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Cleveland-Cliffs CEO airs frustration over Clarke, Gov. Dayton

Cleveland-Cliffs Inc. CEO Lourenco Gouncalves

Cleveland-Cliffs CEO Lourenco Goncalves said he'll continue to fight Chippewa Capital Partners over disputed mineral leases at the former Essar Steel Minnesota site in Nashwauk during a conference call Friday discussing the company's second quarter results.

The companies are waiting for a federal bankruptcy judge in Delaware to determine whether Glacier Park had the right to pull its mineral rights at the Nashwauk mine site out of a bankruptcy agreement and sell them to Cliffs. Chippewa Capital owner Tom Clarke is trying to revive the site as Mesabi Metallics and earned back key mineral leases from the state last week, but the disputed ownership over other leases create a complicated quilt of ownership around the mine site.

"The land is mine until someone else tells me it's not," Goncalves said, promising that the company will appeal any decision not in Cliffs' favor.

"I am going to fight that thing until hell freezes over," Goncalves said.

Clarke has said he can still finish the project without the contested leases.

In response to a question over connections between Essar Steel, which left a partially built plant at the Nashwauk site when facing bankruptcy several years ago, and Switzerland-based Riverdale Commodities, which lent Mesabi Metallics $650 million for the project, Goncalves called Clarke a "loser" and referred to him as "Chewbacca," a character from Star Wars.

He's called both Clarke and Chippewa Capital by that name in the past.

"Who else would give money to a loser like Chewbacca?" Goncalves said.

In a phone interview with the News Tribune Friday afternoon, Clarke responded to Goncalves name calling.

"I think Chewbacca is a great character ... to me it's an honor," Clarke said.

In a release sent earlier in the week, Clarke characterized the relationship between Essar and Riverdale as Riverdale staff having "one or more principals who previously held positions with Essar-related companies. Riverdale has verified its owners are not affiliated with any Essar-related company."

On Friday, Clarke told the News Tribune he always wanted to ensure the Ruia family, owners of Mumbai, India-based Essar, would not have any ownership or control over his companies.

The Minnesota Department of Natural Resources was aware people connected to Riverdale had Essar backgrounds, according to a Mesabi Daily News report, but Barb Naramore, an assistant commissioner with the DNR, explained that the state's agreement was with Chippewa and Mesabi Metallics — not Riverdale.

Naramore said it is legal for Essar Steel to do business in Minnesota, according to the Mesabi Daily News.

In the conference call, Goncalves also criticized Minnesota Gov. Mark Dayton, saying he's bad for mining and a "lame duck."

"Come November, Minnesota will be a lot better because we are going to have a new governor ... I already know that the governor will be better than the one that's there right now," Goncalves said.

The two had once been allies. When Goncalves announced in 2016 Cliffs' plans to revive the Nashwauk site, Dayton supported him. That relationship disintegrated in 2017 when Mesabi Metallics, Dayton and the DNR proceeded with a bankruptcy emergency plan. Dayton expressed support last week when the DNR reinstated Mesabi Metallics' mineral leases.

Through a spokesperson, Dayton's office decline to comment Friday.

Cliffs touts $714 million in second-quarter revenue

Cleveland-Cliffs released strong second quarter results Friday.

Cliffs reported consolidated revenues of $714 million for the quarter ending June 30, up from revenues of $471 million from the same time last year.

The company's second-quarter adjusted EBITDA — earnings before interest, tax, depreciation and amortization — was $276 million, up 103 percent over last year. EBITDA is considered a good measure of a company's current operational health.

The company's U.S. iron ore pellet sales volume in the second quarter was 6 million long tons, a 38 percent increase from the second quarter of 2016 thanks impart to increased customer demand.

"Going forward, we expect 2019 to be a continuation of a great 2018, based on the renewed strength of American manufacturing, the multi-year positive impact of the tax reform implemented in 2018 in the United States, and our strong position as the supplier of iron ore pellets within the Great Lakes region," Cliffs CEO Lourenco Goncalves said.

The company also said it is spending $50 million to upgrade Northshore Mining.

Jimmy Lovrien

Jimmy Lovrien is a reporter for the Duluth News Tribune. He spent the summer of 2015 as an intern for the Duluth News Tribune and was hired full time in October 2017 as a reporter for the Weekly Observer. He also reported for the Lake County News-Chronicle in 2017-18. Lovrien grew up in Alexandria, Minn., but moved to Duluth in 2013 to attend The College of St. Scholastica. Lovrien graduated from St. Scholastica in 2017 with a bachelor's degree in English and history. He also spent a summer studying journalism at the University of California, Berkeley.

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