Cliffs Natural Resources (CLF), WEC Energy Group (WEC) Enter New Energy Agreement

August 15, 2016 1:35 PM EDT

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Cliffs Natural Resources Inc. (NYSE: CLF) announced today that its Tilden Mining Company has entered into a new 20-year energy agreement with WEC Energy Group (NYSE: WEC) to provide Tilden mine with a long-term, reliable and affordable source of electrical power in Michigan.

Lourenco Goncalves, Cliffs' Chairman, President and CEO, said, "With a significant and longstanding presence in the Upper Peninsula of Michigan that spans over 160 years, Cliffs' commitment to operate in the region for many more years to come has been greatly enhanced through this new energy agreement with WEC Energy Group. Our Tilden Mine produces among the highest quality pellets in North America. With a stable, long-term source of power in place, Tilden will also continue to be the most operationally efficient producer of pellets for the domestic steel industry. Today's announcement is a demonstration of the success of the settlement agreement developed by key stakeholders under the leadership of the State of Michigan. Our collaboration with WEC Energy Group, Governor Snyder and the State of Michigan has resulted in a strategic energy solution for the Upper Peninsula which optimizes affordability and improves reliability for all ratepayers for decades to come."

The Company stated that this agreement will provide Cliffs' Tilden Mine with a clean, cost-effective and highly efficient energy generating capacity solution and also resolve the long-term energy reliability issues facing the residents in Upper Peninsula of Michigan. Under this agreement WEC Energy Group, through the proposed Upper Michigan Energy Resources Corporation plans to construct, own and operate 170 MW of new natural gas generating capacity across two sites in the Upper Peninsula. Pending regulatory approvals, the proposed facilities are expected to commence operation in 2019 which will be in advance of the retirement of the Presque Isle Power Plant.

With WEC Energy Group's investment in new electric power generation in the region, the Company stated that there will be tangible benefits for U.P. residents of a more cost-effective energy future and negating the possibility of a future System Support Resource (SSR) related to the operation of the Presque Isle Power Plant.

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