Cliffs.   Land Disputes In 2013, we did not experience any significant land disputes with Indigenous or Aboriginal communities.   Incidents Involving the Rights of Indigenous People During 2013, we had no identified incidents of violations involving the rights of Indigenous peoples. $800k to education $1.8mil to health $1.7 to commu ------------------------------- Although we ultimately decided to indefinitely suspend the project, we made significant progress in 2013 with our Chromite Project. We advanced our feasibility study and strengthened relationships among Aboriginal communities and other stakeholders throughout Northern Ontario.   Unfortunately, challenges surrounding the access and infrastructure that would allow us to move the chromite from the remote mine to existing road and rail infrastructure in Ontario’s Near North grew in prominence. The question of how to build infrastructure in the remote region became even more challenging following the unexpected and disappointing decision of Ontario’s Mining and Lands Commissioner in September 2013 not to dispense with consent from a mineral-rights holder as part of an easement application that would have allowed for the construction of an all-weather road to the proposed site of the mine and concentrator.   Although other issues, including the delay in approval of the Terms of Reference for the Ontario Environmental Assessment process, contributed to our decision to suspend the Chromite Project in November 2013, the infrastructure and access issue remains a key obstacle to the Ring of Fire development.   The decision of the Ontario Mining and Lands Commissioner is currently scheduled for appeal in Ontario’s Divisional Court in June 2014. In the meantime, we continue to engage with First Nations and government partners on infrastructure development that will benefit both the project and communities.