Exhibit 10.64

PELLET SALE AND PURCHASE AGREEMENT

THIS AGREEMENT (this “Agreement”) is entered into, dated and effective as of
January 31, 2002, by and among THE CLEVELAND-CLIFFS IRON COMPANY, an Ohio
corporation (“CCIC”), CLIFFS MINING COMPANY, a Delaware corporation (“CMC”)
NORTHSHORE MINING COMPANY, a Delaware corporation (“Northshore”; CCIC, CMC and
Northshore, collectively, “Cliffs”) and ALGOMA STEEL INC., an Ontario
corporation (“Algoma”). Capitalized terms used herein and not defined in context
have the respective meanings given to them or cross-referenced in Section 1.

RECITALS

WHEREAS, concurrently with the execution and delivery of this Agreement, Algoma,
Cannelton Iron Ore Company (“Cannelton”), CCIC and Cliffs TIOP, Inc. (“TIOP”)
are entering into that Purchase and Sale Agreement (“PSA”) pursuant to which
TIOP is to acquire Cannelton’s 45% membership interest in Tilden Mining Company
L.C. (“Tilden”) (the date such acquisition occurs, the “Closing Date”); and

WHEREAS, Algoma desires to purchase from Cliffs, and Cliffs desires to sell to
Algoma, a tonnage of Cliffs Pellets equal to Algoma’s Annual Requirements from
and after the Closing Date;

AGREEMENTS

NOW, THEREFORE, in consideration of the premises, their mutual covenants and
other good and valuable consideration the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:

1. DEFINITIONS.

(a) “Business Day” means any day on which banks in Cleveland, Ohio or Toronto,
Ontario are not permitted or required by law to be closed for business.

(b) “Composite Index” means, for any year, the sum of:

 

  (i) 0.40, multiplied by a fraction, the numerator of which is the United
States Producer Price Index—All Commodities-Series Id: WPU00000000- Annual
Average for such year, and the denominator of which is the United States
Producer Price Index—All Commodities-Series Id: WPU00000000- Annual Average for
2001; plus

 

  (ii)

0.20, multiplied by a fraction, the numerator of which is the United States
Producer Price Index - Metals and Metal Products-Sheets, Cold Rolled Carbon -
Series Id: WPU10170711-Annual Average for such year, and the

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  denominator of which is the United States Producer Price Index—Metals and
Metal Products-Sheets, Cold Rolled Carbon—Series Id: WPU10170711—Annual Average
for 2001; plus

 

  (iii) 0.40, multiplied by a fraction, the numerator of which is the Eastern
Canadian Pellet Price for such year, and the denominator of which is the Eastern
Canadian Pellet Price for 2001. (Eastern Canadian Pellet Price for 2001 is
$0.5236 per iron unit.)

For each year beginning in 2004, the Composite Index, (w) shall be initially
determined based on Cliffs’ good faith reasonable estimate (which shall take
into account all data that is final for the year in determination) given to
Algoma not later than December 15 of the prior year, (x) shall be updated based
on Cliffs’ good faith estimate (which shall take into account all data that is
final for the year in determination) given to Algoma not later than June 15 of
such year, (y) shall be updated again based on Cliffs’ good faith estimate
(which shall take into account all data that is final for the year in
determination) given to Algoma not later than January 15 of the following year,
and (z) shall be finally determined and certified by Cliffs on June 15 of the
following year. Should Algoma disagree with Cliffs’ estimate or final
determination, Algoma may require that such estimate or final determination be
determined by arbitration pursuant to Section 15.

(c) “Eastern Canadian Pellet Price” means, for any year, the arithmetical
average of the per iron unit pellet prices, as published in Skillings (or, if
not published therein, as published in Tex Report) of Quebec Cartier Mining
(f.o.b. Port Cartier, Quebec) and Iron Ore Company of Canada (f.o.b. Sept-Iles,
Quebec), for such year.

(d) “Expected Iron Content” means at 1.5% moisture (i) for Tilden Mag Flux
Pellets, 60.38%, (ii) for Tilden Hem Flux Pellets, 60.58%, (iii) for Empire
Royal Pellets, 60.09%, and (iv) for any kind of Other Cliffs Pellets (x) in the
first year they are provided by Cliffs, the percentage specified by Cliffs in
good faith, and (y) in all other years, the actual iron percentage for such kind
of Other Cliffs Pellets for the prior year.

(e) The words “iron unit”, as used herein, shall mean one percent (1%) of
contained iron, and all prices per iron unit shall be expressed on an iron unit
per ton basis.

(f) The word “pellets”, as used herein, shall mean iron-bearing products
obtained by the pelletizing of iron ore or iron ore concentrates, suitable for
making iron in blast furnaces.

(g) The word “person”, as used herein, means any natural person, or any
corporation, limited liability company, limited or general partnership, trust,
association or other legal entity.

(h) The word “ton”, as used herein, shall mean a gross ton of 2,240 pounds
avoirdupois natural weight.

(i) “World Pellet Price” means, at any time, a price per iron unit equal to the
sum of:

 

  (i) 0.50, multiplied by the Eastern Canadian Pellet Price; plus

 

  (ii) 0.50, multiplied by the average published price per iron unit for pellets
of Companhia Vale Rio Doce, S.A. (f.o.b. Tubaro).

 

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Schedule 1(i) illustrates calculation of the World Pellet Price for 2001, which
is $0.5163 per iron unit.

(j) The word “year”, as used herein, shall mean a calendar year commencing on
January 1 and ending December 31.

(k) If any of the information required to calculate the Composite Index, the
Eastern Canadian Pellet Price or the World Pellet Price ceases to be published
(either because a particular product ceases to be available, or because
information is no longer publicly available), the parties will negotiate in good
faith to revise the definition of such term to one based on then-published
information, and any dispute will be resolved pursuant to Section 15.

(l) The following terms are defined on the pages cross-referenced below:

 

Adjusted Expected Price per Iron Unit

     9   

Agreement

     1   

Algoma

     1   

Annual Requirements

     4   

Base Price per Iron Unit

     8   

Basic Cliffs Pellets

     4   

Benchmark Delivered Cost

     15   

Business Day

     1   

Cannelton

     1   

CCIC

     1   

Cliffs

     1   

Cliffs Pellets

     5   

Closing Date

     1   

CMC

     1   

Commission

     18   

Composite Index

     1   

Confidential Information

     18   

Eastern Canadian Pellet Price

     2   

Empire Plant

     4   

Empire Royal Pellets

     4   

Expected Iron Content

     2   

Hibbing Pellets

     5   

Hibbing Plant

     5   

iron unit

     2   

Northshore

     1   

Northshore Pellets

     5   

Northshore Plant

     5   

Other Cliffs Pellets

     5   

pellets

     2   

 

3

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person

     2   

PSA

     1   

Sault Ste. Marie Plant

     4   

Source Requirements

     6   

Tilden

     1   

Tilden Hem Flux Pellets

     4   

Tilden Mag Flux Pellets

     4   

Tilden Pellets

     4   

Tilden Plant

     4   

TIOP

     1   

ton

     2   

WCS

     12   

World Pellet Price

     2   

year

     3   

2. SALE AND PURCHASE/VOLUME.

(a) Subject to the other provisions of this Section 2, for each of the 15 years
2002 through 2016 inclusive, Cliffs shall sell and deliver to Algoma, and Algoma
shall purchase and receive from Cliffs and pay Cliffs for, a tonnage of Cliffs
Pellets equal to 100% of Algoma’s total pellet tonnage requirements, adjusted
for inventory positions, (“Annual Requirements”) for such year required for use
at its facility at Sault Ste. Marie, Ontario (the “Sault Ste. Marie Plant”);
provided, however, that in no year shall Algoma purchase and receive from
Cliffs, and pay Cliffs for, less than 2,500,000 tons of Cliffs Pellets.

(b) If Algoma’s Annual Requirements, as initially fixed pursuant to Section 5(a)
or as adjusted pursuant to Section 5(b), in any year exceeds 4,000,000 tons,
Cliffs shall have the right, but not the obligation, to sell and deliver any
pellets in excess of 4,000,000 tons. Such right may be exercised as provided in
Section 5.

(c) Because the Closing Date will occur after January 1, 2002, (i) Algoma shall
not be required to purchase any Cliffs Pellets hereunder unless and until the
Closing Date occurs, (ii) Cliffs shall not be required to sell any Cliffs
Pellets hereunder unless and until the Closing Date occurs, and (iii) in the
year 2002 Cliffs shall sell and deliver to Algoma, and Algoma shall purchase and
receive from Cliffs and pay Cliffs for, a tonnage of pellets equal to Algoma’s
Annual Requirements, less Algoma’s share of pellets delivered pursuant to the
membership interest of Cannelton in Tilden between January 1, 2002 and the
Closing Date.

3. SOURCING.

(a) Cliffs shall initially supply Algoma with pellets produced at the Tilden
iron ore pellet plant (“Tilden Mag Flux Pellets” and “Tilden Hem Flux Pellets”,
as the case may be; collectively. “Tilden Pellets”) in National Mine, Michigan
(the “Tilden Plant”) and/or pellets produced at the Empire Iron Mining
Partnership iron ore pellet plant (“Empire Royal Pellets;” collectively with the
Tilden Pellets, “Basic Cliffs Pellets”) located in Palmer, Michigan (the “Empire
Plant”).

 

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(b) Cliffs may change pellet sourcing from Basic Cliffs Pellets to pellets from
other sources (“Other Cliffs Pellets”), including, without limitation, those
produced at the Hibbing Taconite Company Joint Venture iron ore pellet plant
(“Hibbing Pellets”) in Hibbing, Minnesota (the “Hibbing Plant”) and those
produced at the Northshore iron ore pellet plant (“Northshore Pellets”) in
Silver Bay, Minnesota (the “Northshore Plant;” Other Cliffs Pellets together
with Basic Cliffs Pellets, are defined as “Cliffs Pellets”). If Cliffs desires
to provide Algoma with Other Cliffs Pellets, Cliffs shall give Algoma not less
than three months prior notice, and then may make such change provided that
(i) Algoma’s cost of handling pellets, including the movement of pellets to the
stock house, is not increased, or, if Algoma’s costs of handling are increased,
Cliffs shall adjust the price of Other Cliffs Pellets so that the additional
handling costs are mitigated so as to fully offset the increased handling costs,
and (ii) Algoma has had a reasonable opportunity to purge its stockpile of
conflicting grades of iron ore.

4. QUALITY.

(a) As measured pursuant to Section 4(c), if solely Basic Cliffs Pellets are
supplied to Algoma hereunder, they will conform in all material respects with
the AIM pellet specifications and requirements as set forth in Exhibit A-1. As
measured pursuant to Section 4(c), if any Other Cliffs Pellets are supplied to
Algoma hereunder, then all Cliffs Pellets supplied to Algoma hereunder, will
conform in all material respects with the AIM pellet specifications and
requirements as set forth in Exhibit A-2.

(b) As measured pursuant to Section 4(c), if solely Basic Cliffs Pellets are
supplied hereunder they will not fall below the LSL, or exceed the USL, in
either case as specified on Exhibit A-l. As measured pursuant to Section 4(c),
if any Other Cliffs Pellets are supplied hereunder, then all Cliffs Pellets
supplied hereunder shall not fall below the LSL, or exceed the USL, in either
case as specified on Exhibit A-2.

(c) In each case, consistency with the AIM specifications, LSL and USL will be
determined on a quarterly basis (1/1—3/31; 4/1—6/30; 7/1—9/30; 10/1—12/31) based
on the AIM specifications, LSL and USL of the kinds of Cliffs Pellets shipped
for such quarter, weighted according to the percentage of each kind of Cliffs
Pellets to be consumed in such quarter pursuant to Algoma’s blast furnace plan.

(d) Cliffs will report the characteristics of Cliffs Pellets to Algoma on the
following basis:

 

  (i) On the volume of Cliffs Pellets in a vessel or train load for direct rail
shipments, as soon as practicably available and, in particular, for direct rail
shipments, within 24 hours of shipment from the mine:

Chemical: Fe, SiO2, Al2O3 , CaO, MgO, Mn, P, CaO/SiO2; and

Physical: % + 1/2”, %—1/2” x + 3/8”, %—1/4%, %—28 mesh.

 

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Moisture

 

  (ii) On the volume of Cliffs Pellets actually shipped to Algoma in a calendar
month: Compression (LBS).

 

  (iii) On the volume of Cliffs Pellets actually shipped to Algoma in a calendar
quarter (1/1—3/31; 4/1—6/30; 7/1—9/30; 10/1—12/31):

Chemical: S, TiO2, Na2O, K2O;

Metallurgical: Reducibility (R40), LTB (% + 1/4”), Swelling, Softening
Temperature.

(e) For each source of Cliffs Pellets, the parties shall agree upon a defined
set of characteristics or specifications for Cliffs Pellets from that source
(“Source Requirements”). Cliffs shall ensure that the characteristics of each
train load or vessel conforms to its applicable Source Requirements. Attached as
Exhibit A-3 are the Source Requirements for the types of Cliffs Pellets set out
in Section 3.

(f) If specifications for the chemical composition of steel change so that it is
a competitive requirement for Algoma that Algoma lower the phosphorous content
of the Cliffs Pellets, then at any time after December 31, 2006, and with not
less than one year’s prior notice to Cliffs, specifying the change to be made,
Algoma may propose a change to the phosphorous specification for the Cliffs
Pellets set forth in Exhibit A-1 and Exhibit A-2; provided, however, that Algoma
shall not propose any change to the pellet specification that would make a
phosphorous change to Algoma’s pellet chemistry that is disproportionate to the
phosphorous change in the chemistry of Algoma’s other blast furnace and steel
making burden materials that have a significant effect on phosphorous levels. If
any allowable change in the phosphorous specification as provided in this
Section 4(f) results in financially disadvantaging Cliffs, then Cliffs and
Algoma shall, for up to 60 days from the date of Algoma’s delivery to Cliffs of
the notice proposing a change in the phosphorous specification, use all
reasonable efforts to reach agreement on both a new phosphorous specification
and new prices in a manner that maintains Algoma’s relative position in respect
of its delivered pellet cost per iron unit. If an agreement is not reached
within 60 days, then Cliffs may (i) agree to continue to supply Algoma the
Cliffs Pellets at the current contract price with the new phosphorous
specification, or (ii) terminate this agreement 300 days after the expiry of the
60-day period. In the event Cliffs notifies Algoma of Cliffs’ option to
terminate this agreement, Cliffs shall retain the right during the 300 day
period to supply Algoma’s future Annual Requirements at the revised phosphorous
specification at a price that would be 2% below (on a delivered cost basis) the
lowest cost competitive offer which Algoma receives during such 300 day period
(provided that following receipt of Algoma’s notice to Cliffs of the competitive
offer, Cliffs shall notify Algoma within 45 days as to Cliffs’ option to
exercise its right to supply Algoma’s future Annual Requirements); and if Cliffs
exercises such right, then this Agreement shall not terminate. In the event that
new prices are determined as a result of changing the pellet phosphorous
specifications, then the Base Prices per Iron Unit shall be adjusted so that,
after taking into account Section 6(b), Section 6 can be used to set prices in
future years. Any dispute arising out of this Section 4(f) shall be resolved by
arbitration as provided in Section 15.

 

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5. NOTIFICATION AND NOMINATION.

(a) Annually on or before November 1, Algoma shall notify Cliffs of Algoma’s
good faith estimate of its preliminary Annual Requirements for the upcoming
year. Schedule 5(a) sets forth such information for the year 2002.

(b) Algoma shall have the right to modify, based upon Algoma’s good faith
estimate, its Annual Requirements for any year:

 

  (i) by notice to Cliffs sent not later than January 10 of such year, Algoma
may decrease or, subject to Section 5(c), increase its Annual Requirements by up
to 10% of the original Annual Requirements for such year; and/or

 

  (ii) by notice to Cliffs sent not later than July 10 of such year, Algoma may
decrease or, subject to Section 5(c), increase its Annual Requirements (as
previously adjusted pursuant to Section 5(b)(i), if applicable) by up to 5%;
and/or

 

  (iii) in unforeseen circumstances where Algoma’s need for pellets unexpectedly
increases, Algoma may, on 30 days notice to Cliffs, amend its Annual
Requirements to increase them beyond the parameters provided for in (i) and
(ii) above.

(c) If (i) Algoma’s Annual Requirements (as forecast pursuant to Section 5(a) or
as amended pursuant to Section 5(b)) is for an amount in excess of 4,000,000
tons or (ii) Algoma amends its Annual Requirements pursuant to Section 5(b)(ii)
and (iii) to increase such requirement above the tonnage previously specified
for such year, Cliffs shall within 30 days of receipt of the initial
specification or amendment, as the case may be, notify Algoma whether Cliffs
will commit to provide all, a portion or no portion of such excess or increased
tonnage. If Cliffs commits to sell and deliver all or any portion of such excess
or increased tonnage, Cliffs shall be obligated to supply such additional
tonnage as herein set forth. Cliffs shall have no obligation to supply any
portion of such excess or additional tonnage that it does not commit to supply.
If Cliffs does not commit to provide all of such excess or increased tonnage,
then Algoma may purchase from another party any such tonnage that Cliffs has not
committed to provide.

 

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6. PRICE AND ADJUSTMENTS.

(a) In each year the price paid for the Cliffs Pellets purchased and sold
hereunder shall be determined as follows:

 

  (i) First, taking each kind of Basic Cliffs Pellets separately, the Base Price
per Iron Unit shall be determined, based on an annual purchase of between
3,475,000 and 3,525,000 tons, as provided in Section 6(b).

 

  (ii) Second, taking each kind of Basic Cliffs Pellets separately, the Base
Price per Iron Unit shall be adjusted based on the amount of Cliffs Pellets
purchased and sold, either up or down, as provided in Section 6(c), to determine
the Adjusted Expected Price per Iron Unit.

 

  (iii) Third, the Adjusted Expected Price per Iron Unit for any kind(s) of
Other Cliffs Pellets shall be determined as provided in Section 6(d).

 

  (b) (i)      Basic Cliffs Pellets shall have the following “Base Price per
Iron Unit” for the year 2002:

 

Pellet

  

f.o.b.

   Base Price Per
Iron Unit  

Tilden Mag Flux

   Railcar at Partridge    $ 0.5755   

Tilden Mag Flux

   Vessel at Port Marquette    $ 0.5846   

Tilden Hem Flux

   Railcar at Partridge    $ 0.5736   

Tilden Hem Flux

   Vessel at Port Marquette    $ 0.5827   

Empire Royal

   Railcar at Empire    $ 0.5783   

Empire Royal

   Vessel at Port Marquette    $ 0.5875   

 

  (ii) Basic Cliffs Pellets shall have the following Base Price per Iron Unit
for the year 2003:

 

Pellet

  

f.o.b.

   Base Price Per
Iron Unit  

Tilden Mag Flux

   Railcar at Partridge    $ 0.5838   

Tilden Mag Flux

   Vessel at Port Marquette    $ 0.5929   

Tilden Hem Flux

   Railcar at Partridge    $ 0.5819   

Tilden Hem Flux

   Vessel at Port Marquette    $ 0.5910   

Empire Royal

   Railcar at Empire    $ 0.5866   

Empire Royal

   Vessel at Port Marquette    $ 0.5879   

 

  (iii) The Base Price per Iron Unit for each of the Basic Cliffs Pellets, f.o.b
railcar or vessel, shall be determined as follows for the years 2004 through
2016, inclusive:

 

  (A) First, the 2002 Base Price per Iron Unit for such Basic Cliffs Pellets
shall be multiplied by the estimated Composite Index for the year in
determination.

 

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  (B) Second, if the Base Price per Iron Unit for the year in determination
(calculated as provided in Section 6(b)(iii)(A)) is greater than 106% of the
Base Price per Iron Unit for the prior year, the Base Price per Iron Unit for
the year in determination shall be reduced to 106% of the Base Price per Iron
Unit for the prior year. If the Base Price per Iron Unit for the year in
determination (calculated as provided in Section 6(b)(iii)(A)) is less than 94%
of the Base Price per Iron Unit for the prior year, the Base Price per Iron Unit
for the year in determination shall be increased to 94% of the Base Price per
Iron Unit for the prior year.

 

  (C) Third, if the Base Price per Iron Unit for the year in determination (as
adjusted pursuant to Section 6(b)(iii)(B)) is greater than 120.2% of the World
Pellet Price for the year in determination, the Base Price per Iron Unit shall
be reduced to 120.2% of the World Pellet Price. If the Base Price per Iron Unit
for the year in determination (as adjusted pursuant to Section 6(b)(iii)(B)) is
less than 106.2% of the World Pellet Price for the year in determination, the
Base Price per Iron Unit shall be increased to 106.2% of the World Pellet Price.
(If the World Pellet Price is replaced in the future by an alternative generally
accepted published formulation of a benchmark price per iron unit, the parties
will negotiate in good faith or the applicable of such formulation to the
pricing limits contained herein, and any dispute will be resolved pursuant to
Section 15.)

(c) For each year, the Base Price per Iron Unit (as defined in Section 6(b)) for
each kind of Basic Cliffs Pellets shall be increased by $0.0007 per iron unit
for each 25,000 tons by which the Annual Requirement is less than 3,500,000 tons
or decreased by $0.0007 for each 25,000 tons by which the Annual Requirement
exceeds 3,500,000 tons, in order to determine the price per iron unit to be paid
for such year (the “Adjusted Expected Price per Iron Unit”) for each kind of
Cliffs Pellet.

(d) If in any year Cliffs supplies any Other Cliffs Pellets to Algoma, the
Adjusted Expected Price per Iron Unit for such kind(s) of Other Cliffs Pellets
shall be that price per iron unit that, after taking into account the
difference, if any, in transportation costs, results in the same average cost
per iron unit delivered to the Sault Ste. Marie Plant as the average cost per
iron unit delivered to the Sault Ste. Marie Plant would be if the entire Annual
Requirements were provided from the Tilden Plant.

(e) Attached as Exhibit B-2 is an example of the application of the provisions
of this Section 6.

 

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7. PAYMENTS AND ADJUSTMENTS.

(a) Subject to adjustment as provided in Sections 7(b) and 7(c):

 

  (i)

During the six years 2002 through 2007 inclusive, Algoma shall pay Cliffs on the
first and the 15th day of each month (or if such day is not a Business Day, the
Business Day immediately thereafter) an amount equal to 1/24 the total cost of
all of the tons of the various kinds of Cliffs Pellets to be supplied to meet
Algoma’s Annual Requirements for such year, to be determined in each case by
multiplying such Annual Requirements by the Expected Iron Content and the
Adjusted Expected Price per Iron Unit. This payment method will result in a
significant prepayment by Algoma early in each year. For any year from 2003
through 2007 inclusive Algoma may, on 60 days’ notice prior to the commencement
of such year, require that Cliffs provide security in respect of such
prepayment. Such security may take the form of an interest in or charge on
pellets, a trust arrangement or any other form of security mutually agreeable to
Cliffs and Algoma. In the event that Cliffs does not provide security as set out
herein in a particular year, then the method of payment for such year shall be
as set out in Section 7(a)(ii).

 

  (ii) For the nine years 2008 through 2016 inclusive, Algoma shall pay Cliffs,
on the second Monday of January of each year and every two weeks thereafter
throughout such year, an amount calculated as follows:

 

  (A) The number of tons of each kind of pellets delivered by Cliffs to Algoma
during the week ended at the midnight immediately preceding the date of such
payment, multiplied in each case by the applicable Expected Iron Content and
Adjusted Expected Price per Iron Unit; plus

 

  (B) The number of tons of each kind of pellets estimated by Algoma to be
delivered by Cliffs to Algoma during the week beginning at midnight immediately
preceding the date of such payment, multiplied in each case by the applicable
Expected Iron Content and Adjusted Expected Price per Iron Unit; plus or minus,
as the case may be;

 

  (C) The variance, if any, between the number of tons of each kind of pellets
estimated to be delivered during the week beginning at midnight immediately
prior to the date of the preceding payment, and the number of tons actually
delivered during such week, multiplied in each case by the applicable Expected
Iron Content and Adjusted Expected Price per Iron Unit.

In case of any payment scheduled to be made on a Monday that is not a Business
Day, such payment shall be made on the next occurring Business Day, but all
calculations shall be made as if the payment were made on the Monday.

 

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(b) The payments provided for in Section 7(a) shall be adjusted as follows:

 

  (i)

Since the Closing Date will be after January 1, 2002, the 2002 payments shall be
adjusted so that (x) a partial payment is made on the day following the Closing
Date for the period between the Closing Date and the next occurring first or
15th day of the month, and (y) equal regular payments begin on the next
occurring first or 15th day of the month.

 

  (ii) In the event of any adjustment to the Annual Requirements pursuant to
Section 5(b), any payments to be made pursuant to Section 7(a)(i) after such
adjustment shall be increased or decreased so that such payments will be
(x) equal in amount, and (y) the minimum amount such that at no time during the
year, based on then-existing month-by-month forecasts, will Algoma have taken
delivery of a greater amount of pellets than it has paid for.

 

  (iii) Beginning in 2004, not later than June 15 of each year, Cliffs shall
prepare and certify to Algoma (x) Cliffs’ revised good faith estimate of the
Composite Index for such year, (y) Cliffs’ recalculation of the Adjusted
Expected Price per Iron Unit for each kind of Cliffs Pellets, based thereon, and
(z) the amount of the difference between the amount previously paid for Cliffs
Pellets during the year and the amount that would have been paid had such
adjusted Composite Index been in effect from the beginning of the year. All
subsequent payments to be made under Section 7(a) shall be adjusted to reflect
the revised Adjusted Expected Price per Iron Unit, and the next such payment
shall be adjusted by the amount specified in clause (z) above.

(c) In addition to the adjustments to be made pursuant to Section 7(b), the
following lump sum adjustments shall be made:

 

  (i) Not later than January 15 of each year, Cliffs shall prepare and certify
to Algoma: (w) Cliffs’ revised good faith estimate of the Composite Index for
the prior year (beginning in 2004), (x) Cliffs’ calculation of the actual
tonnage of each kind of Cliffs Pellets and any variance from tonnage forecast to
be delivered to satisfy. Algoma’s Annual Requirements, in each case for the
prior year, (y) the actual iron units in each kind of Cliffs Pellets, and any
variance from the Expected Iron Content expected therefore, in each case for the
prior year, and (z) the amount due from Cliffs to Algoma, or vice versa, to
adjust to correct for all of the variances in clauses (w) through (y), for the
prior year. The payment due pursuant to Section 7(a) next occurring after
January 15 shall be adjusted by the amount specified in clause (z).

 

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  (ii) Beginning in 2005, in addition to the adjustment provided for in Section
7(b)(iii), not later than June 15 of each year, Cliffs shall calculate and
certify to Algoma (x) the final Composite Index for the prior year, (y) Cliffs’
calculation of the adjustment to the Adjusted Expected Price per Iron Unit for
each kind of Cliffs Pellets, and (z) the total amount required to be paid by
Cliffs to Algoma, or vice versa, to correct the total amount paid by Algoma to
Cliffs for the prior year (as previously adjusted) for the actual Adjusted
Expected Price per Iron Unit derived for the actual Composite Index. The payment
due pursuant to Section 7(a) next occurring after June 15 shall be adjusted by
the amount specified in clause (z).

(d) All payments shall be made by wire transfer of immediately available funds
according to such instructions as Cliffs may from time to time provide, and
shall be made in U.S. dollars.

(e) In the event Algoma shall fail to make payment when due of any amounts,
Cliffs, in addition to all other remedies available to Cliffs in law or in
equity, shall have the right, but not the obligation, to withhold further
performance by Cliffs under this Agreement until all claims Cliffs may have
against Algoma under this Agreement are fully satisfied.

(f) Exhibit C illustrates the operation of the provisions of this Section 7.

8. SHIPMENTS AND DELIVERY.

(a) Cliffs and Algoma will agree on a mutually acceptable delivery schedule for
each year prior to November 1 of the preceding year. Such schedule must be
established to match both Algoma’s furnace requirements and Cliffs’ pellet
availability. Cliffs and Algoma will balance the delivery schedule by pellet
source and type so that monthly shipments will be relatively equal, considering
winter shipping restrictions and production schedules. Cliffs and Algoma
recognize that changes in schedule will occur as provided in Section 5, and will
use commercially reasonable efforts to accommodate such changes.

(b) During 2002, Cliffs will use commercially reasonable efforts (which shall
not require incurring additional operating or capital costs) to load an average
of 70 railcars per day for direct delivery by the Wisconsin Central System, or
its successor (“WCS”), to the Sault Ste. Marie Plant. The number of railcars
shipped daily from the various locations shall be agreed upon by Cliffs and
Algoma, but the total shall not exceed 70. Thereafter, Cliffs will use
commercially reasonable efforts (which shall not require incurring additional
operating or capital costs) to increase the tonnage of shipments to the Sault
Ste. Marie Plant by direct rail with the objective of being able to (i) ship a
minimum of 90% of Algoma’s annual pellet requirements by direct rail, and
(ii) cause a minimum of 90% of the railcars loaded out of the Tilden Plant or
the Empire Plant not to exceed their capacities, and not to have a gross weight
over rail in excess of 263,000 pounds. Cliffs and Algoma acknowledge that
neither of them owns any railcars and as such they must obtain the cooperation
of WCS. To this end, Algoma will pursue with WCS a more appropriately sized rail
car fleet (i.e., smaller rail cars) to be used for shipments by WCS. Algoma will
cause WCS to adjust the weight of any railcar that is loaded in excess of its
designed carrying capacity.

 

12

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(c) Deliveries shall be made as follows:

 

  (i) Tilden Mag Flux Pellets and Tilden Hem Flux Pellets shall be delivered by
Cliffs to Algoma f.o.b. loaded vessel at Port Marquette, Michigan or f.o.b.
loaded railcar at Partridge, Michigan, as the case may be, and in either case
title and all risk of loss, damage or destruction shall pass to Algoma at the
time of discharge of the pellets from the loading device to the vessel or at the
time of transfer of rail cars to WCS.

 

  (ii) Empire Royal Pellets shall be delivered by Cliffs to Algoma f.o.b. loaded
vessel at Port Marquette, Michigan, or loaded rail car at the Empire Plant, as
the case may be, and in either case title and all risk of loss, damage or
destruction shall pass to Algoma at the time of discharge of the pellets from
the loading device to the vessel or railcar.

 

  (iii) Other Cliffs Pellets shall be delivered by Cliffs to Algoma f.o.b.
loaded vessel at Allouez, Wisconsin or Silver Bay, Minnesota or loaded railcar
at the Hibbing Plant, or other mutually agreed location (by vessel or rail), as
the case may be, and in any case title and all risk of loss, damage or
destruction shall pass to Algoma at the time of discharge of the pellets from
the loading device to the vessel or railcar.

9. WEIGHTS.

Railcar bill of lading weight determined by railroad scale weights, bin scale
weights or belt scale weights in accordance with the procedures in effect at
each of the plants, and vessel bill of lading weight determined by railroad
scale weights or belt scale weights in accordance with the procedures in effect
from time to time at each of the loading ports, shall be accepted by the parties
as finally determining the amount of Cliffs Pellets delivered to Algoma pursuant
to this Agreement. Cliffs shall ensure that all weighing devices are regularly
tested, verified and maintained.

10. EMPLOYMENT OF VESSELS AND RAILCARS.

Algoma assumes the obligation for arranging and providing appropriate vessels
and railcars for the transportation of the Cliffs Pellets delivered by Cliffs to
Algoma hereunder. Algoma shall arrange and provide (a) for all rail shipments,
railcars capable of loading at the Tilden Plant, Empire Plant, Hibbing Plant or
Northshore Plant, as the case may be, and (b) for all vessel shipments, ore
carrier or bulk carrier type vessels suitable in all respects to enter, berth at
and leave the loading ports and suitable for the loading and mooring facilities
at the loading ports. If Cliffs supplies any Other Cliffs Pellets hereunder,
Algoma shall (i) use all commercially reasonable efforts to obtain the best
possible price and other terms for transportation of such Other Cliffs Pellets,
and (ii) certify the use of such efforts, and the prices obtained for such
transportation, to Cliffs at the end of each year.

 

13

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11. SAMPLING PROCEDURES.

All pellet sampling procedures and analytical tests conducted on Cliffs Pellets
sold to Algoma to demonstrate compliance with typical and average analysis
characteristics specified in Section 4 shall be performed by Cliffs at the
loading point on each pellet vessel shipment or train shipment, as the case may
be. Test methods to be used shall be the appropriate ASTM or ISO standard
methods published at the time of testing or the customary procedures and
practices previously furnished by Cliffs to Algoma, or any other procedures and
practices that may be mutually agreed to by Cliffs and Algoma. The final values
of all characteristics are those determined by Cliffs at the loading point.
Algoma may, at any time and from time to time through one or more authorized
representatives, be present during production, loading, or to observe sampling
and analysis of pellets being processed for shipment to Algoma. At Algoma’s
option and at its own expense, Algoma may from time to time require independent
sampling.

12. WARRANTIES.

(a) EXCEPT AS SET FORTH IN SECTION 4(b), CLIFFS MAKES NO, AND HEREBY DISCLAIMS
AND EXCLUDES ANY, EXPRESS OR IMPLIED WARRANTIES INCLUDING, WITHOUT LIMITATION,
ANY IMPLIED WARRANTY OF MERCHANTABILITY, OF FITNESS, OR OF FITNESS FOR A
PARTICULAR PURPOSE, WITH RESPECT TO ALL CLIFFS PELLETS; PROVIDED, HOWEVER, THAT
NOTHING IN THIS SECTION 12(a) SHALL LIMIT CLIFFS’ OBLIGATION TO USE ITS BEST
EFFORTS TO COMPLY WITH SECTION 4(a).

(b) All notices of material variance of any Cliffs Pellets from the LSL and USL
described on Exhibit A-1, Exhibit A-2, Exhibit A-3.1, Exhibit A-3.2, Exhibit
A-3.3, Exhibit A- 3.4, Exhibit A-3.5 or Exhibit A-3.6, as the case may be, over
the average volumes specified in Section 4(c) shall be delivered to Cliffs prior
to such Cliffs Pellets being charged in the Sault Ste. Marie Plant’s blast
furnace, or any claim arising from any such material variance shall be waived by
Algoma. Each party shall afford the other party prompt and reasonable
opportunity to inspect the Cliffs Pellets as to which any notice is given as
above stated. The Cliffs Pellets shall not be returned to Cliffs without prior
consent of Cliffs, which consent, in the case of direct rail shipments, shall
not be unreasonably withheld. IN NO EVENT SHALL CLIFFS BE LIABLE FOR ANY DAMAGE
TO ALGOMA’S PROPERTY OR LOST PROFITS, INJURY TO GOOD WILL OR ANY OTHER SPECIAL
OR CONSEQUENTIAL DAMAGES UNLESS IT IS PROVED THAT CLIFFS HAS ENGAGED IN WILLFUL
MISCONDUCT.

13. PRICE REOPENER.

If at the end of 2007, 2010 or 2013, (a) Algoma believes that its delivered
pellet cost per iron unit under this Agreement is higher than either (i) the
delivered cost per iron unit for comparable grades of pellets, on average, paid
by other blast furnace operators in the Great Lakes region served by ports
located on Lake Erie, Lake Huron, Lake Michigan or Lake Superior, or (ii) the
delivered cost per iron unit for comparable grades of pellets, on average,
sourced from iron ore deposits in the United States, paid by other Canadian
blast furnace operators served by ports located on Lake Ontario (the lesser of
the costs described in clauses (i)

 

14

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and (ii), the “Benchmark Delivered Cost”) or (b) Cliffs believes that Algoma’s
delivered pellet cost per ton is 6% less than the Benchmark Delivered Cost, then
Algoma or Cliffs, as the case may be, may, by notice to the other within 30 days
after the end of 2007, 2010 or 2013, as the case may be, request a price
renegotiation. If Cliffs and Algoma are unable to reach agreement on a mutually
agreeable price within 60 days of such notice, either of them may initiate
arbitration, as provided in Section 15, for the determination of a price per
iron unit for the various kinds of Cliffs Pellets (excluding transportation
costs) that results in (x) a delivered cost per iron unit to Algoma (taking into
account transportation costs) that is equal to the Benchmark Delivered Cost if
Algoma has initiated this price reopener provision, or (y) in a delivered cost
per iron unit to Algoma (taking into account transportation costs) that is 2%
below the Benchmark Delivered Cost if Cliffs has initiated this price reopener
provision. In addition, the arbitration shall adjust the Base Prices per Iron
Unit for 2002 in such a manner that, taking into account Section 6(b), Section 6
hereof can be used to establish prices for future years. The prices determined
by the arbitrators shall be effective retroactively to the beginning of the year
in which Algoma or Cliffs requested a price renegotitation. Cliffs shall pay
Algoma, or Algoma shall pay Cliffs, within 10 days of the arbitrators decision,
an amount equal to the adjustment calculated by the arbitrators for the prior
period of that year.

14. COVENANTS.

(a) During the term of this Agreement, Algoma shall continue to operate its
No. 7 blast furnace located at its Sault Ste. Marie Plant in accordance with
prevailing industry practice.

(b) Algoma agrees that it will limit its purchase of steel slabs to 200,000 tons
per year during the term of this Agreement provided that no restriction on slab
purchases by Algoma will apply to: (i) any year where Algoma’s Annual
Requirements are 3,500,000 tons or greater; (ii) slab purchases made in
connection with either a blast furnace reline or other equipment related issues;
or (iii) any period after a decision by Algoma to discontinue the operation of
Algoma’s slab caster.

(c) During the term of this Agreement, Algoma shall not: (i) sell, transfer or
otherwise permit any other Person to use any pellets purchased hereunder, other
than as security for a bona fide extension of credit in the ordinary course of
business; (ii) use any pellets purchased hereunder in any facility other than
the Sault Ste. Marie Plant; or (iii) sell, lease or otherwise transfer title or
the right to use the Sault Ste. Marie Plant (including without limitation its
blast furnaces), or any material portion thereof, to any Person, or merge,
consolidate or reorganize with any Person unless that Person assumes in writing
this Agreement and all of Algoma’s obligations hereunder.

15. ARBITRATION.

Any matter related hereto that is required to be resolved by arbitration or
pursuant to Section 15 hereof shall be resolved in Cleveland, Ohio by
application of the rules of The American Arbitration Association applicable to
commercial disputes, modified as follows:

 

15

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  (a) there shall be three arbitrators, all of whom shall have expertise
relevant to the matter to be determined, and none of whom shall be an employee,
officer, director or consultant of, or of a direct competitor of, Algoma or
Cliffs;

 

  (b) in connection with any arbitration arising out of Section 13, each of
Cliffs and Algoma shall have the right to submit information to the arbitrators
to be held in confidence by them and not disclosed to the other party (or any
other person), provided that (i) the party providing such information shall
certify its accuracy to the best of its actual knowledge; and (ii) such
information shall be made available to counsel for the other party upon delivery
by such counsel of its undertaking to hold the information (either in the form
provided or in any other form) in confidence and not to disclose it to its
client, or any other person (other than the arbitrators);

 

  (c) before making their determination in any matter, the arbitrators must
request from each of the parties a complete statement of its proposed resolution
of such matter, and the arbitrators shall select between the two proposed
resolutions, without making any alteration to either of them (or if either party
does not submit a proposed resolution, or submits one that is materially
incomplete, shall select the proposed resolution of the other party); and

 

  (d) the costs of the arbitrators shall be borne entirely by the party that did
not prevail.

The judgment of the arbitrators shall be final and binding on the parties, and
may be entered and enforced by any court of the United States, any state
thereof, Canada or any province thereof.

16. FORCE MAJEURE.

No party hereto shall be liable for damages resulting from failure to deliver or
accept and pay for all or any of the Cliffs Pellets as described herein, if and
to the extent that such delivery or acceptance would be contrary to or would
constitute a violation of any regulation, order or requirement of a recognized
governmental body or agency, or if such failure, including (a) failure of the
mines supplying the Cliffs Pellets to be delivered under this Agreement to
produce the Cliffs Pellets, or (b) failure of Algoma’s facilities to produce
steel, is caused by or results directly or indirectly from acts of God, war,
insurrections, interference by foreign powers, acts of terrorism, strikes,
hindrances, labor disputes, labor shortages, fires, flood, embargoes, accidents
or delays at the mines, on the railroads or docks or in transit, shortage of
transportation facilities, disasters of navigation, or other causes, similar or
dissimilar, if such other causes are beyond the control of the party charged
with a failure to deliver or to accept and pay for the Cliffs Pellets. To the
extent a force majeure is claimed hereunder by a party hereto, such shall
relieve the other party from fulfilling its corresponding agreement hereunder to
the party claiming such force majeure, but only for the period and to the extent
of the claimed force majeure, unless otherwise mutually agreed to by the
parties.

 

16

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17. NOTICES.

All notices, consents, reports and other documents authorized and required to be
given pursuant to this Agreement shall be given in writing and either personally
served on an officer of the party hereto to whom it is given, or sent by
recognized overnight delivery service, mailed by registered or certified mail,
postage prepaid, or by facsimile, addressed as follows:

If to CCIC, CMC or Northshore:

1100 Superior Avenue—18th Floor

Cleveland, Ohio 44114-2589

Attention: Secretary

cc: Vice President-Sales

If to Algoma:

105 West Street

Sault Ste. Marie, Ontario P6A 7B4

Attention: Corporate Secretary

Fax: (705) 945-2203

provided, however, that any party may change the address to which notices or
other communications to it shall be sent by giving to the other party written
notice of such change, in which case notices and other communications to the
party giving the notice of the change of address shall not be deemed to have
been sufficiently given or delivered unless addressed to it at the new address
as stated in said notice.

18. TERM.

The term of this Agreement shall commence as of 12:01 a.m. on the day following
the Closing Date and continue through December 31, 2016; provided, however, that
if the Closing Date has not occurred prior to February 28, 2002, then either
party shall have the right to terminate this Agreement at any time prior to the
Closing Date, by notice to the other party. This Agreement shall remain valid
and fully enforceable for the fulfillment of obligations incurred prior to
termination.

19. AMENDMENT.

This Agreement may not be modified or amended except by an instrument in writing
signed by all parties hereto.

20. WAIVER.

No waiver of any of the terms of this Agreement shall be valid unless in writing
and signed by all parties hereto. No waiver or any breach of any provision
hereof or default under any provisions hereof shall be deemed a waiver of any
subsequent breach or default of any kind whatsoever.

 

17

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21. CONFIDENTIALITY.

(a) Cliffs and Algoma acknowledge that this Agreement contains certain volume
pricing, adjustment and term provisions which are confidential, proprietary or
of a sensitive commercial nature and which would put Cliffs or Algoma at a
competitive disadvantage if disclosed to the public, specifically, Sections 1,
2, 6, 7, 13 and 14, and all of the Schedules and Exhibits hereto (“Confidential
Information”). Cliffs and Algoma further agree that all provisions of this
Agreement shall be kept confidential and, without the prior consent of the other
party, shall not be disclosed to any party not a party to this Agreement except
as required by law or governmental or judicial order and except that disclosure
of the existence of this Agreement shall not be precluded by this Section 21.

(b) If either party is required by law or governmental or judicial order or
receives legal process or a court or agency directive requesting or requiring
disclosure of any of the Confidential Information contained in this Agreement,
such party will promptly notify the other party prior to disclosure to permit
such party to seek a protective order or take other appropriate action to
preserve the confidentiality of such Confidential Information. If either party
determines to file this Agreement with the Securities and Exchange Commission
(“Commission”) or any other federal, state, provincial or local governmental or
regulatory authority, or with any stock exchange or similar body, such
determining party will use its best efforts to obtain confidential treatment of
such Confidential Information pursuant to any applicable rule, regulation or
procedure of the Commission and any applicable rule, regulation or procedure
relating to confidential filings made with any such other authority or exchange.
If the Commission (or any such other authority or exchange) denies such party’s
request for confidential treatment of such Confidential Information, such party
will use its best efforts to obtain confidential treatment of the portions
thereof that the other party designates. Each party will allow the other party
to participate in seeking to obtain such confidential treatment for Confidential
Information.

(c) GOVERNING LAW.

This Agreement shall in all respects, including matters of construction,
validity and performance, be governed by and be construed in accordance with the
laws of the State of Ohio.

22. ASSIGNMENT.

(a) For purposes of this Agreement, the term “Algoma” includes and means not
only Algoma, but also any successor by merger or consolidation of Algoma and any
permitted assigns of Algoma.

(b) In case Algoma shall consolidate with or merge into another corporation or
shall transfer to another person, partnership, corporation or entity, all or
substantially all of its iron and steel business, this Agreement shall be
assigned by Algoma to, and shall be binding upon, the corporation resulting from
such consolidation or merger or the person, partnership, corporation or entity
to which such transfer is made; otherwise no assignment of this Agreement by
Algoma shall be valid unless Cliffs shall consent in writing thereto.

 

18

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(c) In case CCIC, CMC or Northshore, or any permitted assign of any of them,
shall consolidate with or merge into another corporation or shall transfer to
another person, partnership, corporation or entity, all or substantially all of
its business, this Agreement shall be assigned by CCIC, CMC or Northshore, as
the case may be, to, and shall be binding upon, the corporation resulting from
such consolidation or merger or the person, partnership, corporation or entity
to which such transfer is made; otherwise, no assignment of this Agreement by
CCIC, CMC or Northshore, shall be valid unless Algoma shall consent thereto in
writing.

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their respective authorized officers.

 

THE CLEVELAND-CLIFFS IRON COMPANY     ALGOMA STEEL INC. By:   /s/    Donald J.
Gallagher     By:   /s/    Glen Manchester Name:   Donald J. Gallagher     Name:
  Glen Manchester Title:   Vice President     Title:   Vice President—Finance
and Administration

 

CLIFFS MINING COMPANY     NORTHSHORE MINING COMPANY By:   /s/    Donald J.
Gallagher     By:   /s/    Donald J. Gallagher Name:   Donald J. Gallagher    
Name:   Donald J. Gallagher Title:   Vice President     Title:   Vice President

 

19

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Schedule 1(i)

PELLET SALE AND PURCHASE AGREEMENT

WORLD PELLET PRICE CALCULATION

YEAR 2001

 

    

2001 WORLD PELLET PRICES

 

PRODUCER

   WEIGHT     DMTU      DGTU      WTD AVG     

 

 

   

 

 

    

 

 

    

 

 

 

Eastern Canadian Pellet Price

     50.0 %      0.5153         0.5236         0.2618   

Companhia Vale Rio Doce, S.A. — (f.o.b. Tubaro)

     50.0 %      0.5010         0.5090         0.2545              

 

 

 

TOTAL

           $ 0.5163   

--------------------------------------------------------------------------------

Schedule 5(a)

 

Edward M. Bumbacco       Algoma Steel Inc. Manager Corporate Logistics,      
105 West Street Purchasing and Stores       Sault Ste. Marie, Ontario, Canada
Telephone: (705) 945-2472       P6A 7B4 Facsimile: (705) 945-3112       e-mail:
ebumbacco@algoma.com      

November 7, 2001

VIA FAX 216-694-5385

Mr. Don Gallagher

Cleveland Cliffs Inc.

1100 Superior Avenue

Cleveland, OH 44114-2589

Dear Don:

Pellet Nomination for 2002

As per our recent agreement, our November pellet nomination for 2002 will be
3.0m gt.

Our monthly shipment expectations are as follows:

 

January:

   260,000gt    July:    256,000gt

February:

   199,000gt    August:    253,000gt

March:

   220,000gt    September:    243,000gt

April:

   292,000gt    October:    257,000gt

May:

   276,000gt    November:    248,000gt

June:

   243,000gt    December:    253,000gt

Algoma Steel would like to meet with Cliffs, at your convenience, to discuss our
detailed monthly requirements and routing expectations. For your information,
the volumes for the year reflect a slightly higher rail movement than previously
discussed.

As you know, the steel market has deteriorated during the 4th quarter of 2001.
Our nomination for 2002 is based on our expectations of seeing some business
improvement beginning in early 2002. Our January nomination may change based
upon market projections.

Yours truly,

ALGOMA STEEL INC.

/s/ Ed /s/

Ed Bumbacco

Manager Corporate Logistics, Purchasing and Stores

Cc A. Stevens

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Exhibit A-1

Iron Ore Fluxed Pellets

Average Composite Specification for all Fluxed Pellet Blends

 

          Pellet Specification             LSL    AIM      USL      Frequency

A. % DRY CHEMICAL ANALYSIS

           

Fe

   60.20      61.20          S

SiO2

        5.30         5.60       S

Al2O3

        0.33          S

CaO

        4.75          S

MgO

        1.60          S

Mn

        0.10          S

P

        0.020         0.023       S

S

        0.015          Q

TiO2

        0.060          Q

Na2O

        0.035          Q

K2O

        0.040          Q

CaO/ SiO2

   0.85      0.90         0.95      

B/A

        1.14         

MgO/ SiO2

           

B. PHYSICAL

           

% + l/2”

        8.0          S

% - 1/2” x +3/8”

   75.0      80.0          S

% -  1/4”

        2.0         3.5       S

% - 28 Mesh

        0.3          S

C. REDUCIBILITY (R4O)

        1.10          Q

D. LTB (% +  1/4”)

   85      90          Q

E. COMPRESSION (LBS)

        400          M

F. SWELLING

        15.0         20.0       Q

G. SOFTENING TEMP (°C)

        1350          Q

H. MOISTURE AS LOADED

        1.5         4.0       S

Additional Requirements:

 

1. Specifications to be based on a weighted pellet quality specification as
charged to the blast furnace.

2. Individual pellet specifications to be provided on a train lot or vessel
cargo basis. Physical and moisture limits apply on a shipment by shipment basis.
Moisture shall also be limited to a maximum of 3.5% on a monthly average basis.

3. Changes to pellet sourcing must result in a specification substantially
equivalent to the above, and shall be reviewed by Algoma and Cliffs prior to
shipments.

4. Pellet blend limited to two (2) “families” of pellets. (Tilden Magnetite and
Empire Royal are a family.) Cliffs may (at its own cost) blend pellets to create
a single family, such as Tilden Magnetite blended with the Tilden Hematite to
create one family.

Frequency of reporting: S = Shipment, M = Monthly average, Q = Quarterly
average.

--------------------------------------------------------------------------------

Exhibit A-2

Iron Ore Blended Pellets

Average Composite Specification for Fluxed and

Maximum 15% Standard Pellet Blends

 

            Pellet Specification               LSL      AIM      USL     
Frequency  

A. % DRY CHEMICAL ANALYSIS

           

Fe

     60.80         61.80            S   

SiO2

        5.25         5.50         S   

Al2O3

        0.36            S   

CaO

        4.17            S   

MgO

        1.44            S   

Mn

        0.09            S   

P

        0.020         0.023         S   

S

        0.015            Q   

TiO2

        0.060            Q   

Na2O

        0.035            Q   

K2O

        0.037            Q   

CaO/ SiO2

     0.74         0.79         0.84      

B/A

           

MgO/ SiO2

           

B. PHYSICAL

           

% + l/2”

        8.0            S   

% - 1/2” x +3/8”

     75.0         80.0            S   

% -  1/4”

        2.0         3.5         S   

% - 28 Mesh

        0.3            S   

C. REDUCIBILITY (R40)

        1.0            Q   

D. LTB (% +  1/4”)

     85         90            Q   

E. COMPRESSION (LBS)

        400            M   

F. SWELLING

        15.0         20.0         Q   

G. SOFTENING TEMP (°C)

        1325            Q   

H. MOISTURE AS LOADED

        1.5         4.0         S   

Additional Requirements:

1. Specifications to be based on a weighted pellet quality specification as
charged to the blast furnace.

2. Individual pellet specifications to be provided on a train lot or vessel
cargo basis. Physical and moisture limits apply on a shipment by shipment basis.
Moisture shall also be limited to a maximum of 3.5% on a monthly average basis.

3. Changes to pellet sourcing must result in a specification substantially
equivalent to the above, and shall be reviewed by Algoma and Cliffs prior to
shipments.

4. Pellet blend limited to two (2) “families” of pellets. (Tilden Magnetite and
Empire Royal are a family.) Cliffs may (at its own cost) blend pellets to create
a single family, such as Tilden Magnetite blended with the Tilden Hematite to
create one family.

Frequency of reporting: S = Shipment, M = Monthly average, Q = Quarterly
average.

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Exhibit A-3.1

THE CLEVELAND-CLIFFS IRON COMPANY

EMPIRE IRON MINING PARTNERSHIP

EMPIRE ROYAL FLUX PELLET

 

            PELLET SPECIFICATION        LSL      AIM      USL  

A. % DRY CHEMICAL ANALYSIS

        

Fe

     60.50         61.00      

Si02

        5.50         5.80   

A1203

        0.33      

CaO

        4.95      

MgO

        1.50      

Mn

        0.06      

P

        0.016         0.022   

S

        0.005      

Ti02

        0.06         0.10   

Na20

        0.030      

K20

        0.047      

CaO / SiPO2 (L/S)

     0.85         0.90         0.95   

MgO / SiO2

        0.27      

B. SIZING (BT)

        

% + 1/2”

        5.0         10.0   

% – l/2” x + 3/8”

        84.0      

% – 3/8” x + 1/4”

        6.0      

% – 1/4”

        1.0         1.5   

C. POROSITY, % VOIDS

        30.25      

D. REDUCIBILITY (R40)

     0.95         1.03      

E. LTB (% + 1/4”)

     85.0         92.0      

F. COMPRESSION (LBS)

     450         528      

G. HIGH TEMP UNDER LOAD (% RED.)

        86.0      

H. SWELLING (% VOLUME CHANGE)

        13.0         18.0   

I. SOFTENING TEMP (°C)

     1320         1350      

J. BULK DENSITY (LBS/CU FT)

        

K. MOISTURE AS LOADED

        1.5         4.0   

ANALYSIS ARE LOADED AT MINE

        

Comments:

Currently Empire does not analyze for Ti02—Ti02 impacts granulated slag.

--------------------------------------------------------------------------------

Exhibit A-3.2

THE CLEVELAND-CLIFFS IRON COMPANY

TILDEN MINING COMPANY L.C.

TILDEN MAGNETITE FLUX PELLET

 

            PELLET SPECIFICATION        LSL      AIM      USL  

A. % DRY CHEMICAL ANALYSIS

        

Fe

     60.80         61.30      

Si02

        5.33         5.60   

AI203

        0.33      

CaO

        4.80      

MgO

        1.60      

Mn

        0.10      

P

        0.017         0.020   

S

        0.020      

Ti02

        0.050      

Na20

        0.035      

K20

        0.030      

CaO / SiO2 (L/S)

     0.85         0.90         0.95   

B/A

        1.13      

MgO / SiO2

        0.30      

B. PHYSICAL

        

% + 1/2”

        10.0         25.0   

% – l/2” x + 3/8”

     70.0         76.0      

% – 1/4”

        1.5         2.0   

% – 28 Mesh

        0.3      

C. POROSITY, % VOIDS

        35.0      

D. REDUCIBILITY (R40)

     1.05         1.15      

E. LTB (% + 1/4”)

     85.0         93.0      

F. COMPRESSION (LBS)

     300         350      

G. HIGH TEMP UNDER LOAD (% RED.)

        

H. SWELLING (% VOLUME CHANGE)

        15.0         18.0   

I. SOFTENING TEMP (°C)

     1320         1350      

J. BULK DENSITY (LBS/CU FT)

        118      

K. MOISTURE AS LOADED

        1.5         4.0   

ANALYSIS ARE LOADED AT MINE

        

Comments:

NOTE %+l/2” is high and should be lowered to ~15%, interim 20%.

--------------------------------------------------------------------------------

Exhibit A-3.3

THE CLEVELAND-CLIFFS IRON COMPANY

TILDEN MINING COMPANY L.C.

TILDEN HEMATITE FLUX PELLET

 

            PELLET SPECIFICATION        LSL      AIM      USL  

A. % DRY CHEMICAL ANALYSIS

        

Fe

     61.00         61.50      

SiO2

        4.90         5.20   

A12O3

        0.53      

CaO

        4.40      

MgO

        1.70      

Mn

        0.10      

P

        0.035         0.040   

S

        0.015      

TiO2

        0.090      

Na2O

        0.035      

K2O

        0.030      

CaO / SiO2 (L/S)

     0.85         0.90         0.95   

B/A

        1.12      

MgO / SiO2

        0.35      

B. SIZING (BT)

        

% + 1/2”

        4.0         10.0   

% – 1/2” x + 3/8”

        84.5      

% – 1/4”

        2.0         3.0   

% – 28 Mesh

        0.3      

C. POROSITY, % VOIDS

        33.00      

D. REDUCIBILITY (R40)

     1.00         1.10      

E. LTB (% + 1/4”)

     85.0         92.0      

F. COMPRESSION (LBS)

     420         470      

G. HIGH TEMP UNDER LOAD (% RED.)

        

H. SWELLING (% VOLUME CHANGE)

        15.0         18.0   

I. SOFTENING TEMP (°C)

     1320         1350      

J. BULK DENSITY (LBS/CU FT)

        121      

K. MOISTURE AS LOADED

        1.5         4.0   

ANALYSIS ARE LOADED AT MINE

        

Comments:

Phos Limit at the Blast Furnace is currenlty 0.022% for Pellet Burden. Usage of
Tilden Hematite is governed by shift-to-shift Phos average.

--------------------------------------------------------------------------------

Exhibit A-3.4

CLIFFS MINING COMPANY

HIBBING TACONITE COMPANY JOINT VENTURE

HIBTAC STANDARD PELLET

 

            PELLET
SPECIFICATION               LSL      AIM      USL  

A. % DRY CHEMICAL ANALYSIS

        

Fe

     65.40         66.15      

SiO2

        4.50         4.80   

A12O3

        0.30      

CaO

        0.30      

MgO

        0.31      

Mn

        0.08      

P

        0.011         0.015   

S

        0.002      

TiO2

        

Na2O

        0.019      

K2O

        0.016      

CaO / SiO2 (L/S)

        0.07      

B/A

        0.13      

MgO / SiO2

        0.07      

B. SIZING (BT)

        

% + 1/2”

        4.5         10.0   

% – 1/2” x + 3/8”

        81.5      

% – 1/4”

        3.5         7.0   

% – 28 Mesh

        0.5      

C. POROSITY, % VOIDS

        

D. REDUCIBILITY (R40)

     0.85         0.94      

E. LTB (% + 1/4”)

     87.5         95.2      

F. COMPRESSION (LBS)

     410         460      

G. HIGH TEMP UNDER LOAD (% RED.)

        

H. SWELLING (% VOLUME CHANGE)

        

I. SOFTENING TEMP (°C)

     1260         1290      

J. BULK DENSITY (LBS/CU FT)

        139      

K. MOISTURE AS LOADED

        2.5         4.0   

ANALYSIS ARE LOADED AT MINE

        

Comments:

Hibtac Pellet to control Monisture and - 1/4” size.

--------------------------------------------------------------------------------

Exhibit A-3.5

NORTHSHORE MINING COMPANY

NORTHSHORE STANDARD (Acid)

          PELLET
SPECIFICATION          

LSL

   AIM    USL

A. % DRY CHEMICAL ANALYSIS

        

Fe

   64.70    65.20   

SiO2

      4.80    5.20

Al2O3

      0.35   

CaO

      0.80   

MgO

      0.53   

Mn

      0.18   

P

      0.022    0.027

S

      0.003   

TiO2

        

Na2O

      0.035   

K2O

      0.020   

CaO / SiO2 (L/S)

      0.17   

B/A

      0.26   

MgO / SiO2

      0.11   

B. SIZING (BT)

        

% + 1/2”

      4.4    9.0

% – 1/2” x + 3/8”

      86.5   

% – 1/4”

      2.0    3.0

% – 28 Mesh

      0.3   

C. POROSITY, % VOIDS

        

D. REDUCIBILITY (R40)

   0.87    0.97   

E. LTB (% + 1/4”)

   85.0    90.0   

F. COMPRESSION (LBS)

   430    480   

G. HIGH TEMP UNDER LOAD (% RED.)

        

H. SWELLING (% VOLUME CHANGE)

        

I. SOFTENING TEMP (°C)

   1265    1295   

J. BULK DENSITY (LBS/CU FT)

        

K. MOISTURE AS LOADED

      2.75    4.0

ANALYSIS ARE LOADED AT MINE

        

Comments:

Phos Limit at the Blast Furnace is currenlty 0.022% for Pellet Burden.

--------------------------------------------------------------------------------

Exhibit A-3.6

NORTHSHORE MINING COMPANY

NORTHSHORE FLUX

 

          PELLET
SPECIFICATION          

LSL

   AIM    USL

A. % DRY CHEMICAL ANALYSIS

        

Fe

   62.70    63.15   

SiO2

      4.00    5.20

Al2O3

      0.40   

CaO

      4.00   

MgO

      1.00   

Mn

      0.20   

P

      0.024    0.029

S

      0.003   

TiO2

        

Na2O

      0.040   

K2O

      0.025   

CaO / SiO2 (L/S)

      1.00   

B/A

      1.14   

MgO / SiO2

      0.25   

B. SIZING (BT)

        

% + 1/2”

      3.0    7.0

% –l/2” x + 3/8”

      89.0   

% – 1/4”

      1.0    3.0

% – 28 Mesh

      0.2   

C. POROSITY, % VOIDS

      31.00   

D. REDUCIBILITY (R40)

   1.10    1.20   

E. LTB (% + 1/4”)

   85.0    91.0   

F. COMPRESSION (LBS)

   420    460   

G. HIGH TEMP UNDER LOAD (% RED.)

        

H. SWELLING (% VOLUME CHANGE)

      13.0   

I. SOFTENING TEMP (°C)

   1300    1350   

J. BULK DENSITY (LBS/CU FT)

      128   

K. MOISTURE AS LOADED

      2.75    4.0

ANALYSIS ARE LOADED AT MINE

        

Comments:

Phos Limit at the Blast Furnace is currently 0.022% for Pellet Burden.

--------------------------------------------------------------------------------

Exhibit B-1

PELLET SALE AND PURCHASE AGREEMENT

COMPOSITE INDEX FORMULA FOR YEARS 2004—2016

 

Contract Year’s Composite Index Calculation

               

(i) Producer Price Index (PPI)—All Commodities - Series Id: WPU00000000

               

Contract Year’s PPI—All Commodities

          X         0.4000        =         A   

Base Year 2001 PPI—All Commodities

               

(ii) Producer Price Index (PPI)—Metals and Metal Products—Sheets’ Cold Rolled
Carbon (SCRC)—Series Id: WPU10170711

               

Contract Year’s PPI—Metals and Metal Products—(SCRC)

        X         0.2000        =         B   

Base Year 2001 PPI—Metals and Metal Products—(SCRC)

             

(iii) Eastern Canadian Pellet Prices

               

Contract Year’s Eastern Canadian Pellet Prices

          X         0.4000        =         C   

Base Year 2001 Eastern Canadian Pellet Prices

               

Contract Year’s Composite Index

       =            (A+B+C )      

--------------------------------------------------------------------------------

Exhibit B-2

PELLET SALE AND PURCHASE AGREEMENT

EXAMPLE OF CALCULATION OF CURRENT YEAR’S PELLET PRICE

CONTRACT YEAR 2004

(1) Multiply 2002 Base Price per iron unit by the Composite Index

 

Pellet

   f.o.b.      2002 Base
Price  Per
Per Iron Unit      Composite
Index      Adjusted Base
Price Per
Per Iron Unit  

Tilden Mag Flux

     Railcar at Partridge       $ 0.5755         0.980       $ 0.5640   

(2) Any contract year’s prices shall be limited to a maximum of 106% above the
prior year’s price per iron unit or a minimum of 94% below the prior year’s
price per iron unit—Prior year’s price $0,5838

 

Pellet

   % of Adjusted Base Price
Per Iron Unit vs. Prior  Year’s
Base Price per Iron Unit     Adjusted Base Price Caps
> = 94% or < = 106% of
Prior Year’s Base Price      Capped
Adjusted
Base  Price
Per Iron Unit  

Tilden Mag Flux

     96.61 %    $ 0.5488 - $0.6188       $ 0.5640   

(3) Any contract year’s price shall be limited to a maximum of 120.2% of the
World Pellet Price or a minimum of 106.2% of the World Pellet Price

 

Pellet

   2004 World Pellet Price      Adjusted Base Price Caps
> = 106.2% or < =  120.2%
Current Year’s World Pellet Price      Adjusted Base
Price Per Iron Unit  

Tilden Mag Flux

   $ 0.5027       $ 0.5339 - $0.6042       $ 0.5640   

(4) Adjusted Expected Price Per Iron Unit determined by Annual Pellet
Requirement Nomination

Pellet Nomination: 3,600,000

 

Pellet

   Nomination Range      Per Iron Unit Adjustment
Per 25.000 Ton Range      Adjusted Expected
Price Per Iron Unit  

Tilden Mag Flux

     3,475,000 -3,525,000       $ 0.0000       $ 0.5640         3,525,000
-3,550,000       $ 0.0007       $ 0.5633         3,550,000 -3,575,000       $
0.0007       $ 0.5626         3,575,000 -3,600,000       $ 0.0007       $ 0.5619
  

 

(5) Adjusted Expected Price Per Iron Unit—Contract Year

 

Pellet

   Adjusted Expected
Price Per Iron Unit  

Tilden Mag Flux

   $ 0.5619   

--------------------------------------------------------------------------------

Exhibit C

PELLET SALE AND PURCHASE AGREEMENT

EXAMPLE OF ONE YEAR’S CYCLE OF RECALCULATION OF ADJUSTED EXPECTED PRICE PER IRON
UNIT

CONTRACT YEAR 2004

(1) No later than December 15 of year prior to Contract Year, Cliffs will
provide a good faith estimate of the Composite Index for the Contract Year

 

Pellet

   f.o.b.      December 15 of Year Prior To
Contract Year Estimated
Composite Index      2002 Base
Price Per
Iron Unit      Adjusted Base
Price Per
Iron Unit  

Tilden Mag Flux

     Railcar at Partridge         0.980       $ 0.5755       $ 0.5640   

(2) All price caps and volume price adjustments apply to the December 15
Adjusted Expected Price Per Iron Unit for the Contract Year

(3) No later than June 15 of Contract Year, Cliffs will provide a revised good
faith estimate of the Composite Index for the Contract Year

 

Pellet

   f.o.b.      December 15 of Year Prior To
Contract Year Estimated
Composite Index      June 15 of Contract Year
Revised Calculated
Composite Index      2002 Base
Price Per
Iron Unit      Adjusted Base
Price Per
Iron Unit  

Tilden Mag Flux

     Railcar at Partridge         0.980         0.970       $ 0.5755       $
0.5582   

(4) All price caps and volume price adjustments apply to the June 15 Revised
Adjusted Expected Price Per Iron Unit for the Contract Year

(5) No later than January 15 of year following the Contract Year, Cliffs will
provide a second revised good faith estimate of the Composite Index for the
prior year’s Contract Year

 

Pellet

   f.o.b.      June 15 of Contract
Year Estimated
Composite Index      January 15 of Year
Following Contract Year
Revised Calculated
Composite Index      2002 Base
Price Per
Iron Unit      Adjusted Base
Price Per
Iron Unit  

Tilden Mag Flux

     Railcar at Partridge         0.970         0.975       $ 0.5755       $
0.5611   

(6) All price caps and volume price adjustments apply to the January 15 Revised
Adjusted Expected Price Per Iron Unit for the prior year’s Contract Year

(7) No later than June 15 of year following the Contract Year, Cliffs will
provide a final revised Composite Index for the prior year’s Contract Year

 

Pellet

   f.o.b.      January 15 of Year Following
Contract Year Estimated
Composite Index      June 15 of Year
Following Contract Year
Final Calculated
Composite Index      2002 Base
Price Per
Iron Unit      Adjusted Base
Price Per
Iron Unit  

Tilden Mag Flux

     Railcar at Partridge         0.975         0.980       $ 0.5755       $
0.5640   

(8) All price caps and volume price adjustments apply to the June 15 Final
Adjusted Expected Price Per Iron Unit for the prior year’s Contract Year