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Greenstone Mayor Questions Chairman of Cliffs Natural Resources

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THUNDER BAY, ON  ---  May 5, 2012  ---  I am writing to you today as Mayor of Greenstone to ask some questions that are unresolved following your presentation to the Cliff ResourcesAboriginal Business Council's luncheon event in Thunder Bay, Ontario earlier this week.

As the Mayor of Greenstone,Renald Beaulieu and several members of my Council attended the event with the expectation that we would  earn something about the company's approach to matters that remain unaddressed. We left disappointed by the sheer lack of information.

I am writing to you today to ask some questions that are unresolved following your presentation to the Aboriginal Business Council's luncheon event in Thunder Bay, Ontario earlier this week.

Greenstone

Accordingly, since the matters are of such great urgency I am writing today to request your answers to the following questions.

1. You mentioned that Cliffs doesn't come in and roll over local interests. With that in mind, could you please tell me if you are aware that area First Nations have  unanimously endorsed the principle that the ore body should be refined in the same territory from which it is extracted?

2. Before or since establishing Capreol as the "base case" for the refinery, did Cliffs actually consider other sites or seriously review information that was put forward?

3. In your talk you mentioned that Cliffs ranked 34 on a sustainability index. How many positions do you expect to slide with your plan to use temporary power solutions at the mine site?

4. Is the estimate of 10,000,000 litres of diesel fuel per month for generating electricity at the mine site accurate?

5. The Ontario Power Authority has estimated that the cost of generating electricity at the mine site through temporary power solutions will be $2 Billion over 10  years. How much less would it cost to develop a sustainable, grid-connected solution that would also benefit area First Nations? Are you aware that First Nations and Greenstone have developed and shared with Cliffs a viable electricity grid solution?

6. You mentioned that infrastructure is key to the new mine development and in that context you mentioned roads but you didn't mention electricity. Do you view electricity at the mine site as key infrastructure?

7. Has Cliffs once asked the Province to provide grid-connected electricity to the mine site? If not, why not?

8. First Nations in the vicinity of the mine site have been forced to survive using costly and  environmentally unsustainable diesel power for their electricity needs. Did Cliffs ever consider the provision of grid-connected electricity as a benefit for Cliffs, First Nations and the environment?

9. What price does Cliffs place on project implementation? As the time-line continues to slide, will Cliffs consider changing tactics to gain a hand in partnership rather than the current approach, which is heading towards confrontation?

10. If, in fact, Cliffs actually spent any time evaluating Exton as the Refinery site, did the benefit of keeping to your Project schedule not offset the added one time cost for improvements to the  electricity infrastructure? (Keep in mind that such infrastructure costs would be shared amongst multiple parties)

11. What risks to Project schedule do you anticipate if the Courts rule that a Full Panel review is required? Did you ever consider a more thorough review given the magnitude of the impact on the fragile environment in the ROF?

12. The mantra seems to be that the project will produce enough benefits that everyone will do well. If  the Refinery jobs are in Sudbury and the mine workers will be flown in from Sudbury, Timmins and Thunder Bay, what permanent job opportunities will be available for those nearest the mine site? What guarantees will be provided?

Mr. Carrabba, we very much respect that these are large and difficult decisions that must be considered on their merits.

Having said that Sir, we must say that the approach Cliffs has taken to date seems to lack a cultural understanding of the area where the mining activity is proposed. The risk to your company on an economic basis from an ever-sliding project timetable has not been properly costed. Were such consideration part of the analysis the base case would look a lot different.

The incremental cost of a contribution to electricity transmission improvements has been traded off for risks to the project schedule. At what cost?

I strongly request that you apply your own judgment to this matter. Your meeting  with First Nations representatives in Thunder Bay ought to have provided you with some greater understanding of the distinct cultural landscape of the Ring of Fire. Such understanding certainly has not been properly accounted for in the Cliffs base case analysis.

As always, I remain open to helping Cliffs form the right kind of partnership model where interests are aligned amongst all parties.

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