Sudbury native Gary Halverson has been ousted as president and CEO of Cliffs Natural Resources.
As expected, Lourence Goncalves was appointed today to the top job at the Ohio mining giant and was also named chairman of the board.
He replaces Jim Kirsch who served as chairman since July 2013, and Halverson who served as CEO since February.
Halverson first appeared on the scene last fall when he was named president and chief operating officer (COO), replacing Joseph Carrabba who retired in November.
Halverson was serving as interim COO of Barrick Gold and had previously worked with Kinross Gold from 2000 to 2004 where he held the general manager role at the Hoyle Pond and Placer Dome Mines in Timmins.
Goncalves is the choice of Casablanca Capital, a New York hedge fund, which won a proxy battle with Cliffs at the company’s annual shareholders meeting in Cleveland, July 29.
Shareholders nominated six of the Casablanca nominees to Cliffs’ board of directors, thus achieving majority control.
In an Aug. 7 news release, Goncalves said he was ready to refocus and lead Cliffs into its next chapter in the company’s 167-year-history on a “new strategic path” with the aim of “restoring shareholder value.”
Goncalves is the former chairman, president and CEO of Metals USA Holdings Corp., a leading American steel and metals manufacturer.
An internal company debate now begins as to whether Cliffs will keep or divest its chromite properties in the Ring of Fire, including its flagship Black Thor deposit.
For months, Casablanca railed against Cliffs for its managerial missteps and costly investments in international projects like its Bloom Lake iron mine in Quebec which has been part of a “value-destroying diversification strategy.”
The fund campaigned that it would either sell or spin off those international assets.
“No matter what happens corporately,” said Bill Boor, Cliffs’ vice-president of corporate development, “we still believe in the value of this project, one way or the other.”
Boor has a major selling job ahead of him to convince his newly constituted board of directors that the chromite projects in the swampy James Bay lowlands are worth keeping in the fold.
Since 2010, Cliffs has spent $500 million to acquire and prove up the mineral potential at its Ring of Fire projects where no rail and road connections exist.
The company halted all its exploration and technical work in the Ring of Fire, suspended project spending and sold off its remote exploration camp to Noront Resources.
Boor said there are currently no plans afoot to withdraw from Ontario.
“The sale of the camp assets should not have been interpreted as an exit of Cliffs,” said Boor alluding to media reports suggesting otherwise. “I think that sale has been completely overblown.”
With all the exploration work done, Boor said, they simply “ran out of productive technical work to do” and sold the camp.
The company still has outstanding issues remaining with the Ontario government over its commitment to mine-related transportation infrastructure, a power pricing agreement, and the terms of reference for the provincial environmental assessment.
Cliffs received some glimmer of hope when the company won a strategic victory in a provincial appeals court on July 30.
A Divisional Court set aside a decision by the Ontario Mining and Lands Commissioner that had denied Cliffs an easement for a road to reach its chromite properties atop the mining claims of a rival company, KWG Resources.
The tribunal’s ruling created a provincial policy conundrum about whether a mining claims holder can control surface rights on Crown land.
Cliffs argued that KWG was blocking a critical path that was holding up all development in the mineral-laden region.
The appeals court has shifted the easement question over to Bill Mauro, Ontario’s new natural resources minister, to decide on what’s in the public good.
Boor called it a “decisive” ruling with a “great outcome” that removes their requirement to get KWG’s consent for the easement.
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