# Technical Memorandum

From: 

### Barr Engineering Subject: Tilden SO2 Control Cost Analysis Date: 

### September 28 , 2012


# 1. Summary of SO 2 

# Control Cost Analysis for Tilden Line 1

In the proposed Regional Haze Federal Implementation Program (FIP) for taconite indurating furnaces located in Michigan and Minnesota, the United States Environmental Protection Agency (US EPA) has proposed the installation of dry flue gas desulfurization (dr y FGD) SO 2 

### controls for Tilden Line 1. US EPA claims that dry SO 2 

### controls are economically feasible because they can be installed at Tilden at a
SO 2 

### control cost effectiveness of $4,500 to $5,500 per ton of SO 2 

### removed. However, this estimate is
based on information from a different taconite plant, and it does not consider site specific modifications needed to install these controls (retrofit factors). Consideration of site specific costs associated with the
modifications needed to install emission control s is a valid factor in determining the cost effectiveness of potential emission control technologies as BART. As noted in the 40 CFR Part 51 Appendix Y guidelines for BART cost effectiveness analyses:

“ Physical modifications needed to resolve technical obs tacles do not, in themselves, provide a justification for eliminating the control technique on the basis of technical infeasibility. However, you may consider the cost of such modification in estimating costs. This in turn, may form the basis for eliminati ng a control technology .”

There are several site specific technical obstacles to installing dry FGD controls on Tilden Line 1 including:From: Barr Engineering Company Subject: Tilden SO2 Control Cost Analysis Date: September 28 , 2012 Page: 2



###  Space limitations on where the dry FGD SO 2 

### emission control equipment can be installed

 Limitations on where ductwork from Line 1 to the new emission control system can be located
due to the presence of existing equipment

 Addition of induced draft fans to operate the emission control equipment. The existing fans were not designed to overcome the additional pressure drop imposed by dry FGD controls.

 Installation of a new stack at the outlet of the dry FGD emission control system. Given the high cost of the ductwork, installation of a new stack is less expensive than installing ducts back to the original stacks.

A control cost analysis for installation of dry FGD on Tilden Line 1 was prepared fo r this report in order to document the overall cost of installing dry SO 2 

### controls when the following factors are considered:

 Current supplier pricing based on design specifications for Tilden Line 1

 Site specific factors affecting the installation costs o f SO 2 

### controls on Tilden Line 1

 A construction schedule which takes site specific factors into account.

Dry FGD SO 2 

### control costs were calculated using :



###  Budgetary emission control equipment cost estimates from a supplier for a Circulating Fluidized
Bed Absorber (CFBA) and from Ducon for a spray dryer absorber (SDA)

 A pre

- feasibility level engineering study was conducted to determine the installed cost of
modifications to Line 1 as described above.

 Using supplier equipment cost information and the inst alled costs for the Line 1 modifications necessary for installation of dry FGD, the overall installation and operating costs were calculated

per the procedures found in the U.S. EPA Air Pollution Control Cost Manual

– Sixth Edition (EPA
452/B

- 02

- 001). Thes e costs are summarized in Table 1 on the following page. The control cost calculations are located in Appendix A of this report.

In addition, SO 2 

### control costs were calculated using the installed equipment costs and operating costs from the prefeasibilit y study. This analysis resulted in SO 2 

### control costs similar to the SO 2 

### control costsFrom: Barr Engineering Company Subject: Tilden SO2 Control Cost Analysis Date: September 28, 2012 Page: 3


### using EPA methods. In all cases listed in Table 1 the SO 2 

### control costs are calculated using the anticipated annual SO2 emissions and the SO 2 

### emission control performance specified by the proposed FIP limit of 5 ppm SO 2 

### . At SO 2 

### control costs of $11,450 to $15,750 per ton SO 2 

### removed, the costs of dry
FGD for SO 2 

### control are significantly higher than the $4,500 to $5,500 per ton SO 2 

### removed EPA reported in the proposed FIP when site specific m odification needed to install these emission control technologies are considered.

Table 1 - Tilden Line 1 SO 2 

### Cost Effectiveness with Site Specific Modifications Costs Included

Dry FGD SO 2 

### Control Technology Cost Estimating Procedure Total Installed Capital Cost for Dry FGD Annual Operating Cost for Dry FGD - $/yr Annual SO 2 

### Emission Reduction

tons/yr SO 2 

### Control Cost $/ton SO 2 

### removed
Circulating Fluidized Bed Absorber EPA Control Cost Manual $64,400,000 $11,450,000 1000 $11,450
Engineering Prefeasibility Study $63,100,000 $11,650,000 1000 $11,650

Spray Dryer

Absorber EPA Control Cost Manual $96,250,000 $15,750,000 1000 $15,750
Engineering Prefeasibility Study $84,550,000 $14,500,000 1000 $14,550

Using the anticipated annual baseline emi ssion rate and a 95% control efficiency, SO 2 

### concentrations at the outlet of a dry FGD on Tilden Line 1 would be below the CFBA supplier performance guarantee of 5 ppm. Ducon proposed a performance guarantee of > 90% SO 2 

### control for a SDA scrubber. The SO 2 

### emission reduction of 1,037.8 tons per year listed in Table V-B.36 of the proposed FIP did not use the anticipated annual emissions. 1 

### . At a controlled SO 2 

### concentration of 5 ppm, the calculated SO 2 

### reduction is 999 tons per year.

1 The cost effectiveness guidance refers to use of “a realistic depiction of antic ipated annual emissions for the source. .. for the existing sources subject to BART, you will estimate the anticipated annual emissions based upon actual emissions from a baseline period.” 40 CFR Part 51, App. Y D.4.d.From: Barr Engineering Company Subject: Tilden SO2 Control Cost Analysis Date: September 28 , 2012 Page: 4



# 2

. EPA Pollution Control Cost Manual Approach to Estimating Pollution Control Cost Effectiveness

Pollution control cost effectiveness is the total annual cost (TAC) of the emission controls divided by the emission reduction achieved by t he emission controls.

In the US EPA Pollution Control Cost Manual (Control Cost Manual), the total annual cost is the sum

1 

### of:

 Direct operating costs such as labor, chemical, utilities and maintenance.

 Indirect operating costs including capital recovery co sts, administration and employee benefits

 The capital recovery cost is based on the total installed cost of the equipment and a 7% interest

rate 2



### .
Direct operating costs such as chemical use and utilities are based on the expected consumption rates. Suggested operator and maintenance labor hours are listed for each type of emission controls. The costs of maintenance materials are estimated using cost factors listed for each type of emission controls. Significant periodic maintenance costs such as repl acing baghouse filters are annualized so they can be incorporated into the annual operating cost.

To determine the total installed cost, the EPA Pollution Control Cost Manual uses the cost factor method for estimating the installed costs of emission contro l equipment. In this method, the installed cost of pollution controls is estimated by multiplying the cost of the emission control equipment by factors for the major components of a construction project for direct costs such as foundations, piping, electri cal, etc. and for indirect costs such as engineering, construction management, contingencies, etc. The equipment costs plus the direct and indirect installation costs are summed to
determine the total installed cost of emission controls.

1 US EPA Office of Air Quality Planning and Standards, “ EPA Air
Pollution Control Cost Manual ”, January 2002, p. 2

- 7.

2 Ibid, p. 2

- 13.From: Barr Engineering Company Subject: Tilden SO2 Control Cost Analysis Date: September 28 , 2012 Page: 5


### The proposed FIP r ecommends installation of dry FGD SO 2 

### controls for Tilden Line 1. The proposed FIP indicates that dry SO 2 

### controls are economically feasible because they can be installed at Tilden at a
SO 2 

### control cost effectiveness of $4,500 to $5,500 per ton of SO 2 

### remo ved. As previously noted, this estimate does not consider site specific modifications needed to install these controls which can have a considerable impact on the final installation price. At existing facilities, there can be several physical
barriers to i nstallation of emission controls. Often, there is little space available for new equipment, clearance between existing equipment is limited and existing plant infrastructure may not have sufficient capacity to accommodate the new emission control equipment and the associated ancillary equipment. The EPA control cost manuals do not contain cost factors to specifically address these types of issues in a detailed manner. The manual explicitly provides for the use of a “retrofit factor” to asses
these costs in a general manner, or costs for site specific requirements such as demolition, buildings and enclosures, ductwork and other ancillary equipment may be included as line items in the direct installation cost calculations. Due to the site specific nature of th e installations, installed costs were calculated in the prefeasibility study. Use of the baghouse installation cost factors to determine the installed cost of ancillary equipment would not properly account for site specific installation costs at the
Tilden plant.

Given the importance of modifications to existing facilities in control cost analysis, it important to carefully assess these factors when determining how much it will cost to install new emission controls under these circumstances. Therefore, a pr efeasibility engineering analysis was completed to determine both the cost of site specific modifications and the total installed cost of a dry FGD emission control system on Tilden Line 1.


# 3. SO 2 

# Control Cost Analysis for Tilden Line 1

Prefeasibility Engineering Cost Analysis

A common practice in engineering and design work is to develop cost estimates at varying levels of accuracy throughout the life of a project. Initial cost estimates are prepared at a level of accuracy sufficient to effectively sc reen various design options. As the evaluation process continues, more accurate cost estimates are prepared for the remaining alternatives until a fin al design basis is selected and the accuracy of the cost estimate prepared from this information is suffic iently accurate to receive financing for theFrom: Barr Engineering Company Subject: Tilden SO2 Control Cost Analysis Date: September 28 , 2012 Page: 6


### project.

One level of cost estimating used to screen project options is a prefeasibility study. The results of a prefeasibility study are known as “an opinion of probable cost.” 3 

### This cost estimate is prepared based on site specific equipment locations, equipment and material lists, new equipment design specifications, information gathered during a site visit, inquiries to suppliers for equipment costs and costs for recent
similar projects. Sufficient engineering and design work is done to assess project costs to an accuracy of plus or minus 40%. For further information on the requirements of a prefeasibility study, please see report Appendix B, Explanation of Cost Estimate Classif ications. An opinion of probable cost was developed for installation of dry FGD emission controls on Line 1 at Tilden based on the aforementioned procedures. Costs for the emission control equipment were provided by Ducon and CFBA supplier . Costs for

mater ials and equipment outside the dry FGD system (flange to flange control system inlet and outlet) and overall construction costs were provided by Zachry Engineering Company as part of the prefeasibility study (Appendix C).



# 4. Determination of Site Specific Modifications for Installation of Dry FGD SO 2 

# Controls on Tilden Line 1

In order to prepare a cost estimate for installation of a dry FGD system on Tilden Line 1, a dry FGD system design and scope of work for site specific modifications to the Tilden pla nt was needed. This information was developed by doing the following:

 Identify a conceptual design for dry FGD controls based on the Line 1 exhaust gas
characteristics.

 Identify induration furnace operational requirements, operating scenarios and process s tream characteristics which could affect the dry FGD system and select dry FGD system design.

 Identify ancillary equipment needed for the dry FGD system based on the Line 1 exhaust stream
characteristics.

 Identification of a suitable location for the dry FGD system and ancillary equipment

 Identification of suitable tie

- in locations to Line 1 for routing the exhaust streams to the dry FGD

3 CITEFrom: Barr Engineering Company Subject: Tilden SO2 Control Cost Analysis Date: September 28 , 2012 Page: 7



### system.

 Identification of potential ductwork routes from the Line 1 exhaust points to the dry FGD system
location

 Id entify plant modifications needed to accommodate installation of a dry FGD emission control system. This includes modifications to Line 1, structural changes to support new ductwork and changes to Tilden plant’s infrastructure.

 Identify site specific const raints at Tilden which could affect the dry FGD construction schedule.

A meeting between Cliffs Natural Resources, Ducon, Zachry Engineering and Barr Engineering was held at the Tilden plant on September 9, 2012. The purpose of the meeting was to review th e characteristics of the Line 1 exhaust streams, identify how those characteristics would affect the design of the dry FGD system, identify Line 1 operating conditions which the dry FGD system must meet and to inspect the Tilden plant site and identify opt ions for installing a dry FGD system equipment on Line 1. The results of this meeting are discussed in the following sections.



### 4.1 Design basis for dry FGD controls
Cliffs Natural Resources per sonnel developed Line 1 exhuast stream parameters for the dry FGD system design from Line 1 heat and material balances and available stack test data. The facility periodically prepares the heat and material balances from plant operating data to assess the performance of the
indur ation furnaces. The dry FGD system design parameters reflect Line 1 induration furnace operating conditions during maximum production rates. A copy of the design specifications submitted to Ducon
and the CFBA supplier is presented in Table 2 below.From: Barr Engineering Company Subject: Tilden SO2 Control Cost Analysis Date: September 28 , 2012 Page: 8



### Table 2: Assumed Process Parameters for Each Gas Stream

Parameter Value Units

Inlet Gas Flow acfm

Inlet SO 2 in Gas Lb/hr
Inlet Gas Temp Degrees F

Inlet PM to ESP Gr/acf

MWw Lbs/p

- mol
Inlet Humidity %

Site elevation above sea level ft
Inlet Static Pressure to Dry Absorber Reactor w.g.



### 4.2 Dry FGD System Conceptual Design
The dry FGD systems for Line 1 proposed by Ducon and CFBA supplier each include two parallel dry scrubbing vessels and baghou se systems. An air blower with a variable speed motor will be used on each train, and the exh a u st from each blower will be routed to a common stack. Block flow diagrams for the proposed systems are located in Appendix D.

Taconite induration furnaces are de signed with recuperative heat recovery systems to minimize the amount of fuel use. Air used to cool the finished pellets exiting the induration furnace is used to dry and preheat the “green ball” pellets entering the furnace. Tilden Line 1 has three exhaus t streams. The exhaust stream exiting the section of the furnace where the green ball pellets enter the furnace has the lowest operating temperature and highest moisture content of the three streams. Ducon representatives expressed concerns about the tempe rature of this stream relative to its water dew point and recommended
that all three exhaust streams be combined to address this issue.From: Barr Engineering Company Subject: Tilden SO2 Control Cost Analysis Date: September 28 , 2012 Page: 9


### The combined steams represent a total flow rate of acfm. Ducon representatives indicated that
the combined flow rate resulted in an SDA vessel size too large to provide the required emission control performance because Ducon’s sorbent injection system design could not adequately disperse the SO 2 

### reagent in a vessel this size. Therefore, two parallel control tra ins were proposed. Each control train includes a spray dryer absorber vessel

.
The combined stream flow rate also exceeds the maximum design flow rate of a CFBA dry FGD and CFBA supplier has proposed parallel CFBA dry FGD systems as well.

The parallel dry FGD trains are also needed allow the facility operational flexibility needed to operate the dry FGD systems under the full range of air flow rates expected under the majority of operating conditions. Dry FGD systems have a limited turn down capacity and op eration at less than 50% of the design air flow rate is not feasible because the reduced air velocity is insufficient to keep the SO 2 

### reagent particles suspended in the air stream. The air velocity in a dry FGD system must be sufficient to keep the reagent suspended so it can be pneumatically transported from the scrubber to the sorbent recovery system. In a CFBA system, the air velocity must be sufficient to maintain a fluidized bed of sorbent particles in the CFBA reactor as well and pneumatically transporting sorbent to the recovery system. Use of two parallel scrubber vessels allows the facility to take one dry FGD scrubber off line
d uring low flow conditions so that the air flow rates through the operating dry FGD system are maintained at the proper levels.

Baghouses were proposed for sorbent recovery and control of spent sorbent particulate emissions. The baghouses will be sized to a llow one baghouse compartment to be taken off line for maintenance while the remaining compartments are sufficiently sized to meet the facility’s particulate emission control requirements. This feature is critical because it allows the facility to continue operating if a bag failure occurs and a compartment must be taken off line to replace a filter bag. Otherwise, Line 1 would be forced to shut down when baghouse maintenance of this type is required.

One of the emails included in the FIP docket suggested t hat the cost of SO 2 

### controls at Tilden could be significantly reduced by utilizing the exiting electrostatic precipitators (ESPs) in a dry FGD system in lieu of installing new baghouses. This is not feasible for the following reasons:

 The existing ESPs are located in close proximity to the Line 1 induration furnace. AirFrom: Barr Engineering Company Subject: Tilden SO2 Control Cost Analysis Date: September 28 , 2012 Page: 10



### manifolds on the underside of the furnace collect the furnace exhaust and route the air directly into the ESPs. There is insufficient space in this area to install new ductwork for routing t he furnace exhaust over to a dry FGD system and back to the ESPs for sorbent recovery. Removing the existing ESPs and relocating them to the proposed dry FGD plot space would be inordinately expensive.

 T he existing ESPs are used to recover iron ore dust fr om the induration furnace and recycle the iron ore for reprocessing. If the ESPs were removed for use in the dry FGD system, this would increase the particulate loading on the dry FGD system and that could adversely affect the dry FGD system operations. Bo th suppliers have recommended that the ESPs remain in
their exi s ting service for this reason.

 The existing ESPs are also used to remove dust in the furnace exhaust streams to protect the furnace exhaust fans. Iron ore dust is very abrasive and the exhaust fans could easily be damaged by iron dust if dust levels are not properly controlled. An exhaust fan failure would force the shutdown of Line 1 during fan repairs.

 If the ESP were to be removed for use in the dry FGD system, iron ore currently recovered in the ESPs would have to disposed of as solid waste because it would be contaminated with the spent sorbent from the dry FGD system.



### 4.3 Ancillary equipment needed for the dry FGD system based on the Line 1 process design and exhaust stream characteristics

 Installation of ductwork from the existing Line 1 stacks ( North and South) to the dry FGD system.

 Induced draft fans equipped with variable speed motors at the outlet of each of parallel dry FGD
trains.

 A new common exhaust stack and ductwork from the ind uced draft fans to the stack.From: Barr Engineering Company Subject: Tilden SO2 Control Cost Analysis Date: September 28 , 2012 Page: 11



###  A conveyor system for spent lime removal

 A spent lime storage silo and truck loading facility so spent lime can be transported to a solid waste disposal facility.

 In addition to the electrical system upgrades for the new dry FGD system, there are electrical system upgrades for the ancillary equipment listed above.

The rationale for ancillary equipment will be discussed in the plant modifications needed to accommodate installation of a dry FGD emission controls section below.



### 4.4 Selection of a location for the dry FGD system and ancillary equipment

The proposed site for installation of a dry FGD system for Line 1 is located on the South side of the building which houses Lines 1 and 2 at Tilden. The proposed location is indicat ed on the attached aerial photograph of the Tilden plant (Figure 1). Please note that all figures are located in Appendix D. Figures 6 and 7 are photographs of the south side of the building taken at grade. The space inside the induration furnace building is limited and not enough area is located inside the building to contain a dry FGD system. One can see this by the area of the dry FGD plot space indicated in Figure 1 as compared to the induration furnace building. Therefore, the only available option is to install the dry FGD system on available open land adjacent to the induration furnace building. The area directly west of the induration furnaces is occupied by a building which houses the equipment used to prepare the “greenball” feedstock
for the indur ation furnaces. Rail deliveries are routed through the area on the North side of the building. Figures 10 and 11 are photographs taken on the North side of the induration furnace building at ground level. One can see that all open space is taken up with ro adways, rail lines and piping. The roadway on the East and North side of the building is used for truck deliveries and heavy equipment access for maintenance. Installation of the dry FGD system elevated above the road and rail lines was considered,
but con struction of the supports needed to install an FGD system at this location would severely disrupt the deliveries of supplies needed to operate the plant. Therefore, the South side is the only viable location for a dry FGD system for Line 1.



### 4.5 Ductwork r oute from the Line 1 exhaust points to the dry FGD system locationFrom: Barr Engineering Company Subject: Tilden SO2 Control Cost Analysis Date: September 28 , 2012 Page: 12


### Lines 1 and 2 at the Tilden plant run in an east west direction. Line 1 is on the North side of the induration furnace building and Line 2 is on the south side. As noted in the previous sec tion, the only available site for a dry FGD system is located on the South side of the induration furnace building. The proposed layout of the ducting is shown in Figure 1. Figures 2, 3, 4 and 5 are drawings of the induration furnaces. As one can
see the i nduration furnace structures are very large and take up several stories of space within the building. The furnace exhaust streams are located at the center of Figures 2 and 3. Figures 8 and 9 are photographs taken inside the induration furnace building from grade below the Line 1 air blowers. As one can see, the space is densely packed with existing ducts and there is little room for installation of ne w ductwork. Figures 15 and 16 are photograph s taken inside the building from the upper level of the buil ding looking toward s the Line 1 stacks. As one can see, a large duct is directly in the pathway where the ductwork for Line 1 would be routed. Therefore, the only alternative for ductwork running from Line 1 to the dry FGD
site on the South side of the bu ilding is across the top of the building. Figures 12 and 13 are photographs take on the roof of the Tilden plant. Access to the Line 1 stacks is relatively open and accessible for tie

ins on the roof. Therefore, installation of tie

- ins at this location is not expected to extend beyond the time normally taken for the annual maintenance outage.

Several factors will make construction of the duct across the top of the building difficult. Most of the structural steel seen in Figures 8, 9, 14, 15, and 16 designed to for building support and structural steel below the proposed duct will need to be re

- enforced to handle the weight of the ductwork and wind loads on the duct. Figure 12 is a photo of the roof monitors (ventilators) on the top of the induration furnace building. Ductwork running across the top of the building will need to be elevated in order to clear these structures. As previously noted, the area on the North side of the building is where truck and rail deliveries are made. Therefore, the amount of tim e construction cranes can be located in this area is
limited and most of the crane lifts of materials for construction of the new duct must be made from the
south side.

Duct construction costs are based on new ductwork being insulated and constructed out o f 316 stainless steel. Under most operating conditions, the insulation will keep the ductwork above acid and water dew points. However, corrosion due to water and acid condensation may occur during non

- normal operating conditions such as startup and shutdo wn. Localized corrosion may also occur in areas where insulation has been removed or damaged over time. Given the remote location of the ductwork, it will be difficult to inspect it for damage and if problems are identified accessing the duct for repairs w ill be difficult. ToFrom: Barr Engineering Company Subject: Tilden SO2 Control Cost Analysis Date: September 28 , 2012 Page: 13


### prevent these problems from occurring, 316 stainless steel was selected as the material of construction for the new ductwork. The United Taconite plant is currently using 316 steel for induration furnace ducting.



### 4.6 Duct burners for furnace start up and shutdown
Duct burners are specified as ancillary equipment that would be used during furnace startups and shutdowns to prevent water condensation in the SDA/ CFBA systems during startups, shutdowns, and malfunction periods of the furnaces. The burners would be used during periods when furnace off

- gas temperatures are below normal operating temperatures to raise the temperature of the furnace off

- gas up to the normal SDA/CFBA operating temperature.



### 4. 7 Induced draft fans equipped wi th variable speed motors at the outlet of each parallel dry FGD train.
As previously noted, the existing ESPs will be used to collect iron ore dust so it can be recycled and to prevent the furnace exhaust fans from damage by the abrasive iron ore dust part icles.
The existing induration furnace exhaust fans will be used to maintain air flows and the operating pressure of the induration furnace. The existing fans do not have sufficient horsepower to pressure the induration furnace exhaust through a dry FGD sy stem. Therefore new fans will need to be installed downstream of each of the two dry FGD emission control trains. The fans will be equipped with variable speed drives so they can respond to varying operating conditions in the dry FGD systems.
These fans ar e outside the scope of the emission control equipment vendor’s proposals and must be accounted for as ancillary equipment.
Installation of two induced draft fans will allow the dry FGD trains to be operated independently. This will allow the plant to opera te on one dry FGD train as necessary during low flow periods. This will also allow one dry FGD train to remain in service should one of the variable speed fans malfunction.



### 4. 8 A new common exhaust stack and ductwork from the induced draft fans to the sta ck
A new common stack is proposed as the exhaust point for the two dry FGD trains. New duct work will be required to route the dry FGD exhaust streams from the outlet of the induced draft fans to the new stack. The dry FGD site on the South side of the ind uration furnace is too far from the exiting Line 1 stack to cost effectively run ductwork back to the existing stack. A common stack will be more cost effective thanFrom: Barr Engineering Company Subject: Tilden SO2 Control Cost Analysis Date: September 28 , 2012 Page: 14


### installation of individual stacks. The exhaust gas ductwork and common stack are outside t he scope of the emission control equipment vendor’s proposals and must be accounted for as ancillary equipment.



### 4. 9 A conveyor to transport spent lime collected in the baghouses to a storage silo, and truck loading facilities at the storage silo to transpo rt spent lime to a solid waste disposal facility.
The control equipment supplier proposals include facilities for incoming lime shipments, storage and use within the dry FGD system. The scope of these proposals does not cover the equipment needed to

manage the spent lime generated by the dry FGD system. A conveyor system, storage silo and truck loading station will be needed to manage the spent lime and to ship it off site to a solid waste disposal facility for proper disposal.



# 5. Summary of the Prefeasibi lity Study Results

The “Dry Flue Gas Desulfurization Study” report in Appendix C contains estimates for the total installed cost of a dry FGD system and the annual direct operating and maintenance costs. The following costs are reported for a SDA system installed on Tilden Line 1:

 Total Installed Cost

- $86,100,000.

 Annual Direct Operation and Maintenance Cost

- .$2,870,000 per year

The annual direct operation and maintenance costs were calculated in a manner similar to the methods
described above for the EPA control cost manual. See Appendix C for additional details. The prefeasibility report did not address indirect operating costs

The total installed cost of emission controls was broken down into:

 Costs directly associated with the installation of emiss ion controls

 Costs for site specific modifications and ancillary equipment needed to install an SDA system at
Tilden

Site specific costs for SDA installation at Tilden Line 1 were $26,600,000 or 30% of the totalFrom: Barr Engineering Company Subject: Tilden SO2 Control Cost Analysis Date: September 28 , 2012 Page: 15



### installed cost.


# 6. Description of SO 2 

# Contr ol Cost Spreadsheet Tables and Control Cost Calculation Methods

The SO 2 

### control cost and cost effectiveness calculations are located in Appendix A of this report. The control cost calculations are presented in 9 tables. The tables contain the following information.

Table # Content
1 Summary of SO 2 Emission Control Cost Analysis
2 Utility, Chemical and Supply Costs
3 GSA Installation and operation costs per EPA Control Cost Manual plus site specific costs per the 2012 Dry FGD Study Report
4 GSA Installation and operation costs per the 2012 Dry FGD Study Report
5 GSA Installed Cost Table from the 2012 Dry FGD Study Report
6 O&M Cost Table from the 2012 Dry FGD Study Report
7 SDA installation and operation costs per EPA Control Cost Manual plus site specific costs per the 2012 Dry FGD Study Report
8 SDA Installation and operation costs per the 2012 Dry FGD Study Report
9 SDA Installed Cost Table from the 2012 Dry FGD Study Report



### The total installed costs and operating costs of the dry FGD systems evaluated were calculated using the procedures specified in US EPA’s Air Pollution Control Cost Manual located at http://www.epa.gov/ttn/catc/products.html#cccinfo

. Dry FGD equi pment costs were provided by Ducon
and CFBA supplier . The costs of site specific modifications and ancillary equipment needed to operate the dry FGD system are based on the 2012 Dry Flue Gas Desulfurization Study prepared by Zachry Engineering Company and Barr Engineering Company; a copy of this report is located in Appendix C of this report.From: Barr Engineering Company Subject: Tilden SO2 Control Cost Analysis Date: September 28 , 2012 Page: 16


### The control cost calculations presented in Appendix A Tables 3 and 7 are based on the cost factors for installation of a baghouse as found in Table 1.9 page 1

- 45 and o perating costs are based on the operating cost calculations identified in Section 1.5.of Section 6, Chapter 1 of the control cost manual. The US EPA’s pollution control cost manual does not include a section which specifically addresses the costs of a dry FGD system. The baghouse cost factors were chosen for this analysis because baghouses are significant part of the cost of a dry FGD system. The baghouse pollution control cost calculations also factor in the periodic cost of filter bag replacement (Section 1.5.1.4), which can be a significant operating expense. The total capital investment factor for baghouses as presented in table 1.9 is 2.19 times the purchased equipment cost. One cost of a dry FGD system which is not accounted for in the baghouse
control cost calculations is the cost of the sorbent used to capture the SO 2 

### and other acid gases present in the exhaust stream. Both of the vendor proposals for dry FGD systems utilize hydrated lime for SO 2 

### capture. Annual hydrated lime use was calculated based on a normal stoichiometric ratio of 1.3 (1.3 moles of lime per mole of SO 2 

### ) and the uncontrolled annual SO 2 

### emission rate. Excess hydrated lime must be added to the dry FGD system to achieve the required level of SO 2 

### control (95% or 5 ppm SO 2 

### ).

As noted in the introduction to this report, the Tilden Line 1 2006 BART report SO 2 

### baseline emission
rate was used in the SO 2 

### control cost effectiveness calculation.

The control cost analysis in US EPA’s proposed FIP is based on Table 1.3 in the control cost manual Section 5 Chapter 1, Wet Scrubbers for Acid Gas. The total capital investment factor for wet scrubbers as presented in table 1.3 is 2.20 times the purchased equipment cost which is nearly identical to the baghouse cost factor. However, this section of the control cost manual does not include costs for periodic filter bag replacement. As a result, SO 2 

### control cost calculations in the proposed FIP did not include filter bag

r e placement costs and SO 2 

### control costs presented in the FIP underestimate the dry FGD operation.

The 2012 Dry Flue Gas Desulfurization Study report is a prefeasibility engineering report jointly prepared by Zachry Engineering Company and Barr Engineering Company. The estimated installed cost for installation of a spray dryer absorber syste m is presented in Table X of the report and expected operating costs are presented in Table Y. This information was used to:

A. Independently calculate the SO2 cost effectiveness of dry FGD.From: Barr Engineering Company Subject: Tilden SO2 Control Cost Analysis Date: September 28 , 2012 Page: 17



### B. Identify the costs of site specific equipment modifications and anci llary equipment installation.

The control cost calculations presented in Appendix A, Tables 4 and 8 use the direct and indirect installed costs and the operation and maintenance (O&M) costs from the 2012 Dry Flue Gas Desulfurization Study
in the SO 2 

### cost effectiveness calculations. These costs are inserted into the EPA control cost method worksheets and are used in lieu of the EPA cost factors for installation. O&M costs from the report plus
EPA factors for overhead costs were used to calculate a nnual operating costs.

# Appendix A

- SO 2 

# Control Cost Calculations

## Michigan Operations - West (Tilden) Appendix A -SO2 Emission Control Cost Analysis Table 1 - Summary Information

Capital Costs ($) Annual Costs ($/yr) Pollution Reduction (ton/yr) Control Cost ($/ton)

Circulating Fluidized Bed Absorber 64,400,000 $ 11,450,000 $ 1000 11,450 $
Spray Dry Absorber 96,250,000 $ 15,750,000 $ 1000 15,750 $ Circulating Fluidized Bed 63,100,000 $ 11,650,000 $ 1000 11,650 $ Spray Dry Absorber 84,550,000 $ 14,500,000 $ 1000 14,550 $

[a] Calculates the control cost based on the cost of the scrubber, and the cost of the auxiliary equipment associated with the scrubber. Site specific retrofit costs from 2012 Dry Flue Gas Desulfurization Study - Opinion of Probable Cost Tables [b] Calculates control costs based vendor data for the cost of the scrubber and a 60% retrofit factor. No auxiliary equipment is considered. [c] Control costs based on 2006 BART Report baseline emission rate of 1,153 ton SO2/yr uncontrolled emissions [d] Project cost from 2012 Dry Flue Gas Desulfurization Study - Opinion of Probable Cost Tables EPA Method

Independent Review

C:\Users\arm3\AppData\Local\Temp\Tilden Appendix A SO2 Control Costs 09282012_6B01C.xlsx SummaryMichigan Operations - West (Tilden) Appendix A -SO2 Emission Control Cost Analysis Table 2 - Summary of Utility, Chemical and Supply Costs

9/28/2012 Page 2 of 17 C:\Users\arm3\AppData\Local\Temp\Tilden Appendix A SO2 Control Costs 09282012_6B01C.xlsx Utility Chem$ DataMichigan Operations - West (Tilden) Appendix A -SO2 Emission Control Cost Analysis Table 3 - GSA - EPA Control Cost Manual Method + Site Specific Costs, 2006 BART Baseline Emission Rate
Operating Unit: Line 1 Indurating Furnace

Emission Unit Number EU-KILN1 Stack/Vent Number North Stack South Stack

Standardized Flow Rate scfm @ 68o F Expected Utilization Rate 100% Temperature Deg F Expected Annual Hours of Operation 7,680 Hours Moisture Content Annual Interest Rate 7.0% Actual Flow Rate acfm Expected Equipment Life 20 yrs Standardized Flow Rate scfm @ 68o F

Dry Std Flow Rate dscfm @ 68o F

CONTROL EQUIPMENT COSTS Capital Costs Direct Capital Costs (1) Purchased Equipment (A) 13,000,900 Purchased Equipment Total (B) 21% of control device cost (A) 15,731,089

Installation - Standard Costs 74% of purchased equip cost (B) 11,641,006 Installation - Site Specific Costs 30,049,567 Installation Total 11,641,006 Total Direct Capital Cost, DC 27,372,095 Total Indirect Capital Costs, IC 52% of purchased equip cost (B) 8,180,166 Total Capital Investment (TCI) = DC + IC 64,411,580
Operating Costs Total Annual Direct Operating Costs Labor, supervision, materials, replacement parts, utilities, etc. 2,701,667 Total Annual Indirect Operating Costs Sum indirect oper costs + capital recovery cost 8,765,638 Savings from Shutdown of Existing Emission Controls 4 0 Total Annual Cost (Annualized Capital Cost + Operating Cost) 11,467,306

Actual Emission Control Cost Calculation Emissions Max Emis Annual Cont Eff 3 Exit Conc. Cont Emis Reduction Cont Cost Pollutant lb/hr T/Yr % Conc. Units T/yr T/yr $/Ton Rem #N/A Sulfur Dioxide (SO 2 ) 2 300.3 1,153.2 95% 5 ppm 153.8 999.4 11,475

Notes & Assumptions

1 Purchased equipment costs from independent review by Zachry Engineering. 2 Capital equipment cost includes the items listed in the "Opinion of Probable Cost" tabs of this spreadsheet. 3 Exit concentration at 95% control efficiency is not technically feasible. The exit concentration at 95% control efficiency is shown below. 1.88 ppm 4 NA - ESPs will continue to operate for iron ore recovery 5 CUECost Workbook Version 1.0, USEPA Document Page 2 allows up to a 60% retrofit factor for installations in existing facilities 6 Site specific installation costs from independent review by Zachry Engineering. 7 Labor required for handling of lime shipments entering and exiting the facility. Includes spil prevention/cleanup and truck cleaning. 8 Determined from Table 1.11 of Chapter 1 of EPA's December 1998 Particulate Matter control design guidelines (for FFs and baghouses) 9 A 10% contingency was used in order to be consistent with the 2012 Dry FGD study. This is a conservative contingency allowance. CueCost allows use of a 20% contingency factor.

9/28/2012 Page 3 of 17 C:\Users\arm3\AppData\Local\Temp\Tilden Appendix A SO2 Control Costs 09282012_6B01C.xlsx CFBA EPA MethodMichigan Operations - West (Tilden) Appendix A -SO2 Emission Control Cost Analysis Table 3 - GSA - EPA Control Cost Manual Method + Site Specific Costs, 2006 BART Baseline Emission Rate

CAPITAL COSTS Direct Capital Costs Combined Stack Purchased Equipment (A) 1,2 Purchased Equipment Costs (A) 13,000,900 Instrumentation 10% of control device cost (A) 1,300,090 MI Sales Taxes 6% of control device cost (A) 780,054 Freight 5% of control device cost (A) 650,045 Purchased Equipment Total (B) 21% 15,731,089

Installation Foundations & supports 4% of purchased equip cost (B) 629,244 Handling & erection 50% of purchased equip cost (B) 7,865,545 Electrical 8% of purchased equip cost (B) 1,258,487 Piping 1% of purchased equip cost (B) 157,311 Insulation 7% of purchased equip cost (B) 1,101,176 Painting 4% of purchased equip cost (B) 629,244 Installation Subtotal Standard Expenses 74% 11,641,006

Total Direct Capital Cost, DC 27,372,095

Indirect Capital Costs Engineering, supervision 10% of purchased equip cost (B) 1,573,109 Construction & field expenses 20% of purchased equip cost (B) 3,146,218 Contractor fees 10% of purchased equip cost (B) 1,573,109 Start-up 1% of purchased equip cost (B) 157,311 Performance test 1% of purchased equip cost (B) 157,311 Model Studies NA of purchased equip cost (B) NA Contingencies 9 10% of purchased equip cost (B) 1,573,109 Total Indirect Capital Costs, IC 52% of purchased equip cost (B) 8,180,166 Total Capital Investment (TCI) = DC + IC 35,552,261 TCI Adj for Baghouse Filter Replacement 34,362,014 Retrofit multiplier 5 0% of TCI 0 Site Specific Installed Equipment Costs 6 Civil/Structural 3,462,500 Mechanical Equipment 15,021,000 Electrical and Control 5,226,000 Freight 735,117 Total Indirect Costs + Contingencies 5,604,950

Total Site Specific Costs 30,049,567

Total Capital Investment (TCI) Retrofit Installed 64,411,580

OPERATING COSTS Direct Annual Operating Costs, DC
Operating Labor Operator Supervisor Maintenance Maintenance Labor Maintenance Materials Utilities, Supplies, Replacements & Waste Manage Compressed Air $ Electricity Filter Bag Replacement Solid Waste Disposal Lime

Total Annual Direct Operating Costs

Savings from Shutdown of Existing Emission Contro

Indirect Operating Costs Overhead Administration (2% total capital costs) Property tax (1% total capital costs) Insurance (1% total capital costs) Capital Recovery Total Annual Indirect Operating Costs Sum indirect oper costs + capital recovery cost 8,765,638

Total Annual Cost (Annualized Capital Cost + Operating Cost) 11,467,306 See Summary page for notes and assumptions

9/28/2012 Page 4 of 17 C:\Users\arm3\AppData\Local\Temp\Tilden Appendix A SO2 Control Costs 09282012_6B01C.xlsx CFBA EPA MethodMichigan Operations - West (Tilden) Appendix A -SO2 Emission Control Cost Analysis Table 3 - GSA - EPA Control Cost Manual Method + Site Specific Costs, 2006 BART Baseline Emission Rate

See Summary page for notes and assumptions

9/28/2012 Page 5 of 17 C:\Users\arm3\AppData\Local\Temp\Tilden Appendix A SO2 Control Costs 09282012_6B01C.xlsx CFBA EPA MethodMichigan Operations - West (Tilden) Appendix A -SO2 Emission Control Cost Analysis Table 4 - 2012 Dry FGD Study Costs for CFBA Scrubber Including Site Specific Costs, 2006 BART Baseline Emission Rate
Operating Unit: Line 1 Indurating Furnace

Emission Unit Number EU-KILN1 Stack/Vent Number North Stack South Stack

Standardized Flow Rate scfm @ 68o F Expected Utilization Rate 100% Temperature Deg F Expected Annual Hours of Operation 7,680 Hours Moisture Content Annual Interest Rate 7.0% Actual Flow Rate acfm Expected Equipment Life 20 yrs Standardized Flow Rate scfm @ 68o F

Dry Std Flow Rate dscfm @ 68o F

CONTROL EQUIPMENT COSTS Capital Costs Direct Capital Costs (1) Purchased Equipment (A) 13,000,900 Purchased Equipment Total (B) 0% of control device cost (A) 0

Installation - Standard Costs 0% of purchased equip cost (B) 0 Installation - Site Specific Costs 0 Installation Total 0 Total Direct Capital Cost, DC 56,338,228 Total Indirect Capital Costs, IC 0% of purchased equip cost (B) 6,737,500 Total Capital Investment (TCI) = DC + IC 63,075,728
Operating Costs Total Annual Direct Operating Costs Labor, supervision, materials, replacement parts, utilities, etc. 2,866,588 Total Annual Indirect Operating Costs Sum indirect oper costs + capital recovery cost 8,766,112 Savings from Shutdown of Existing Emission Controls 4 0 Total Annual Cost (Annualized Capital Cost + Operating Cost) 11,632,701

Actual Emission Control Cost Calculation Emissions Max Emis Annual Cont Eff 3 Exit Conc. Cont Emis Reduction Cont Cost Pollutant lb/hr T/Yr % Conc. Units T/yr T/yr $/Ton Rem #N/A Sulfur Dioxide (SO 2 ) 2a 300.3 1,153.2 95% 5 ppm 153.8 999.4 11,640

Notes & Assumptions

1 Installed Cost per 2012 Dry FGD Study Opinion of Probable Cost; includes CFBA and baghouse cost per FL Smidth Proposal 9/15/2012 2 Emission rate assuming 100% natural gas firing, and 100% of sulfur in green balls released as SO2. See "Baseline Emissions" tab for more details. 2a Emission rate from 2006 BART report baseline emission rate. See "Baseline Emissions" tab for more details. 3 Exit concentration at 95% control efficiency is not technically feasible. The exit concentration at 95% control efficiency is shown below. 1.88 ppm 4 NA - ESPs will continue to operate for iron ore recovery 5 CUECost Workbook Version 1.0, USEPA Document Page 2 allows up to a 60% retrofit factor for installations in existing facilities 6 Baghouse filter replacement cost from 2012 Dry FGD Study Option of Probable Cost, O&M cost analysis

9/28/2012 Page 6 of 17 C:\Users\arm3\AppData\Local\Temp\Tilden Appendix A SO2 Control Costs 09282012_6B01C.xlsx CFBA Independent ReviewMichigan Operations - West (Tilden) Appendix A -SO2 Emission Control Cost Analysis Table 4 - 2012 Dry FGD Study Costs for CFBA Scrubber Including Site Specific Costs, 2006 BART Baseline Emission Rate

CAPITAL COSTS Direct Capital Costs Combined Stack Purchased Equipment (A) 1,2 13,000,900 Purchased Equipment Costs (A) Instrumentation MI Sales Taxes Freight Purchased Equipment Total (B)

Installation Foundations & supports Handling & erection Electrical Piping Insulation Painting Installation Subtotal Standard Expenses

Total Direct Capital Cost, DC from Probable Cost Study 56,338,228

Indirect Capital Costs Engineering, supervision 0 Construction & field expenses 0 Contractor fees 0 Start-up 0 Performance test 0 Model Studies 0 Contingencies 0 Total Indirect Capital Costs, IC from Probable Cost Study 6,737,500 Total Capital Investment (TCI) = DC + IC 63,075,728 TCI Adj for Baghouse Filter Replacement 63,075,728 Retrofit multiplier 5 0% of TCI 0 Site Specific Installed Equipment Costs 7 Included in Probable Cost Study Analysis

Total Site Specific Costs

Total Capital Investment (TCI) Retrofit Installed 63,075,728

OPERATING COSTS Direct Annual Operating Costs, DC
Operating Labor Operator Supervisor Maintenance Maintenance Labor Maintenance Materials Utilities, Supplies, Replacements & Waste Manageme Compressed Air $ Electricity Filter Bag Replacement Solid Waste Disposal Lime
Total Annual Direct Operating Costs 2,866,588

Savings from Shutdown of Existing Emission Controls. NA - Continue using ESPs for iron ore recovery 0

Indirect Operating Costs Overhead Administration (2% total capital costs) Property tax (1% total capital costs) Insurance (1% total capital costs) Capital Recovery Total Annual Indirect Operating Costs Sum indirect oper costs + capital recovery cost 8,766,112

Total Annual Cost (Annualized Capital Cost + Operating Cost) 11,632,701 See Summary page for notes and assumptions

9/28/2012 Page 7 of 17 C:\Users\arm3\AppData\Local\Temp\Tilden Appendix A SO2 Control Costs 09282012_6B01C.xlsx CFBA Independent ReviewMichigan Operations - West (Tilden) Appendix A -SO2 Emission Control Cost Analysis Table 4 - 2012 Dry FGD Study Costs for CFBA Scrubber Including Site Specific Costs, 2006 BART Baseline Emission Rate

Table 4 - 2012 Dry FGD Study Costs for CFBA Scrubber Including Site Specific Costs, 2006 BART Baseline Emission Rate

See Summary page for notes and assumptions

9/28/2012 Page 8 of 17 C:\Users\arm3\AppData\Local\Temp\Tilden Appendix A SO2 Control Costs 09282012_6B01C.xlsx CFBA Independent ReviewMichigan Operations - West (Tilden) Appendix A -SO2 Emission Control Cost Analysis
Table 5 - TILDEN GSA/BAGHOUSE FEASIBILITY STUDY Opinion of Probable Cost - PRELIMINARY
14-Sep-12

Item Material Labor Total Retrofit

Cost GSA/SDA Tilden Retrofit Costs GSA/Baghouse Costs DIRECT COST ITEMS

CIVIL/STRUCTURAL

Demo Existing Equip. and Building Penetrations $25,000 $125,000 $150,000 100% 0% $150,000 $0 Structural Modifications $750,000 $1,750,000 $2,500,000 100% 0% $2,500,000 $0 Misc. Platforms, Support, Access & Enclosures $750,000 $500,000 $1,250,000 40% 60% $500,000 $750,000 Concrete $600,000 $400,000 $1,000,000 25% 75% $250,000 $750,000 Rock Anchors $100,000 $150,000 $250,000 25% 75% $62,500 $187,500 Subtotal - Civil Structural $2,225,000 $2,925,000 $5,150,000 $3,462,500 $1,687,500

MECHANICAL

Demolition $15,000 $85,000 $100,000 100% 0% $100,000 $0 Lead Paint Abatement $5,000 $45,000 $50,000 100% 0% $50,000 $0 Line 1 Ductwork $6,200,000 $1,700,000 $7,900,000 100% 0% $7,900,000 $0 Duct Burner $600,000 $420,000 $1,020,000 100% 0% $1,020,000 $0 2 GSA/Baghouse Trains $13,000,900 $9,100,630 $22,101,530 0% 100% $0 $22,101,530 ID Fan $1,350,000 $945,000 $2,295,000 100% 0% $2,295,000 $0 Stack $775,000 $542,500 $1,317,500 100% 0% $1,317,500 $0 Ash Handling System $1,025,000 $717,500 $1,742,500 100% 0% $1,742,500 $0 Water Softener $100,000 $70,000 $170,000 100% 0% $170,000 $0 Air Compressors $150,000 $45,000 $195,000 0% 100% $0 $195,000 Compressed Air Piping $15,000 $15,000 $30,000 0% 100% $0 $30,000 SDA Water Supply Piping $25,000 $25,000 $50,000 0% 100% $0 $50,000 Lime Slurry Piping $25,000 $25,000 $50,000 0% 100% $0 $50,000 Natural Gas Piping for Duct Burners $18,000 $18,000 $36,000 100% 0% $36,000 $0 Fire Protection $10,000 $10,000 $20,000 0% 100% $0 $20,000 HVAC for ESP, SDA & PJFF Enclosures $75,000 $75,000 $150,000 0% 100% $0 $150,000 CEMS $325,000 $65,000 $390,000 100% 0% $390,000 $0 Vendor Support - Service Engineers $0 $500,000 $500,000 0% 100% $0 $500,000 Miscellaneous Mechanical Equipment $50,000 $50,000 $100,000 0% 100% $0 $100,000 Subtotal - Mechanical $23,763,900 $14,453,630 $38,217,530 $15,021,000 $23,196,530

ELECTRICAL & CONTROLS GSA/SDA 20% percent of total electrical load

Demolition $0 $25,000 $25,000 100% 0% $25,000 $0 13800 V Cable, Switchgear, and Circuit Breakers $250,000 $75,000 $325,000 100% 0% $325,000 $0 Power Distribution Center $2,750,000 $50,000 $2,800,000 80% 20% $2,240,000 $560,000 7.5 MVA Transformer $600,000 $50,000 $650,000 80% 20% $520,000 $130,000 480 Volt Transformer $120,000 $30,000 $150,000 80% 20% $120,000 $30,000 Indoor/Outdoor LightingLighting $25,000 $25,000 $50,000 80% 20% $40,000 $10,000 Safety Switches & Terminations $25,000 $25,000 $50,000 80% 20% $40,000 $10,000 Cable Tray and Miscellaneous Conduit $150,000 $250,000 $400,000 80% 20% $320,000 $80,000 Power Distribution & Instrument Cable $500,000 $825,000 $1,325,000 80% 20% $1,060,000 $265,000 Gounding System $25,000 $25,000 $50,000 80% 20% $40,000 $10,000 Medium Voltage Emergency Generator Rental $50,000 $0 $50,000 80% 20% $40,000 $10,000 Control System Hardware & Panels $300,000 $100,000 $400,000 80% 20% $320,000 $80,000 Field Devices $100,000 $50,000 $150,000 80% 20% $120,000 $30,000 Fiber Optic Cable $5,000 $15,000 $20,000 80% 20% $16,000 $4,000 Subtotal - Electrical & Controls $4,900,000 $1,545,000 $6,445,000 $5,226,000 $1,219,000

Subtotal of Above $30,888,900 $18,923,630 $49,812,530 $23,709,500 $26,103,030 Freight $1,544,445 $0 $1,544,445 $735,117 $809,328 Direct Cost Contingency $3,088,890 $1,892,363 $4,981,253 $2,370,950 $2,610,303 Total Direct Costs $35,522,235 $20,815,993 $56,338,228 $26,815,567 $29,522,661

INDIRECT COST ITEMS 48% 52% Performance Bonds, All Contracts - not required. $0 $0 $0 48% 52% $0 $0 Sales Tax, All Materials $0 $0 $0 48% 52% $0 $0 Engineering - Design $0 $4,000,000 $4,000,000 48% 52% $1,920,000 $2,080,000 Construction Management Services $0 $1,200,000 $1,200,000 48% 52% $576,000 $624,000 Startup and Commissioning Services $0 $400,000 $400,000 48% 52% $192,000 $208,000 Construction Testing Services $0 $200,000 $200,000 48% 52% $96,000 $104,000 Soil Borings $0 $150,000 $150,000 48% 52% $72,000 $78,000 Emission Testing $0 $75,000 $75,000 48% 52% $36,000 $39,000 Owner's Finance Cost $0 $0 $0 0% 100% $0 $0 Owner's Staff Time $0 $0 $0 48% 52% $0 $0 Startup Materials, EG, lime $100,000 $0 $100,000 48% 52% $48,000 $52,000 Subtotal Above $100,000 $6,025,000 $6,125,000 $2,940,000 $3,185,000 Indirect Cost Contingency $10,000 $602,500 $612,500 $294,000 $318,500 Total Indirect Cost $110,000 $6,627,500 $6,737,500 $3,234,000 $3,503,500

Grand Total Opinion of Probable Cost $35,632,235 $27,443,493 $63,075,728 $30,049,567 $33,026,161
NOTE: O&M inputs provided separately

9

## Michigan Operations - West (Tilden) Appendix A -SO2 Emission Control Cost Analysis Table 6 - TILDEN CFBA/BAGHOUSE FEASIBILITY STUDY
Direct Annual Operating & Maintenance Costs (Preliminary) Operations: Hours Operator Cost Operator Supervisor Cost Maintenance: Maintenance Hours Maintenance Materials Utilities, Supplies, Replacement & Waste Disposal: Compressed Air Electricity Filter Bag & Cage Replacement
Solid Waste Disposal Lime Softener Salt

Total Direct Annual Operating & Maintenance Costs (Preliminary) 2,866,588

$ 

### TILDEN SDA/BAGHOUSE O&M COST ESTIMATES

C:\Users\arm3\AppData\Local\Temp\Tilden Appendix A SO2 Control Costs 09282012_6B01C.xlsx O&M CostsMichigan Operations - West (Tilden) Appendix A -SO2 Emission Control Cost Analysis Table 7 -SDA - EPA Control Cost Manual Method + Site Specific Costs, 2006 BART Baseline Emission Rate
Operating Unit: Line 1 Indurating Furnace

Emission Unit Number EU-KILN1 Stack/Vent Number North Stack South Stack

Standardized Flow Rate scfm @ 68o F Expected Utilization Rate 100% Temperature Deg F Expected Annual Hours of Operation 7,680 Hours Moisture Content Annual Interest Rate 7.0% Actual Flow Rate acfm Expected Equipment Life 20 yrs Standardized Flow Rate scfm @ 68o F

Dry Std Flow Rate dscfm @ 68o F

CONTROL EQUIPMENT COSTS Capital Costs Direct Capital Costs (1) Purchased Equipment (A) 25,000,000 Purchased Equipment Total (B) 21% of control device cost (A) 30,250,000

Installation - Standard Costs 74% of purchased equip cost (B) 22,385,000 Installation - Site Specific Costs 29,095,341 Installation Total 22,385,000 Total Direct Capital Cost, DC 52,635,000 Total Indirect Capital Costs, IC 52% of purchased equip cost (B) 15,730,000 Total Capital Investment (TCI) = DC + IC 96,270,093
Operating Costs Total Annual Direct Operating Costs Labor, supervision, materials, replacement parts, utilities, etc. 2,701,667 Total Annual Indirect Operating Costs Sum indirect oper costs + capital recovery cost 13,047,197 Savings from Shutdown of Existing Emission Controls 4 0 Total Annual Cost (Annualized Capital Cost + Operating Cost) 15,748,864

Actual Emission Control Cost Calculation Emissions Max Emis Annual Cont Eff Exit Conc. Cont Emis Reduction Cont Cost Pollutant lb/hr T/Yr % Conc. Units T/yr T/yr $/Ton Rem #N/A Sulfur Dioxide (SO 2 ) 2 300.3 1,153.2 90% 5 ppm 153.8 999.4 15,759

Notes & Assumptions

1 SDA and baghouse cost per Ducon Proposal 9/20/2012, Site Specific Installed Cost per Installed Cost per Barr/Zachry Dry FGD Study Opinion of Probable Cost 2 Emission rate from 2006 BART report baseline emission rate. See "Baseline Emissions" tab for more details. 3 Controlled emission is the greater of the emission rate at 90% control (vendor proposal) or 5 ppm (EPA proposed FIP limit) Exit Concentration at 90% Control 4 ppm 4 NA - ESPs will continue to operate for iron ore recovery 5 CUECost Workbook Version 1.0, USEPA Document Page 2 allows up to a 60% retrofit factor for installations in existing facilities 6 Site specific installation costs from independent review by Zachry Engineering. 7 Labor required for handling of lime shipments entering and exiting the facility. Includes spil prevention/cleanup and truck cleaning. 8 Determined from Table 1.11 of Chapter 1 of EPA's December 1998 Particulate Matter control design guidelines (for FFs and baghouses) 9 A 10% contingency was used in order to be consistent with the 2012 Dry FGD study. This is a conservative contingency allowance. CueCost allows use of a 20% contingency factor.

9/28/2012 Page 11 of 17 C:\Users\arm3\AppData\Local\Temp\Tilden Appendix A SO2 Control Costs 09282012_6B01C.xlsx SDA EPA MethodMichigan Operations - West (Tilden) Appendix A -SO2 Emission Control Cost Analysis Table 7 -SDA - EPA Control Cost Manual Method + Site Specific Costs, 2006 BART Baseline Emission Rate

CAPITAL COSTS Direct Capital Costs Combined Stack Purchased Equipment (A) 1,2 Purchased Equipment Costs (A) 25,000,000 Instrumentation 10% of control device cost (A) 2,500,000 MI Sales Taxes 6% of control device cost (A) 1,500,000 Freight 5% of control device cost (A) 1,250,000 Purchased Equipment Total (B) 21% 30,250,000

Installation Foundations & supports 4% of purchased equip cost (B) 1,210,000 Handling & erection 50% of purchased equip cost (B) 15,125,000 Electrical 8% of purchased equip cost (B) 2,420,000 Piping 1% of purchased equip cost (B) 302,500 Insulation 7% of purchased equip cost (B) 2,117,500 Painting 4% of purchased equip cost (B) 1,210,000 Installation Subtotal Standard Expenses 74% 22,385,000

Total Direct Capital Cost, DC 52,635,000

Indirect Capital Costs Engineering, supervision 10% of purchased equip cost (B) 3,025,000 Construction & field expenses 20% of purchased equip cost (B) 6,050,000 Contractor fees 10% of purchased equip cost (B) 3,025,000 Start-up 1% of purchased equip cost (B) 302,500 Performance test 1% of purchased equip cost (B) 302,500 Model Studies NA of purchased equip cost (B) NA Contingencies 9 10% of purchased equip cost (B) 3,025,000 Total Indirect Capital Costs, IC 52% of purchased equip cost (B) 15,730,000 Total Capital Investment (TCI) = DC + IC 68,365,000 TCI Adj for Baghouse Filter Replacement 67,174,752 Retrofit multiplier 5 0% of TCI 0 Site Specific Installed Equipment Costs 6 Civil/Structural 3,462,500 Mechanical Equipment 15,021,000 Electrical and Control 5,226,000 Freight 724,141 Total Indirect Costs + Contingencies 4,661,700

Total Site Specific Costs 29,095,341

Total Capital Investment (TCI) Retrofit Installed 96,270,093

OPERATING COSTS Direct Annual Operating Costs, DC
Operating Labor Operator Supervisor Maintenance Maintenance Labor Maintenance Materials Utilities, Supplies, Replacements & Waste Managem Compressed Air $ Electricity Filter Bag Replacement Solid Waste Disposal Lime

Total Annual Direct Operating Costs 2,701,667

Savings from Shutdown of Existing Emission Controls. NA - Continue using ESPs for iron ore recovery 0

Indirect Operating Costs Overhead Administration (2% total capital costs) Property tax (1% total capital costs) Insurance (1% total capital costs) Capital Recovery Total Annual Indirect Operating Costs Sum indirect oper costs + capital recovery cost 13,047,197

Total Annual Cost (Annualized Capital Cost + Operating Cost) 15,748,864 See Summary page for notes and assumptions

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See Summary page for notes and assumptions

9/28/2012 Page 13 of 17 C:\Users\arm3\AppData\Local\Temp\Tilden Appendix A SO2 Control Costs 09282012_6B01C.xlsx SDA EPA MethodMichigan Operations - West (Tilden) Appendix A -SO2 Emission Control Cost Analysis Table 8 - 2012 Dry FGD Study Costs for SDA Scrubber Including Site Specific Costs, 2006 BART Baseline Emission Rate
Operating Unit: Line 1 Indurating Furnace

Emission Unit Number EU-KILN1 Stack/Vent Number North Stack South Stack

Standardized Flow Rate scfm @ 68o F Expected Utilization Rate 100% Temperature Deg F Expected Annual Hours of Operation 7,680 Hours Moisture Content Annual Interest Rate 7.0% Actual Flow Rate acfm Expected Equipment Life 20 yrs Standardized Flow Rate scfm @ 68o F

Dry Std Flow Rate dscfm @ 68o F

CONTROL EQUIPMENT COSTS Capital Costs Direct Capital Costs (1) Purchased Equipment (A) 25,000,000 Purchased Equipment Total (B) 0% of control device cost (A) 0

Installation - Standard Costs 0% of purchased equip cost (B) 0 Installation - Site Specific Costs 0 Installation Total 0 Total Direct Capital Cost, DC 79,376,500 Total Indirect Capital Costs, IC 0% of purchased equip cost (B) 6,737,500 Total Capital Investment (TCI) = DC + IC 84,540,985
Operating Costs Total Annual Direct Operating Costs Labor, supervision, materials, replacement parts, utilities, etc. 2,866,588 Total Annual Indirect Operating Costs Sum indirect oper costs + capital recovery cost 11,650,891 Savings from Shutdown of Existing Emission Controls 4 0 Total Annual Cost (Annualized Capital Cost + Operating Cost) 14,517,479

Actual Emission Control Cost Calculation Emissions Max Emis Annual Cont Eff Exit Conc. Cont Emis Reduction Cont Cost Pollutant lb/hr T/Yr % Conc. Units T/yr T/yr $/Ton Rem #N/A Sulfur Dioxide (SO 2 ) 2a 300.3 1,153.2 90% 5 ppm 153.8 999.4 14,527

Notes & Assumptions

1 Installed Cost per Barr/Zachry Dry FGD Study Opinion of Probable Cost; includes SDA and baghouse cost per Ducon Proposal 9/20/2012 2 Emission rate assuming 100% natural gas firing, and 100% of sulfur in green balls released as SO2. See "Baseline Emissions" tab for more details. 2a Emission rate from 2006 BART report baseline emission rate. See "Baseline Emissions" tab for more details. 3 Controlled emission is the greater of the emission rate at 90% control (vendor proposal) or 5 ppm (EPA proposed FIP limit) Exit Concentration at 90% Control 4 ppm per note 2 4 ppm per note 2a 4 NA - ESPs will continue to operate for iron ore recovery 5 CUECost Workbook Version 1.0, USEPA Document Page 2 allows up to a 60% retrofit factor for installations in existing facilities 6 Baghouse filter replacement cost from CFBA estimate from Essar Steel BACT report hood exhuast control cost analysis; CFBA design basis of 1,207,266 acfm.

9/28/2012 Page 14 of 17 C:\Users\arm3\AppData\Local\Temp\Tilden Appendix A SO2 Control Costs 09282012_6B01C.xlsx SDA Independent ReviewMichigan Operations - West (Tilden) Appendix A -SO2 Emission Control Cost Analysis Table 8 - 2012 Dry FGD Study Costs for SDA Scrubber Including Site Specific Costs, 2006 BART Baseline Emission Rate

CAPITAL COSTS Direct Capital Costs Combined Stack Purchased Equipment (A) 1,2 25,000,000 Purchased Equipment Costs (A) Instrumentation MI Sales Taxes Freight Purchased Equipment Total (B)

Installation Foundations & supports Handling & erection Electrical Piping Insulation Painting Installation Subtotal Standard Expenses

Total Direct Capital Cost, DC from Probable Cost Study 79,376,500

Indirect Capital Costs Engineering, supervision 0 Construction & field expenses 0 Contractor fees 0 Start-up 0 Performance test 0 Model Studies 0 Contingencies 0 Total Indirect Capital Costs, IC from Probable Cost Study 6,737,500 Total Capital Investment (TCI) = DC + IC 86,114,000 TCI Adj for Baghouse Filter Replacement 84,540,985 Retrofit multiplier 5 0% of TCI 0 Site Specific Installed Equipment Costs 7 Included in Probable Cost Study Analysis

Total Site Specific Costs

Total Capital Investment (TCI) Retrofit Installed 84,540,985

OPERATING COSTS Direct Annual Operating Costs, DC
Operating Labor Operator Supervisor Maintenance Maintenance Labor Maintenance Materials Utilities, Supplies, Replacements & Waste Manageme Compressed Air $ Electricity Filter Bag Replacement Solid Waste Disposal Lime
Total Annual Direct Operating Costs 2,866,588

Savings from Shutdown of Existing Emission Controls. NA - Continue using ESPs for iron ore recovery 0

Indirect Operating Costs Overhead Administration (2% total capital costs) Property tax (1% total capital costs) Insurance (1% total capital costs) Capital Recovery Total Annual Indirect Operating Costs Sum indirect oper costs + capital recovery cost 11,650,891

Total Annual Cost (Annualized Capital Cost + Operating Cost) 14,517,479 See Summary page for notes and assumptions

9/28/2012 Page 15 of 17 C:\Users\arm3\AppData\Local\Temp\Tilden Appendix A SO2 Control Costs 09282012_6B01C.xlsx SDA Independent ReviewMichigan Operations - West (Tilden) Appendix A -SO2 Emission Control Cost Analysis Table 8 - 2012 Dry FGD Study Costs for SDA Scrubber Including Site Specific Costs, 2006 BART Baseline Emission Rate

See Summary page for notes and assumptions

9/28/2012 Page 16 of 17 C:\Users\arm3\AppData\Local\Temp\Tilden Appendix A SO2 Control Costs 09282012_6B01C.xlsx SDA Independent ReviewMichigan Operations - West (Tilden) Appendix A -SO2 Emission Control Cost Analysis
Table 9 TILDEN SDA/BAGHOUSE FEASIBILITY STUDY Opinion of Probable Cost - PRELIMINARY

Item Material Labor Total Retrofit

Cost CFBA/SDA Tilden Retrofit Costs SDA/Baghouse Costs DIRECT COST ITEMS

CIVIL/STRUCTURAL

Demo Existing Equip. and Building Penetrations $25,000 $125,000 $150,000 100% 0% $150,000 $0 Structural Modifications $750,000 $1,750,000 $2,500,000 100% 0% $2,500,000 $0 Misc. Platforms, Support, Access & Enclosures $750,000 $500,000 $1,250,000 40% 60% $500,000 $750,000 Concrete $600,000 $400,000 $1,000,000 25% 75% $250,000 $750,000 Rock Anchors $100,000 $150,000 $250,000 25% 75% $62,500 $187,500 Subtotal - Civil Structural $2,225,000 $2,925,000 $5,150,000 $3,462,500 $1,687,500

MECHANICAL

Demolition $15,000 $85,000 $100,000 100% 0% $100,000 $0 Lead Paint Abatement $5,000 $45,000 $50,000 100% 0% $50,000 $0 Line 1 Ductwork $6,200,000 $1,700,000 $7,900,000 100% 0% $7,900,000 $0 Duct Burner $600,000 $420,000 $1,020,000 100% 0% $1,020,000 $0 2 SDA/Baghouse Trains $25,000,000 $17,500,000 $42,500,000 0% 100% $0 $42,500,000 ID Fan $1,350,000 $945,000 $2,295,000 100% 0% $2,295,000 $0 Stack $775,000 $542,500 $1,317,500 100% 0% $1,317,500 $0 Ash Handling System $1,025,000 $717,500 $1,742,500 100% 0% $1,742,500 $0 Water Softener $100,000 $70,000 $170,000 100% 0% $170,000 $0 Air Compressors $150,000 $45,000 $195,000 0% 100% $0 $195,000 Compressed Air Piping $15,000 $15,000 $30,000 0% 100% $0 $30,000 SDA Water Supply Piping $25,000 $25,000 $50,000 0% 100% $0 $50,000 Lime Slurry Piping $25,000 $25,000 $50,000 0% 100% $0 $50,000 Natural Gas Piping for Duct Burners $18,000 $18,000 $36,000 100% 0% $36,000 $0 Fire Protection $10,000 $10,000 $20,000 0% 100% $0 $20,000 HVAC for ESP, SDA & PJFF Enclosures $75,000 $75,000 $150,000 0% 100% $0 $150,000 CEMS $325,000 $65,000 $390,000 100% 0% $390,000 $0 Vendor Support - Service Engineers $0 $500,000 $500,000 0% 100% $0 $500,000 Miscellaneous Mechanical Equipment $50,000 $50,000 $100,000 0% 100% $0 $100,000 Subtotal - Mechanical $35,763,000 $22,853,000 $58,616,000 $15,021,000 $43,595,000

ELECTRICAL & CONTROLS CFBA/SDA 20% percent of total electrical load

Demolition $0 $25,000 $25,000 100% 0% $25,000 $0 13800 V Cable, Switchgear, and Circuit Breakers $250,000 $75,000 $325,000 100% 0% $325,000 $0 Power Distribution Center $2,750,000 $50,000 $2,800,000 80% 20% $2,240,000 $560,000 7.5 MVA Transformer $600,000 $50,000 $650,000 80% 20% $520,000 $130,000 480 Volt Transformer $120,000 $30,000 $150,000 80% 20% $120,000 $30,000 Indoor/Outdoor LightingLighting $25,000 $25,000 $50,000 80% 20% $40,000 $10,000 Safety Switches & Terminations $25,000 $25,000 $50,000 80% 20% $40,000 $10,000 Cable Tray and Miscellaneous Conduit $150,000 $250,000 $400,000 80% 20% $320,000 $80,000 Power Distribution & Instrument Cable $500,000 $825,000 $1,325,000 80% 20% $1,060,000 $265,000 Gounding System $25,000 $25,000 $50,000 80% 20% $40,000 $10,000 Medium Voltage Emergency Generator Rental $50,000 $0 $50,000 80% 20% $40,000 $10,000 Control System Hardware & Panels $300,000 $100,000 $400,000 80% 20% $320,000 $80,000 Field Devices $100,000 $50,000 $150,000 80% 20% $120,000 $30,000 Fiber Optic Cable $5,000 $15,000 $20,000 80% 20% $16,000 $4,000 Subtotal - Electrical & Controls $4,900,000 $1,545,000 $6,445,000 $5,226,000 $1,219,000

Subtotal of Above $42,888,000 $27,323,000 $70,211,000 $23,709,500 $46,501,500 Freight $2,144,400 $0 $2,144,400 $724,141 $1,420,259 Direct Cost Contingency $4,288,800 $2,732,300 $7,021,100 $2,370,950 $4,650,150 Total Direct Costs $49,321,200 $30,055,300 $79,376,500 $26,804,591 $52,571,909

INDIRECT COST ITEMS 34% 66% Performance Bonds, All Contracts - not required. $0 $0 $0 34% 66% $0 $0 Sales Tax, All Materials $0 $0 $0 34% 66% $0 $0 Engineering - Design $0 $4,000,000 $4,000,000 34% 66% $1,360,000 $2,640,000 Construction Management Services $0 $1,200,000 $1,200,000 34% 66% $408,000 $792,000 Startup and Commissioning Services $0 $400,000 $400,000 34% 66% $136,000 $264,000 Construction Testing Services $0 $200,000 $200,000 34% 66% $68,000 $132,000 Soil Borings $0 $150,000 $150,000 34% 66% $51,000 $99,000 Emission Testing $0 $75,000 $75,000 34% 66% $25,500 $49,500 Owner's Finance Cost $0 $0 $0 0% 100% $0 $0 Owner's Staff Time $0 $0 $0 34% 66% $0 $0 Startup Materials, EG, lime $100,000 $0 $100,000 34% 66% $34,000 $66,000 Subtotal Above $100,000 $6,025,000 $6,125,000 $2,082,500 $4,042,500 Indirect Cost Contingency $10,000 $602,500 $612,500 $208,250 $404,250 Total Indirect Cost $110,000 $6,627,500 $6,737,500 $2,290,750 $4,446,750

Grand Total Opinion of Probable Cost $49,431,200 $36,682,800 $86,114,000 $29,095,341 $57,018,659
NOTE: O&M inputs provided separately

17

# Appendix B

– Explanation of Cost Estimate Classifications

### Quantification of Engineer’s Opinion of Probable Cost Estimate Process
The pollution abate cost estimate process followed several standard steps in developing the cost estimate;

1. Process design parameters were developed for such items as flue gas flow, flue gas composition, and current emissions profile.

2. This data was sent to two vendors and informati on was received back from the vendors for equipment cost, erection cost, required footprint, and expected emissions performance.

3. Zachary and Barr conducted site inspections for UTAC and Tilden. Major items evaluated were the available footprint, interconne ctions to existing systems and routes for the new ductwork.

4. Working with the vendor supplied information, Zachry then developed a site layout concept.

5. Concepts were developed for the interties to the existing plant systems and duct runs were developed to connect the existing systems to the new systems.

6. From this information, Zachry developed total cost estimates for Utac and Tilden.



### T ilden Estimate Type

The table below provides a chart describing the different classifications of cost estimates starting with the least precise and ending with the most precise.

The cost estimate developed for this project does not fall exactly into one of these classifications. For the purposes of this analysis the capital cost estimate is divided into two classifications:

1. Vendor supplied cost for equipment and erection of that equipment

2. Balance of plant systems estimated by Zachry

The cost estimate for the Vendor Supplied Equipment corresponds to a Class 2 estimate class. This estimate classification is characterized by a f airly high level of project definition. For instance, many of the design parameters for the pollution control devices are already known and the vendors have their internal data base of comparable projects from which to develop their cost basis. A Class 2 h as an end

### use for developing a preliminary estimate as opposed to a screening or feasibility estimate with an accuracy range of +20% to

- 10%

The cost estimate for the Balance of Plant Systems corresponds to a Class 4 estimate class (American Association of Cost Engineering International Recommended Practice No. 18R

- 97) for the process industries. This estimate classification is characterized by limited project definition and the use of comparable projects, scaling and industry experience to ca lculate costs. A Class 4 has an end use for concept or feasibility studies, with an accuracy range of +50% to

- 25%. These parameters for a Class 4
estimate are shown table below.

AACE Generic Cost Estimate Classification Matrix

Primary
Characteristic Secondary Characteristics

Level of Project Definition End Usage Methodology Accuracy Range Preparation Effort

Estimate class Expressed as % of complete project definition Typical purpose of estimate Typical estimating method Typical
+/

- range relative to best range
index of 1[a] Typical degree of effort relative to least cost index of 1[b]

Class 5 0% to 2% Screening or feasibility Stochastic or judgment 10 to 20 1

Class 4 1% to 5% Concept study or feasibility Primarily stochastic 5 to 10 2 to 4

Class 3 10% to 40% Budget,
authorization or Mixed but primarily 3 to 6 3 to 10

### control stochastic

Class 2 30% to 60% Preliminary estimate Primarily deterministic 2 to 3 5 to 20

Class 1 50% to 100% Check estimate or engineer’s estimate Deterministic 1 10 to 100

Notes:

[a] If the range index value of “1” represents +10/

- 5%, then an index value of 10 represents +100/

- 50%.

[b] If the cost index value of “1” represents 0.005% of project cost, then an index value of 100 represents 0.5% of project cost.

The overall accuracy of the cost estimate will be somewhere between a Class 4 and Class 2 estimate. Approximately 50% of the cost equipment and materials for the project is in the Balance of Plant Systems and approximately 50% of the cost of the p roject is in the Vendor Supplied information. This allows the overall accuracy to be found by taking the arithmetic average of the Class 4 and the Class 2 estimate class. This leads to an accuracy of +35% to

- 17.5%. Zachry has independently assessed the

ac curacy as +40%.



### Qualification of Estimated Cost
The feasibility

- level construction cost estimate provided in this report is made on the basis of Barr/Zachary’s (Engineers) combined experience and qualifications and represents our best judgment as experienced and qualified professionals familiar with the project. This opinion is based on project

- related information available to the Engineer at this time, current information about probable future costs, and a concept

- level design of the project. The opinion of construction cost will likely change as more information becomes available and further design is completed. In addition, because we have no control over the eventual cost of labor, materials, equipment, or services furnished by others; the contr actor’s methods of determining prices; competitive bidding; or market conditions, the Engineers’ cannot and do

### not guarantee that proposals, bids, or actual construction costs will not vary from the opinion of probable construction cost presented in this report. Greater assurance as to the probable construction cost can be achieved through additional design to provide more complete project definition.

# Appendix C

– Dry Flue Gas Desulfurization Study

### DRY FLUE GAS DESULFURIZATION STUDY

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### TABLE OF CONTENTS

SECTION 1

– EXECUTIVE SUMMARY ..................................................................... 3

1.1 Major Equipment List ......................................................................................... 3

1.2 Opinion of Probable Cost.................................................................................... 3

1.3 Milestone Schedule ............................................................................................. 3

1.4 Drawings ............................................................................................................. 3
SECTION 2

– MAJOR EQUIPMENT LIST ................................................................. 5

2.1 United Taconite Facility (Forbes, MN) .............................................................. 5

2.2 Tilden Taconite Facility (Ishpeming, MI) .......................................................... 6
SECTION 3

– OPINION OF PROBABLE COST......................................................... 8

3.1 Financial Assumptions: ....................................................................................... 8

3.2 Site Layout, Scope Assumptions: ....................................................................... 9

3.3 Project/Design Assumptions: .............................................................................. 9

3.4 Circulating Fluidized Bed Absorber (CFBA) Based System ........................... 10
SECTION 4

– MILESTONE SCHEDULE

................................ ................................ .. 18
SECTION 5

– DRAWINGS

........................................................................................... 22

### DRY FLUE GAS DESULFURIZATION STUDY

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### SECTION 1

– EXECUTIVE SUMMARY Barr Engineering Company (Barr) and Zachry Engineering Corporation (Zachry) developed an opinion of probable cost and preliminary construction milestone schedule in response to Cliffs Natural Resources (CliffsNR) request for a dry flue gas desulfurization control equipment study. The project includes the supply and installation of electrostatic precipitators (ESPs), flue gas desulfurization (FGD) equipment, baghouses and associated equipment to reduce particulate matter (PM) and sulfur dioxide (SO 2 

### ) emissions at the United Taconite (UTAC) facility Lines 1 and 2 in Forbes, Minnesota and at the Tilden Taconite (Tilden) facility Line 1 in Ishpeming, MI. The two types of FGD technologies considered for this project included spray dryer absorbers (SDAs) and circulating fluidized bed absorbers (CFBAs). This report is based primarily on the use of SDAs, however the use of CFBA technology is discussed as well. Barr and Zachry completed the necessary investigative tasks to develop an opinion of probable cost and milestone construction schedule. A summary of the major report sections is provided in the following paragraphs. 1.1 Major Equipment List Based on discussions with CliffsNR, Ducon Environmental Systems Inc. (Ducon)

a nd Barr during site visits to the UTAC and Tilden facilities the week of September, 3, 2012, the preliminary list of equipment required for the project and design assumptions were developed. SDAs and associated auxiliary equipment are included for each of 3 lines (Line 1, 2A and 2B) at the UTAC facility and 2 lines (one from existing north stack and one from existing south stack) at Tilden Line 1. Line 2 at UTAC and Tilden Line 1 flue gas streams are each split into two control equipment streams due to the significant amount of flue gas to be treated. 1.2 Opinion of Probable Cost The opinion of probable cost for the ESPs, SDAs, baghouses, lime handling systems and associated equipment was provided by Ducon. A separate cost estimate for ESPs, CFBAs, baghouses, lime handling systems and associated equipment was provided by a CFBA supplier. An opinion of probable cost for the remaining materials and labor was developed by Zachry based on experience with similar type projects. Additionally, Zachry developed preliminary annual plant operations and maintenance (O&M) costs for a SDA based system to be used by Barr to develop an overall cost per ton of SO 2 

### removed for the project.
1.3 Milestone Schedule A milestone schedule was developed for both the UTAC and Tilden facilities based on preliminary estimated equipment lead times and Zachry experience with similar type projects. As indicated, the schedule duration from Notice to Proceed for engineering, procurement, and construction is anticipated to be approximately 2 8 months for UTAC and 26 months for Tilden.

### DRY FLUE GAS DESULFURIZATION STUDY

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### arrangement sketches were developed based on equipment and ductwork locations as discussed during site visits to the UTAC and Tilden facilities the week of September, 3, 2012. Zachry developed preliminary layouts and configurations for the ESPs, SDAs and baghouses as the quotations received from Ducon and the CFBA supplier included equipment layouts that exceed the footprint limitations discussed during the site visits.

### DRY FLUE GAS DESULFURIZATION STUDY

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### SECTION 2

– MAJOR EQUIPMENT LIST
The following equipment lists are based on SDA technology. A CFBA based system would c onsist of similar equipment with CFBAs substituting SDAs in each list.
2.1 United Taconite Facility (Forbes, MN)
The following major equipment items are included to support flue gas desulfurization of Lines 1, 2A and 2B at UTAC:

Equipment Quantity Description/Function

Electrostatic Precipitator (ESP) 3 Removes particulate from flue gas stream to protect the process waste gas fan. Particulate , which is primarily iron ore, is recycled back to process.

Process Waste Gas F an 3 Draws flue gas through ductwork and ESP. Maintains balance on furnace. Includes single

speed motor. Spray Dryer Absor ber (SDA) 3 Removes SO2 from flue gas stream utilizing atomized lime slurry
Baghouse 3 Removes particulate and SDA products from flue gas Induced draft (ID) fan 3 Draws flue gas through SDA, baghouse, ductwork and out the stack. Includes VFD motor.
Sta ck 3 150 ft stack exhausts flue gas to atmosphere
Iron Ore Dust and Ash Handling from ESPs 3 Mechanical conveyors take solids from ESP hoppers to slurry tank. Water is added and slurry is pumped to an existing process thickener. Spent Reagent Handling f

rom SDA and Baghouse 1 Mechanical conveyors direct ash collected in the SDAs and baghouses to one 150 ton ash silo equipped for dry ash truck unloading.

### DRY FLUE GAS DESULFURIZATION STUDY

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### Lime Handling System 1 Hydrated lime is delivered to site and stored in one lime silo. Hydrated lim e is directed to a slurry tank where water is added. 3 pumps direct the lime slurry

to each SDA.

Ductwork N/A Stainless steel ductwork directs the flue gas from the existing furnace tie points through the existing plant and new equipment . Carbon steel d uctwork is included between the baghouse and the stack

.
Recouperating Line Bleed 3 During normal operation, high temperature gas is ducted to the main ductwork from the recouperating lines to heat the flue gas to prevent water/acid condensation in the SDA /baghouse system

.
Duct Burners 3 During startup, duct burners fueled by natural gas are used to heat the flue gas leading to SDAs.

CEMS 3 CEMS from the existing plant stacks will be moved to the new stacks and re

- used.
Power Distribution Center 1 Includ es MCCs, MV switchgear, VFDs, panels, dry transformers and switchboard

2.2 Tilden Taconite Facility (Ishpeming, MI)
The following major equipment items are included to support flue gas desulfurization of Lines 1 at Tilden : Equipment Quantity Description/ Function Spray Dryer Absorber (SDA) 2 Removes SO 2 

### from flue gas stream utilizing atomized lime slurry Baghouse 2 Removes particulate and SDA products from flue gas Induced draft (ID) fan 2 Draws flue gas through SDA, baghouse, ductwork and out the stack

. Includes VFD motor.

Stack 1 150 ft stack exhausts flue gas from both flue gas streams to atmosphere Spent Reagent Handling from SDA and Baghouse 1 Mechanical conveyors direct ash collected in the SDAs and baghouses to one 100 ton ash silo equipped for dry ash truck unloading.

Lime Handling System 1 Hydrated lime is delivered to site and stored in one lime silo. Hydrated lime is directed to a slurry tank where water is added. 2 pumps direct the lime slurry

to each SDA.

### DRY FLUE GAS DESULFURIZATION STUDY

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### Ductwork N/A Stainless steel d uctwork directs the flue gas from the existing Line 1 north and south stack tie points above the existing plant roof and down and through the new equipment . Carbon steel ductwork is included between the baghouse and the stack

.
Duct Burners 2 During start up, duct burners fueled by natural gas are used to heat the flue gas leading to SDAs.

CEMS 1 New CEMS installed to monitor emissions from the stack.
Power Distribution Center 1 Includes MCCs, MV switchgear, VFDs, panels, dry transformers and switchboard

### DRY FLUE GAS DESULFURIZATION STUDY

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### SECTION 3

– OPINION OF PROBABLE COST Based on discussions with CliffsNR, Ducon and Barr during site visits to the UTAC and Tilden facilities the week of September, 3, 2012, the preliminary opinion of probable cost was developed. The opinion of probable cost for the ESPs, SDAs, baghouses, lime handling systems and associated equipment (materials only) are based on the Ducon pr oposal. An opinion of probable cost for the remaining materials and labor was developed by Zachry based on experience with similar type projects. Additionally, Zachry developed preliminary annual plant operations and maintenance (O&M) cost estimates for a SDA based system to be used by Barr to develop an overall cost per ton of SO 2 

### removed for the project. The opinion of probable costs for UTAC and Tilden are shown in Tables 3.1 and 3.3, respectively. The preliminary O&M cost estimates for UTAC and Tilden are shown in Tables 3.2 and 3.4, respectively. The opinion of probable cost was developed based on the following assumptions and clarifications: 3.1 Financial Assumptions:

The opinion of probable costs are ± 40%. Project will be executed as a “conventional” engineering and construction job, not an EPC (Engineer, Procure, Construct). No escalation included. All pricing is September, 2012 dollars. Excluded are sales tax, performance bonds, Owner’s finance cost, and Owner’s staff time cost.
No soil environmental evaluation or remediation included. Delivery costs for all equipment included, FOB site. To the extent Zachry Engineering provides estimates of any kind, whether financial, quantities or otherwise, Barr understands and agrees that (i) Zachry Engineering is providing only a general estimate based on Zachry Engineering’s reasonable judgment; (ii) any proposed rang e of accuracy serves only as a guideline; (iii) the achievement of any estimate is dependent upon a variety of uncertain factors over which Zachry Engineering has no control, examples of which may include escalation costs, cost and availability of labor, materials, equipment, bidding or other methodology, changing market conditions, timing of purchases, third party data, etc., and (iv) Zachry Engineering does not warrant or guarantee and Barr waives all liability of Zachry Engineering and its employees arising from or in connection with the provision of such estimates, including without limitation differences between Zachry Engineering’s estimates and the cost, quantity or other figures actually experienced. This provision shall survive any Agreement.

### DRY FLUE GAS DESULFURIZATION STUDY

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### 3.2 Site Layout, Scope Assumptions:

 Equipment locations and tie-ins fo r ductwork and conveyors as shown on drawings.

 Skirt type enclosures under the SDAs , ESPs, baghouses and silos for freeze protection of these areas as well as miscellaneous equipment such as pumps and the hydrated lime mix tank.

 All piping will be above ground.

 Due to lack of geotechnical informati on at the time of this report, piling assumed for the UTAC site and rock anchors assumed for Tilden. Piling length and capacity was approximated based on experience with similar equipment and geology.

 Transformer foundation with oil containment required.

 Existing electrical ductbank feeding the UTAC plant that is below new equipment footprint will be abandoned in place and new ductbank installed.

 All new cable at Tilden plant will be in above ground cable tray and conduit.
3.3 Project/Design Assumptions:

 Design and opinion of probable cost for the ESPs, SDAs, baghouses, lime handling systems (material costs) are based on the Ducon proposal. Additional ductwork is a dded to reconfigure the Ducon equipment to fit within the allotted footprint (UTAC only) . Labor estimates for these items by Zachry.

 Equipment sizing for items in Zachry scope is based on approximately 85 percent to 95 percent of SO 2 

### removal.

 Thickness of ductwork and equipment insulation is 4 inches.

 All electrical equipment except the ID fan and process waste gas fan will receive 480 V. These large fans will require 4,160 V.

 Existing substations have the capacity to feed the new electrical equipment. New transformers are included in the opinion of probable cost.

 A support structure with in terface with the existing bu ilding is assumed for the ductwork on the roof at the Tilden site, extensive structural modifications to the existing structur e are required.

 Lead based paint abatement assumed for construction in the existing plant. No asbestos abatement required in the existing plant. No soil environmental evaluation or remedia tion is required.

 Ductwork is ASTM 316 stainless steel due to potential for corrosion under low temperature conditions and lack of access to the new ductwork as well as high temperature upset c onditions. Ductwork between the baghouses and stacks are carbon steel. The stacks are coated carbon steel. Labor estimates

### DRY FLUE GAS DESULFURIZATION STUDY

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### for UTAC include limited access within the plant and manual installation of ductwork inside of the existing facility.Convert existing water knock out vessels at UTAC to initial particulate dropout device near new ductwork tie-point to furnace and remove existing venturi scrubbers. O&M estimates and inputs are based on information received from CliffsNR, Ducon and Barr during site visits to the UTAC and Tilden facilities the week of September, 3, 2012 in addition to Zachry experience with similar type projects. The O&M cost estimates (Tables 3.2 and 3.4) are based on the following assumptions:

o SDA based system.

o Electricity is for new equipment only and credit is not included for disconnected loads. Costs based on /kWh.

o Baghouse replacement costs for bags (fiberglass) and cages based on bag replacement every 3 years and cage replacement every 6 years.

o Solid waste disposal based on /ton.

o Hydrated lime usage based on values provided in Ducon proposal and cost based on /ton.

o Water usage based on values provided in Ducon proposal for lime slurry and cooling requirements.

o Water costs based on / 1,000 gallons.

o Water softener salt costs based on /lb.

o SO 2 

### removal efficiency is > 90%.

o Additional assumptions listed on O&M cost estimate tables.
3.4 Circulating Fluidized Bed Absorber (CFBA) Based System

F or a CFBA based system, the material cost estimates for the Electrostatic Precipitators and SDA/Baghouse Treatment Trains as shown in Tables 3.1 and 3.3 can be substituted with the following material cost estimates from the CFBA supplier:
UTAC: $24,685,700 (Lines 1, 2A and 2B ESPs, CFBAs, baghouses
, equipment only, no labor) Tilden: $13,000,900 (Lines 1N and 1S CFBA s, baghouses, equipment only, no labor )

### DRY FLUE GAS DESULFURIZATION STUDY

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### Other equipment cost differences may exist between the SDA and CFBA based

s ystems for items, such as ductwork and spent reagent silos/handling systems.
Additi onally, O&M costs would be different for a CFBA based system as lime usage is generally greater for the CFBA supplier proposal. There is a potential for footprint issues as well since the CFBA equipment requires more space than SDAs. It is recommended that the cost, O&M, and footprint differences between the two technologies be evaluated further in the next phase of the project.

### TABLE 3.1 - UTAC DRY ESP/SDA/BAGHOUSE FEASIBILITY STUDY

Opinion of Probable Cost - PRELIMINARY 26-Sep-12

Item Material Labor Total 

### DIRECT COST ITEMS

CIVIL/STRUCTURAL
Demo Existing Equip. and Building Penetrations $25,000 $375,000 $400,000 Structural Modifications $175,000 $400,000 $575,000 Misc. Platforms, Support, Access & Enclosures $1,125,000 $750,000 $1,875,000 Concrete $1,050,000 $700,000 $1,750,000 Piling $300,000 $450,000 $750,000 Subtotal - Civil Structural $2,675,000 $2,675,000 $5,350,000

MECHANICAL

Demolition $25,000 $125,000 $150,000 Lead Paint Abatement $10,000 $90,000 $100,000 Line 1 Ductwork $6,125,000 $2,200,000 $8,325,000 Line 2A Ductwork $6,500,000 $2,350,000 $8,850,000 Line 2B Ductwork $5,500,000 $1,925,000 $7,425,000 Added Ductwork Per Zachry Layout Total $2,250,000 $750,000 $3,000,000 3 Electrostatic Precipitators $6,300,000 $4,410,000 $10,710,000 3 SDA/Baghouse Treatment Trains $31,700,000 $22,190,000 $53,890,000 Process Waste Gas Fan $2,325,000 $1,627,500 $3,952,500 Duct Burner $900,000 $630,000 $1,530,000 ID Fan $2,025,000 $1,417,500 $3,442,500 Stack $1,725,000 $1,207,500 $2,932,500 Ash Handling System $1,650,000 $1,155,000 $2,805,000 Water Softener $100,000 $70,000 $170,000 Air Compressors $225,000 $67,500 $292,500 Compressed Air Piping $22,500 $22,500 $45,000 SDA Water Supply Piping $25,000 $25,000 $50,000 Lime Slurry Piping $50,000 $50,000 $100,000 Natural Gas Piping for Duct Burners $18,000 $18,000 $36,000 Fire Protection $15,000 $15,000 $30,000 HVAC for ESP, SDA & PJFF Enclosures $100,000 $100,000 $200,000 Relocate CEMS $15,000 $60,000 $75,000 Vendor Support - Service Engineers $0 $650,000 $650,000 Miscellaneous Mechanical Equipment $50,000 $50,000 $100,000 Subtotal - Mechanical $67,655,500 $41,205,500 $108,861,000

ELECTRICAL & CONTROLS

Demolition $0 $50,000 $50,000 4160 UG Duct Bank $150,000 $150,000 $300,000 Power Distribution Center $3,275,000 $50,000 $3,325,000 4160 Volt Switchgear $200,000 $50,000 $250,000 480 Volt Transformer $180,000 $45,000 $225,000 Indoor/Outdoor LightingLighting $25,000 $25,000 $50,000 Safety Switches & Terminations $25,000 $25,000 $50,000

### TABLE 3.1 - UTAC DRY ESP/SDA/BAGHOUSE FEASIBILITY STUDY

Opinion of Probable Cost - PRELIMINARY 26-Sep-12

Item Material Labor Total Cable Tray and Miscellaneous Conduit $225,000 $350,000 $575,000 Power Distribution & Instrument Cable $750,000 $1,250,000 $2,000,000 Gounding System $25,000 $25,000 $50,000 Medium Voltage Emergency Generator Rental $50,000 $0 $50,000 Control System Hardware & Panels $450,000 $150,000 $600,000 Field Devices $125,000 $75,000 $200,000 Fiber Optic Cable $10,000 $40,000 $50,000 Subtotal - Electrical & Controls $5,490,000 $2,285,000 $7,775,000

Subtotal of Above $75,820,500 $46,165,500 $121,986,000 Freight $3,791,025 $0 $3,791,025 Direct Cost Contingency $7,582,050 $4,616,550 $12,198,600 Total Direct Costs $87,193,575 $50,782,050 $137,975,625



### INDIRECT COST ITEMS

Performance Bonds, All Contracts - not required. $0 $0 $0 Sales Tax, All Materials $0 $0 $0 Engineering - Design $0 $7,000,000 $7,000,000 Construction Management Services $0 $2,100,000 $2,100,000 Startup and Commissioning Services $0 $700,000 $700,000 Construction Testing Services $0 $200,000 $200,000 Soil Borings $0 $150,000 $150,000 Emission Testing $0 $100,000 $100,000 Owner's Finance Cost $0 $0 $0 Owner's Staff Time $0 $0 $0 Startup Materials, EG, lime $100,000 $0 $100,000 Subtotal Above $100,000 $10,250,000 $10,350,000 Indirect Cost Contingency $10,000 $1,025,000 $1,035,000 Total Indirect Cost $110,000 $11,275,000 $11,385,000
Grand Total Opinion of Probable Cost $87,303,575 $62,057,050 $149,360,625

### Direct Annual Operating & Maintenance Costs (Preliminary)

Operations: Hours Operator Cost Operator Supervisor Cost Maintenance: Maintenance Hours Maintenance Materials Utilities, Supplies, Replacement & Waste Disposal: Compressed Air Electricity Filter Bag & Cage Replacement

Solid Waste Disposal Lime Water & Softener Salt



### Total Direct Annual Operating & Maintenance Costs (Preliminary) 6,671,142 $ 

### TABLE 3.2 - UTAC ESP/SDA/BAGHOUSE O&M COST ESTIMATES

### TABLE 3.3 - TILDEN SDA/BAGHOUSE FEASIBILITY STUDY

Opinion of Probable Cost - PRELIMINARY 26-Sep-12

Item Material Labor Total 

### DIRECT COST ITEMS

CIVIL/STRUCTURAL
Demo Existing Equip. and Building Penetrations $25,000 $125,000 $150,000 Structural Modifications $750,000 $1,750,000 $2,500,000 Misc. Platforms, Support, Access & Enclosures $750,000 $500,000 $1,250,000 Concrete $600,000 $400,000 $1,000,000 Rock Anchors $100,000 $150,000 $250,000 Subtotal - Civil Structural $2,225,000 $2,925,000 $5,150,000

MECHANICAL

Demolition $15,000 $85,000 $100,000 Lead Paint Abatement $5,000 $45,000 $50,000 Line 1 Ductwork $6,200,000 $1,700,000 $7,900,000 Duct Burner $600,000 $420,000 $1,020,000 2 SDA/Baghouse Trains $25,000,000 $17,500,000 $42,500,000 ID Fan $1,350,000 $945,000 $2,295,000 Stack $775,000 $542,500 $1,317,500 Ash Handling System $1,025,000 $717,500 $1,742,500 Water Softener $100,000 $70,000 $170,000 Air Compressors $150,000 $45,000 $195,000 Compressed Air Piping $15,000 $15,000 $30,000 SDA Water Supply Piping $25,000 $25,000 $50,000 Lime Slurry Piping $25,000 $25,000 $50,000 Natural Gas Piping for Duct Burners $18,000 $18,000 $36,000 Fire Protection $10,000 $10,000 $20,000 HVAC for ESP, SDA & PJFF Enclosures $75,000 $75,000 $150,000 CEMS $325,000 $65,000 $390,000 Vendor Support - Service Engineers $0 $500,000 $500,000 Miscellaneous Mechanical Equipment $50,000 $50,000 $100,000 Subtotal - Mechanical $35,763,000 $22,853,000 $58,616,000

ELECTRICAL & CONTROLS

Demolition $0 $25,000 $25,000 13800 V Cable, Switchgear, and Circuit Breakers $250,000 $75,000 $325,000 Power Distribution Center $2,750,000 $50,000 $2,800,000 7.5 MVA Transformer $600,000 $50,000 $650,000 480 Volt Transformer $120,000 $30,000 $150,000 Indoor/Outdoor LightingLighting $25,000 $25,000 $50,000 Safety Switches & Terminations $25,000 $25,000 $50,000 Cable Tray and Miscellaneous Conduit $150,000 $250,000 $400,000 Power Distribution & Instrument Cable $500,000 $825,000 $1,325,000 Gounding System $25,000 $25,000 $50,000 Medium Voltage Emergency Generator Rental $50,000 $0 $50,000 Control System Hardware & Panels $300,000 $100,000 $400,000

### TABLE 3.3 - TILDEN SDA/BAGHOUSE FEASIBILITY STUDY

Opinion of Probable Cost - PRELIMINARY 26-Sep-12

Item Material Labor Total Field Devices $100,000 $50,000 $150,000 Fiber Optic Cable $5,000 $15,000 $20,000 Subtotal - Electrical & Controls $4,900,000 $1,545,000 $6,445,000

Subtotal of Above $42,888,000 $27,323,000 $70,211,000 Freight $2,144,400 $0 $2,144,400 Direct Cost Contingency $4,288,800 $2,732,300 $7,021,100 Total Direct Costs $49,321,200 $30,055,300 $79,376,500



### INDIRECT COST ITEMS

Performance Bonds, All Contracts - not required. $0 $0 $0 Sales Tax, All Materials $0 $0 $0 Engineering - Design $0 $4,000,000 $4,000,000 Construction Management Services $0 $1,200,000 $1,200,000 Startup and Commissioning Services $0 $400,000 $400,000 Construction Testing Services $0 $200,000 $200,000 Soil Borings $0 $150,000 $150,000 Emission Testing $0 $75,000 $75,000 Owner's Finance Cost $0 $0 $0 Owner's Staff Time $0 $0 $0 Startup Materials, EG, lime $100,000 $0 $100,000 Subtotal Above $100,000 $6,025,000 $6,125,000 Indirect Cost Contingency $10,000 $602,500 $612,500 Total Indirect Cost $110,000 $6,627,500 $6,737,500
Grand Total Opinion of Probable Cost $49,431,200 $36,682,800 $86,114,000

### Direct Annual Operating & Maintenance Costs (Preliminary)

Operations: Hours Operator Cost Operator Supervisor Cost Maintenance: Maintenance Hours Maintenance Materials Utilities, Supplies, Replacement & Waste Disposal: Compressed Air Electricity Filter Bag & Cage Replacement

Solid Waste Disposal Lime Softener Salt



### Total Direct Annual Operating & Maintenance Costs (Preliminary) 2,866,588 $ 

### TABLE 3.4 - TILDEN SDA/BAGHOUSE O&M COST ESTIMATES

### DRY FLUE GAS DESULFURIZATION STUDY

P: \BARR_ENGINEERING\014562\adminsrv\Documents\Reports\RPTS001\Rev B\A014562-RPTS001 RB.doc Copyright © 2011, Zachry Engineering Corporation All Rights Reserved 

### SECTION 4

– MILESTONE SCHEDULE A milestone schedule was developed for both the UTAC and Tilden facilities based on preliminary estimated equipment lead times for a SDA based system and Zachry experience with similar type projects. As indicated, the schedule duration from Notice to Proceed for engineering, procurement, and construction is anticipated to be approximately 28 months for UTAC and 26 months for Tilden.Activity NameStartFinishTotal08-Apr-1316-Nov-15UTAC Lines 2A and 2B08-Apr-1316-Nov-15Engineering08-Apr-1311-Jun-14Engineering Package Bid/Award08-Apr-1301-Jul-13Studies, Permitting, Preliminary Engineering08-Apr-1316-Dec-13Detailed Design and Engineering01-Jul-1311-Jun-14Notice to Proceed (Engineering)01-Jul-13Equipment Procurement01-Jul-1301-Dec-14Specs, Prep - FF/SDA/ESP01-Jul-1303-Sep-13Specification Preparation - BOP01-Jul-1326-Aug-13Vendor Engineering01-Jul-1329-Oct-13Bidding/Award27-Aug-1322-Oct-13Bidding/Award04-Sep-1329-Oct-13Manufacture and Deliver BOP23-Oct-1330-Apr-14Full Release to Manufacture29-Oct-13Manufacture & Deliver FF/SDA/ESP30-Oct-1301-Dec-14Engineering Bidding Construction Packages02-Dec-1311-Jun-14Eng/Spec - Foundation Packages02-Dec-1329-Jan-14Engineering Specification Prep - Structural/Mechanical/Electrical02-Dec-1326-Mar-14Bid/Award Foundations30-Jan-1412-Mar-14Bidding/Award Structural/Mechanical/Electrical Packages27-Mar-1411-Jun-14Construction Pre-Outage13-Mar-1410-Aug-15Mobilize/Underground Utilities/Drive Piles13-Mar-1411-Jun-14Install Pile Caps/Slabs24-Apr-1423-Jul-14Mobilize - Structural/Mechanical/Electrical12-Jun-1409-Jul-14Install BOP10-Jul-1413-May-15Pre-Outage Existing Plant Demolition10-Jul-1401-Oct-14Install Ductwork in Existing Plant02-Oct-1421-Jan-15Install FF/SDA/ESP02-Dec-1410-Aug-15Tie-In Outage11-Aug-1507-Sep-15Outage Existing Plant Demolition11-Aug-1507-Sep-15Tie-In Outage11-Aug-1507-Sep-15Connect Ductwork to Furnace11-Aug-1507-Sep-15Checkout/Startup Test/Completion08-Sep-1516-Nov-15Startup/Commission AQCS08-Sep-1505-Oct-15AQCS Tuning/Optimization22-Sep-1502-Nov-15Compliance/CEMS Testing20-Oct-1516-Nov-15Startup Complete16-Nov-15MAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASO201320142015201616-Nov-15, Total16-Nov-15, UTAC Lines 2A and 2B11-Jun-14, EngineeringEngineering Package Bid/AwardStudies, Permitting, Preliminary EngineeringDetailed Design and EngineeringNotice to Proceed (Engineering)01-Dec-14, Equipment ProcurementSpecs, Prep - FF/SDA/ESPSpecification Preparation - BOPVendor EngineeringBidding/AwardBidding/AwardManufacture and Deliver BOPFull Release to ManufactureManufacture & Deliver FF/SDA/ESP11-Jun-14, Engineering Bidding Construction PackagesEng/Spec - Foundation PackagesEngineering Specification Prep - Structural/Mechanical/ElectricalBid/Award FoundationsBidding/Award Structural/Mechanical/Electrical Packages10-Aug-15, Construction Pre-OutageMobilize/Underground Utilities/Drive PilesInstall Pile Caps/SlabsMobilize - Structural/Mechanical/ElectricalInstall BOPPre-Outage Existing Plant DemolitionInstall Ductwork in Existing PlantInstall FF/SDA/ESP07-Sep-15, Tie-In OutageOutage Existing Plant DemolitionTie-In OutageConnect Ductwork to Furnace16-Nov-15, Checkout/Startup Test/CompletionStartup/Commission AQCSAQCS Tuning/OptimizationCompliance/CEMS TestingStartup CompleteUTAC Lines 2A and 2BProposal Schedule26-Sep-12Zachry Engineering CorporationPage 1 of 1Activity NameStartFinishTotal07-May-1521-Mar-18UTAC Line 107-May-1521-Mar-18Engineering07-May-1528-Jun-16Engineering Package Bid/Award07-May-1529-Jul-15Studies, Permitting, Preliminary Engineering07-May-1506-Jan-16Detailed Design and Engineering29-Jul-1528-Jun-16Notice to Proceed (Engineering)16-Nov-15Equipment Procurement16-Nov-1505-Apr-17Specs, Prep - FF/SDA/ESP16-Nov-1515-Jan-16Specification Preparation - BOP16-Nov-1508-Jan-16Vendor Engineering16-Nov-1511-Mar-16Bidding/Award11-Jan-1604-Mar-16Bidding/Award18-Jan-1611-Mar-16Manufacture and Deliver BOP07-Mar-1602-Sep-16Full Release to Manufacture11-Mar-16Manufacture & Deliver FF/SDA/ESP14-Mar-1605-Apr-17Engineering Bidding Construction Packages11-Apr-1614-Oct-16Eng/Spec - Foundation Packages11-Apr-1603-Jun-16Engineering Specification Prep - Structural/Mechanical/Electrical11-Apr-1629-Jul-16Bid/Award Foundations06-Jun-1615-Jul-16Bidding/Award Structural/Mechanical/Electrical Packages01-Aug-1614-Oct-16Construction Pre-Outage18-Jul-1613-Dec-17Mobilize/Underground Utilities/Drive Piles18-Jul-1614-Oct-16Install Pile Caps/Slabs29-Aug-1625-Nov-16Mobilize - Structural/Mechanical/Electrical17-Oct-1611-Nov-16Install BOP14-Nov-1615-Sep-17Pre-Outage Existing Plant Demolition14-Nov-1603-Feb-17Install Ductwork in Existing Plant06-Feb-1726-May-17Install FF/SDA/ESP06-Apr-1713-Dec-17Tie-In Outage14-Dec-1710-Jan-18Outage Existing Plant Demolition14-Dec-1710-Jan-18Tie-In Outage14-Dec-1710-Jan-18Connect Ductwork to Furnace14-Dec-1710-Jan-18Checkout/Startup Test/Completion11-Jan-1821-Mar-18Startup/Commission AQCS11-Jan-1807-Feb-18AQCS Tuning/Optimization25-Jan-1807-Mar-18Compliance/CEMS Testing22-Feb-1821-Mar-18Startup Complete21-Mar-18AMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJFM2015201620172018201921-Mar-18, Total21-Mar-18, UTAC Line 128-Jun-16, EngineeringEngineering Package Bid/AwardStudies, Permitting, Preliminary EngineeringDetailed Design and EngineeringNotice to Proceed (Engineering)05-Apr-17, Equipment ProcurementSpecs, Prep - FF/SDA/ESPSpecification Preparation - BOPVendor EngineeringBidding/AwardBidding/AwardManufacture and Deliver BOPFull Release to ManufactureManufacture & Deliver FF/SDA/ESP14-Oct-16, Engineering Bidding Construction PackagesEng/Spec - Foundation PackagesEngineering Specification Prep - Structural/Mechanical/ElectricalBid/Award FoundationsBidding/Award Structural/Mechanical/Electrical Packages13-Dec-17, Construction Pre-OutageMobilize/Underground Utilities/Drive PilesInstall Pile Caps/SlabsMobilize - Structural/Mechanical/ElectricalInstall BOPPre-Outage Existing Plant DemolitionInstall Ductwork in Existing PlantInstall FF/SDA/ESP10-Jan-18, Tie-In OutageOutage Existing Plant DemolitionTie-In OutageConnect Ductwork to Furnace21-Mar-18, Checkout/Startup Test/CompletionStartup/Commission AQCSAQCS Tuning/OptimizationCompliance/CEMS TestingStartup CompleteUTAC Line 1Proposal Schedule26-Sep-12Zachry Engineering CorporationPage 1 of 1Activity NameStartFinishTotal08-Apr-1301-Sep-15Tilden Line 108-Apr-1301-Sep-15Engineering08-Apr-1311-Jun-14Engineering Package Bid/Award08-Apr-1301-Jul-13Studies, Permitting, Preliminary Engineering08-Apr-1316-Dec-13Detailed Design and Engineering01-Jul-1311-Jun-14Notice to Proceed (Engineering)01-Jul-13Equipment Procurement01-Jul-1330-Sep-14Specs, Prep - FF/SDA01-Jul-1303-Sep-13Specification Preparation - BOP01-Jul-1326-Aug-13Vendor Engineering01-Jul-1329-Oct-13Bidding/Award27-Aug-1322-Oct-13Bidding/Award04-Sep-1329-Oct-13Manufacture and Deliver BOP23-Oct-1330-Apr-14Full Release to Manufacture29-Oct-13Manufacture & Deliver FF/SDA30-Oct-1330-Sep-14Engineering Bidding Construction Packages02-Dec-1311-Jun-14Eng/Spec - Foundation Packages02-Dec-1329-Jan-14Engineering Specification Prep - Structural/Mechanical/Electrical02-Dec-1326-Mar-14Bid/Award Foundations30-Jan-1412-Mar-14Bidding/Award Structural/Mechanical/Electrical Packages27-Mar-1411-Jun-14Construction Pre-Outage13-Mar-1409-Jun-15Mobilize/Underground Utilities13-Mar-1411-Jun-14Install Slabs24-Apr-1423-Jul-14Mobilize - Structural/Mechanical/Electrical12-Jun-1409-Jul-14Install BOP10-Jul-1413-May-15Pre-Outage Existing Plant Demolition10-Jul-1401-Oct-14Install FF/SDA01-Oct-1409-Jun-15Install Ductwork in Existing Plant02-Oct-1421-Jan-15Tie-In Outage10-Jun-1523-Jun-15Outage Existing Plant Demolition10-Jun-1523-Jun-15Tie-In Outage10-Jun-1523-Jun-15Connect Ductwork to Stacks10-Jun-1523-Jun-15Checkout/Startup Test/Completion24-Jun-1501-Sep-15Startup/Commission AQCS24-Jun-1521-Jul-15AQCS Tuning/Optimization08-Jul-1518-Aug-15Compliance/CEMS Testing05-Aug-1501-Sep-15Startup Complete01-Sep-15MAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJ201320142015201601-Sep-15, Total01-Sep-15, Tilden Line 111-Jun-14, EngineeringEngineering Package Bid/AwardStudies, Permitting, Preliminary EngineeringDetailed Design and EngineeringNotice to Proceed (Engineering)30-Sep-14, Equipment ProcurementSpecs, Prep - FF/SDASpecification Preparation - BOPVendor EngineeringBidding/AwardBidding/AwardManufacture and Deliver BOPFull Release to ManufactureManufacture & Deliver FF/SDA11-Jun-14, Engineering Bidding Construction PackagesEng/Spec - Foundation PackagesEngineering Specification Prep - Structural/Mechanical/ElectricalBid/Award FoundationsBidding/Award Structural/Mechanical/Electrical Packages09-Jun-15, Construction Pre-OutageMobilize/Underground UtilitiesInstall SlabsMobilize - Structural/Mechanical/ElectricalInstall BOPPre-Outage Existing Plant DemolitionInstall FF/SDAInstall Ductwork in Existing Plant23-Jun-15, Tie-In OutageOutage Existing Plant DemolitionTie-In OutageConnect Ductwork to Stacks01-Sep-15, Checkout/Startup Test/CompletionStartup/Commission AQCSAQCS Tuning/OptimizationCompliance/CEMS TestingStartup CompleteTilden Line 1Proposal Schedule26-Sep-12Zachry Engineering CorporationPage 1 of 1

### DRY FLUE GAS DESULFURIZATION STUDY

P: \BARR_ENGINEERING\014562\adminsrv\Documents\Reports\RPTS001\Rev B\A014562-RPTS001 RB.doc Copyright © 2011, Zachry Engineering Corporation All Rights Reserved 

### SECTION 5

– DRAWINGS Preliminary process flow diagrams and general arrangement sketches were developed based on equipment and ductwork locations as discussed during site visits to the UTAC and Tilden facilities the week of September, 3, 2012. Zachry developed preliminary layouts and configurations for the ESPs, SDAs and baghouses as the quotations received from Ducon and the CFBA supplier included equipment layouts that exceed the footprint limitations discussed during the site visits. The drawings are based on SDA based systems. For CFBA based systems there is a potential for footprint issues since the CFBA equipment requires more space than SDAs. It is recommended that this issue is evaluated further in the next phase of the project.#32 C ON

# Appendix D

– Figures
Figure 1 Tilden Aerial View

................................ ................................ ................................ ...... 30 Figure 2 Tilden Line 1 Top View

................................ ................................ ................................ ....... 31 Figure 3 Tilden Line 1 Side View

................................ ................................ ................................ .. 32 Figure 4 Tilden Line 1 3

- D View_Page_1

................................ ................................ .......................... 33 Figure 5 Tilden Line 1 3

- D View_Page_2

................................ ................................ ..................... 34 Figure 6 S Side

................................ ................................ ................................ .................... 36 Figure 7 Ducts under Line

................................ ................................ ................................ ............. 37 Figure 8 Ductwork and Structural Steel Below Furnace

................................ ................................ ..... 38 Figure 9 Stack Base and Blower Ductwork

................................ ................................ .................... 39 Figure 10 N Side

................................ ................................ ................................ ...................... 40 Figure 11 N Si de 2

................................ ................................ ................................ ........................ 41 Figure 12 Roof Monitor

................................ ................................ ................................ ................. 42 Figure 13 S Stack

................................ ................................ ................................ .......................... 43 Figure 14 Stack Base and Duct

................................ ................................ ................................ ........... 44 Figure 15 Upper Level

................................ ................................ ................................ ................... 45 Figure 16 Upper Level 2

................................ ................................ ................................ ................ 46Figure 1 Tilden Aerial View Truck & Rail

Deliveries

Proposed dry FDG Site Truck & Heavy Equipment Access Road Greenball Preparation

Proposed Duct Location Line 1 Stacks 

## Figure 1
Tilden Line 1 Dry FGD location limitationsFigure 2 Tilden Line 1 Top ViewFigure 3 Tilden Line 1 Side ViewFigure 4 Tilden Line 1 3

- D View_Page_1Figure 5 Tilden Line 1 3

- D View_Page_2Figure 6 S SideFigure 7 Ducts under LineFigure 8 Ductwork and Structural Steel Below FurnaceFigure 9 Stack Base and Blower DuctworkFigure 10 N SideFigure 11 N Side 2Figure 12 Roof MonitorFigure 13 S StackFigure 14 Stack Base and DuctFigure 15 Upper LevelFigure 16 Upper Level 2

# Appendix E

– Emission Control Equipment Supplier Dry FGD Proposals

# CONFIDENTIAL

– DRAFT BUDGETARY PROPOSAL FOR

TWO (2) TREATMENT SYSTEMS EACH CONSISTING OF ONE (1) DRY FGD AND ONE (1) BAGFILTER

FOR

TILDEN MIN E in Preparation to Respond to the USEPA Federal Implementation Plan (BART for Regional Haze Reduction)

Submitted to:

Cliffs N ATURAL R esources Corporation (Michigan Mining O peration , Richmond Township, MI 48062 USA )

Date: September 20 , 2012

PROPOSAL No: DC12

- 5173 TILD EN
By

DUCON ENVIRONMENTAL SYSTEMS

. 19 Engineers Lane., Farmingdale NY 11735, USA Tel: (631) 694

- 1700; Fax: (631) 293

- 6129 URL: www.ducon.com ; E

- mail: info@ducon.comDucon Technologies Inc.

For Tilden Mine Proposal No DC12

- 5173 for a Dry FGD/Baghouse System

The confidential information contained on this page is property of Ducon Technologies Inc. and is for the use of the recipien t or their authorized agents. Any unauthorized use is strictly prohibited. Page 2 of 12 

### 1.0 INTRODUCTION
Ducon Environmental Systems (Ducon), is pleased to submit its proposal for two (2) treatment systems , each consisting of an FGD dry reactor and Baghouse Filter, in series, to Tilden Mine, Ric hmond Township , MI 48062, USA. The Dry FGD absorber reactor s and Baghouse Filter system s , in series, control SOx emissions to the local environment, because SOx emissions contribute to regional haze. ESPs are pre

- existing at the plant for the g as streams being retrofitted. ESP treated gas enters the Ducon treatment equipment. The proposed scope of supply is Ducon’s recommended retrofit technology for use at the Tilden Mine to comply with the USEPA Federal Implementation Plan (FIP), aimed at conformance w ith the Regional Haze Rule (reference 40 CFR, Part 51.308).
The technology treated by this draft proposal is subject to the USEPA mandate for the Tilden Mine site to use dry FGD technology as Best Achievable Retrofit Technology (BART) for SOx control. T he Ducon dry technologies available to this site include: 1. Ducon Dry Absorbers which, with a baghouse, which can remove up to 95% of the SO 2 

### . 2. Dry reagent injection to ductwork, which has a relatively low efficiency of SO 2 

### removal (~50 to 70%). The Dr y FGD reactors can take several designs depending on the application. These dry reactors can also operate successfully at or below ° F (the proposed design temperature) with a relatively small footprint ( as needed at Tilden ). Duct injection is not bei ng recomme n ded for Tilden. During the meeting it was noted by Barr Engineering, that hot air from the kiln may be available to optimize operating temperatures for the Ducon reactor, if needed.
This proposal is tentative owing to the outstanding need t o measure data for the actual composition of the gas stream. Based on information available from CliffsNR and Barr Engineering for the UTAC facility, the gas stream can contain H 2 

### SO 4 

### , HF and HCl, all still unreported, which may impact the sizing and perfo rmance of the system.
Ducon’s scope is complete, as outlined in this proposal, and is based on mutually agreed upon decisions made during the Tilden Mine site meeting, held in Richmond Township, MI, 6 September 2012, and includes all engineering, procurem ent, design and equipment, as defined within our scope, delivered to the jobsite. This proposal does not include any site erection or assembly of delivered equipment. Ducon will provide supervision for startup, commissioning and testing for the project. Per agreement with Barr Engineering and CliffsNR, the scope of Ducon’s proposal for equipment supply is flange

- to

- flange, and does not encompass external ducts, dampers, expansion joints, fans, stack, instruments, material handling and other necessary item s for system integration. LimeDucon Technologies Inc.

For Tilden Mine Proposal No DC12

- 5173 for a Dry FGD/Baghouse System

The confidential information contained on this page is property of Ducon Technologies Inc. and is for the use of the recipien t or their authorized agents. Any unauthorized use is strictly prohibited. Page 3 of 12 

### preparation and delivery to the Dry FGD reactor , and storage silos (with auxiliary equipment) for recycle and disposal of spent lime, are extension s of Ducon’s scope, included in the budgetary price.
DUCON Environmental Sys tems Inc. is one of several air pollution control companies operating globally under common private ownership, each with a charter to design, build, commission and operate suites of pollution control equipment best suited to industry and utilities.

Sin ce its inception in 1938 Ducon has completed over 25,000 installations worldwide. Today, Ducon is a dominant market leader with its proven technologies and successful track record in the industrial air pollution control market. Ducon's air pollution contro l equipment is used to control toxic fumes, SO2, HCl, H2S, NOx and particulate from gaseous stream.
DUCON is a unique company in the environmental control equipment field, because of its broad technology base and a diverse product line, enabling it to m eet a wide variety of air pollution control and waste incineration applications in the market place.
DUCON has been selling its products to the Fortune 500 firms for the past 60 years. The Company has an excellent name recognition and a tremendous amount of repeat business. DUCON'S equipment is known for quality workmanship, rugged construction, long service life and high efficiency.

DUCON ’s products include: Mechanical Collector, Wet Scrubber, Marble Bed Scrubber, VENTURI Scrubber, Ventri

- Rod Scrubber, Dynamic Wet Scrubber, Mist Eliminator, Packed Tower, Tray Tower, Spray Scrubber, Wet Electrostatic Precipitator, FCC Cyclone Collector, Pulse

- Air Fabric Fitter, Activated Carbon Adsorber, VOC Control Scrubber, NOx Scrubber, Odor Control Scrubber, Flue Gas Desulfurization Scrubber, High Temperature Cyclone, Multiple

- Hearth Incinerator and Rotary K iln.
Over the years the Company has built up resources to provide single source process design, engineering, manufacturing and construction services on a variety of industrial, utility and energy related projects. DUCON' s s taff consists of some of the industries finest engineers, designers, scientists, and other professionals. The entire technical and engineering staff is experienced in the design of systems, whi ch meet the required objectives with the lowest system costs.

Over its 7 0 year history Ducon has secured the following patents and trademarks:Ducon Technologies Inc.

For Tilden Mine Proposal No DC12

- 5173 for a Dry FGD/Baghouse System

The confidential information contained on this page is property of Ducon Technologies Inc. and is for the use of the recipien t or their authorized agents. Any unauthorized use is strictly prohibited. Page 4 of 12



### PATENT NO. TITLE 3,410,055 Fabric Bed Filter 3,798,882 Granular Bed Filter Apparatus & Method 3,854,902 Me thod of Filtering Gas 4,047,910 Scrubber for Collecting Fine Particles 4,067,704 Granular Bed Filter 4,072,130 Apparatus & Method for Generating Steam 4,140,497 Screenless Granular Bed Filter (Apparatus) 4,155,728 Screenless Granular Bed Filter (Metho d) 4,262,298 Control of Solids Discharge from Pressurized Vessel 4,305,737 Horizontal Venturi Scrubber 3,432,153 Apparatus for Collecting Contaminants from Gases

3,488,039 Filter Bed for Dust Collector 3,499,264 Method and Apparatus for Controlling F ume & Dust

Emission from Cupola Furnaces & the Like 3,544,087 Filter Apparatus for Gas Scrubber 3,566,908 Gas Tight, Liquid Sealed, Swing Type Valve

Assembly 3,581,474 Gas Scrubber 3,656,279 Gas Scrubber 3,668,825 Method & Apparatus for Determining th e Difficulty of

Removing Pollutant by Wet Scrubbing Action 3,677,407 Method & Apparatus for Removing Sludge from

Liquid 3,680,282 Gas Scrubber 3,683,593 Gas Scrubber 3,685,261 Wet Scrubber for Contaminated Gas 3,712,412 Sound Suppressing System 3,738 ,624 Gas Scrubber 3,785,119 Method & Apparatus for Removing Particulate &

Oxide of Sulfur from Gas 3,795,486 Wet Scrubber 3,811,247 Foam Type Gas Scrubber 3,830,041 Foam Breaker 3,963,463 Foam Scrubber 439,810 Ducon & Design Trademark 707,186 Oriclo ne Trademark 791,355 Ducon Trademark 933,511 Multivane Trademark 1,068,066 Ventri

- Rod Trademark 1,068,479 Hydro

- Flight Trademark 1,098,676 Environeering TrademarkDucon Technologies Inc.

For Tilden Mine Proposal No DC12

- 5173 for a Dry FGD/Baghouse System

The confidential information contained on this page is property of Ducon Technologies Inc. and is for the use of the recipien t or their authorized agents. Any unauthorized use is strictly prohibited. Page 5 of 12 

### 2.0 PROCESS & DESIGN PARAMETERS
The process and project parameters for the Tilden Pla nt project are as follows (reference data from Table 8A, dated 6/14/2012 provided by CliffsNR on 9/13/2012 ) : Gas streams from lines 2C (from the North Stack) and lines 2A and 2B (from the South Stack) will be mixed in a common duct and split 50% (by other s) to two equally sized (50% of total flow) Ducon treatment trains, each consisting of a dry absor ber and baghouse ( including interconnecting ductwork, dampers, and expansion joints (between the absorber and the b aghouse ) and including both common and line

- dedicated equipment for fresh lime (hydrated lime receiving, storage, preparation and delivery to the dry absorbers). Ducon’s scope is limited to the equipment (quoted here) between the inlet flange to the dry absorber and the outlet flange from the Bagh ouse, Within this scope Ducon will also provide three (3) silos and auxiliary equipment for storage, handling and transmission of used lime ( for recycle and disposal). Zachry Engineering Corporation (Zachry) will design and provide new ductw ork to conduc t flue gas from existing north and south stack s to a common manifold, and distribute mixed gas equally to inlet flanges of two Ducon dry absorber reactors

. Zachry will also provide ductwork I.D. fans and common Stack for exhaust of clean gas to the atmosph ere.

Assumed Process Parameters For Each Gas Stream :

Inlet Gas Flow acfm

Inlet SO2 in Gas 366 l b/hr
Inlet Gas Temp F

Inlet PM to ESP gr/acf

MWw lbs/p

- mol
Inlet Humidity

Site Elevation above sea level 1978 ft
Inlet Static Pressure to Dry w.g. A bsorber ReactorDucon Technologies Inc.

For Tilden Mine Proposal No DC12

- 5173 for a Dry FGD/Baghouse System

The confidential information contained on this page is property of Ducon Technologies Inc. and is for the use of the recipien t or their authorized agents. Any unauthorized use is strictly prohibited. Page 6 of 12 

### Assumed Design Parameters For Each FGD Reactor & Baghouse

Inlet SO 2 

### concentration 366 l b/hr SO 2 

### Removal efficiency > 90 % Atomization Air Required @ 6 barg 400 scfm Air required for baghouse pulse jet @ 6 barg 84 scfm Total Water Requirement 648 lbs/min Exit Gas Temp to Stack 2 18 F Exit Gas Flow from Absorber 5 5 4, 806 acfm Solids from Baghouse for disposal 778 l bs/Hr Hydrated Lime Flow to Reactor 9.0 lbs/min Hydrated Lime usage based on 100% purity
Dust Concentration at Baghouse Outlet mg/NM 3 

### 30 System Pressure Drop at scope limits i nch w.c. 11 ”

3.0 PRINCIPLES OF OPERATION For EACH GAS STREAM

3.1 The gas enters the existing ESPs, where 90% (assumed) of the particulate is removed. Th e SO 2 

### laden flue gas
, at F
, is introduced into the spray dry reactor and is accelerated and spun into the absorber zone. At the same time, a 2

- fluid nozzle introduces the measured and controlled amount of lime slurry and water for efficient SO 2 

### abso rption and controlled flue gas cooling to a design specified outlet flue gas temperature. Compressed air @ 6 barg pressure is used to insure fine atomization of the liquid droplets.

Tremendous interaction between the flue gas and the atomized slur ry droplets results in dry ing of the droplets. T he SO 2 

### in the gas reacts and forms dry powder consisting of CaSO 3 

### and CaSO 4 

### (and lime)

. The concentration of particles in the spray dry reactor is increased by recirculating a measured amount of by

- product (CaSO 4 

### , CaSO 3 

### , etc. ) back into the absorber from the outlets of the b aghouse and spray dry absorber

. All the flow streams to the spray dry absorber are under automatic process control.
The flue gas exit ing the absorber is sen t to the bag house, with six (6) chambers
, in parallel. When the pressure drop across the bags in the baghouse reaches a predetermined set point, that module is taken off line, and the pulse jet cleaning sequence is initiated.Ducon Technologies Inc.

For Tilden Mine Proposal No DC12

- 5173 for a Dry FGD/Baghouse System

The confidential information contained on this page is property of Ducon Technologies Inc. and is for the use of the recipien t or their authorized agents. Any unauthorized use is strictly prohibited. Page 7 of 12 

### 4.0 SCOPE OF SUPPLY

Al l equipment furnished by Ducon shall be adequately sized to meet the required objectives and shall be suitable for outdoor installation. Equipment selection shall be done to minimize the wear and provide long operating life with least amount of maintenance and down time. The following drawings are being provided and are part of this proposal. DC12

- 5173

- 03

- PFD DC12

- 5173

- 04

- GA PLAN VIEW Ducon's scope of supply shall be as outlined below.

4.1 H ydrated Lime Storage & Slurry preparation system

A ) Common Storage Silo & Slurry Preparation Tank (20% Hydrated Lime)

One (1) storage silo for t wo gas streams Type: Vertical, c ylindrical, self standing, w/ 1 hopper. Capacity (net) 3,568 cubic feet Material: ASTM A36 Silo storage capacity: 5 days usable hydrated lime One common slurry preparation tank and one agitator Two common slurry pumps

– One working and one standby
B) Rotary Air Lock Feeder

Quantity: 1 set / each silo Type: Motorized rotary air lock valve Mater ial / Thickness : Mild Steel
C) Mixing tanks & agitators

Quantity: 2 sets Type: Mild Steel
D) Slurry pumps with VFD

Quantity : 2 sets / each gas stream Material : Stainless
E) Slurry piping system to two absorbersDucon Technologies Inc.

For Tilden Mine Proposal No DC12

- 5173 for a Dry FGD/Baghouse System

The confidential information contained on this page is property of Ducon Technologies Inc. and is for the use of the recipien t or their authorized agents. Any unauthorized use is strictly prohibited. Page 8 of 12 

### 4.2 Two (2) Dry Lime FGD recirculating reactors,
A) Absorber & rotary valves
The absorbers shown on drawing DC12

- 5173

- 03 and DC12

- 5173

- 04 will be provided. Absorber dimensions will be 2 2 ’

- 8 ID, 120 ’ high, with 60 deg cone hopper at the bottom. Ducon whirl vanes will be provided at the vessel’s straight side to cone junction to spin the gas to the design spin velocity. Material of construction will be 1⁄4” thick carbon steel with 1/16” AL^XN cladding. Recommended external insulation consists of 4” fiber wool with 20 ga al uminized steel sheathing (by others). A motorized rotary air lock valve will be provided at the bottom of the cone. All required structural supports, platforms, all access ways and staircase will be provided with the system.
B) Injection Lances & nozzles

_ Q’ty: 1set for each absorber
C) Silos

– Three (3)

- Two recycle silos

- One Disposal silo

4.3 Fabric Filter System:
One complete fabric filter system, (consisting of 2 x100% baghouse ) pulse air type in modular configura tion complete with all controls and instrumentation to monitor temperatures, pressures, differential pressures, levels in the hoppers, etc. for complete control and operation of the fabric filter including cleaning operation as follows:
A) High ratio pulse j et type baghouse fabric filters, Each Baghouse consists of Six (6) chambers arranged in one (1) row. Penthouse will be provided on the top of each chamber. Casing and manifold are constructed of 1⁄4”. A

- 36 carbon steel plate, stiffened as necessary. The casi ng includes a 3/8” thick tube sheet with a pulse air cleaning system and diaphragm valves. An enclosure (walk

- in

plenum) is provided on top to allow removal of bags and carry out maintenanc e. The enclosure is made of 1⁄4” thick A

- 36 plate, with prime and fin ish painting by installation contractor after erection completion. Hopper valley angle is 60°. Accessories include 150# ANSI drilling outlet flange, strike plates, and poke holes. The hoppers’ bottom area surfaces will be electrically heat traced to 90 d eg C. 4” of insulation will be providing for entire chambers. Each module is supported by structural steel legs to grade. Because of theDucon Technologies Inc.

For Tilden Mine Proposal No DC12

- 5173 for a Dry FGD/Baghouse System

The confidential information contained on this page is property of Ducon Technologies Inc. and is for the use of the recipien t or their authorized agents. Any unauthorized use is strictly prohibited. Page 9 of 12 

### Size of the module, the module will be factory fabricated and shipped in maximum shippable sizes , knocked down, match marked for field erection and welding in the field. Each module contains an array of 17 rows x 25 rows of 10M long filter bags. The following baghouse equipment (for two baghouses) is included:

. 5 712 Filter b ags, 150 mm nominal diameter,10 M long, of 0.5 kg per square meter, PPS

5 712 Bag cages

– 20 wire, 11 gage mild steel. and Pulse Jet Venturis

204

- Pulse Jet Diaphra gm Valves

204

– Blow tubes

12

- Inlet Butterfly dampers with electric actua tor operator for automatic isolation of module

12

- Outlet Butterfly dampers with electric actuator for automatic isolation of module. 12

- Rotary Air Lock to discharge fly ash.

One Lot of Platforms and Stairs
, as required.
B) T w o (2) Solid Recirculation Systems,
One (1) for each gas stream will be provided.
4.4. Two (2) Air Compressor/Filter/Dryer Packages for each gas stream, one (1) operating, one (1) spare will be provided. Each package will be rated for 327SCFM @ 6 barg discharge pressure, 70 KW

.
4.5 Two (2) lots of system ductwork, one (1) lot per gas stream will be provided as shown in drawings DC12

- 5173

- 03 and DC12

- 5173

- 04. This includes the ductwork from the absorber to baghouses. All duct work will be fabricated with 1/4” thick carbon steel structurally reinforced as required

. Each duct system shall also include fabric type expansion joints as required and as determined by engineering. Structural supports and all access requirements are included.

4.6 Two (2) Lot s of Instruments, one (1) per each gas stream, will be provided as listed below. (Package Units Instrumentation not included) For one Lot

GAS SIDE Inlet Pressure TransmitterDucon Technologies Inc.

For Tilden Mine Proposal No DC12

- 5173 for a Dry FGD/Baghouse System

The confidential information contained on this page is property of Ducon Technologies Inc. and is for the use of the recipien t or their authorized agents. Any unauthorized use is strictly prohibited. Page 10 of 12



### In let Temperature Transmitter Inlet SO2 Analyzer/Transmitter ( by others ) Inlet O2 Analyzer/Transmitter (by others) Absorber Outlet Temperature Transmitter Absorber Outlet Pressure Transmitter Level Transmitter in absorber cone Differential Pressure Tr ansmitter Baghouse chamber 1 Differential Pressure Transmitter Baghouse chamber 2 Differential Pressure Transmitter Baghouse chamber 3 Differential Pressure Transmitter Baghouse chamber 4 Differential Pressure Transmitter Baghouse chamber 5 Differential Pressure Transmitter Baghouse chamber 6 Gas Flow Transmitter (Flow to fan ) Outlet Gas Pressure Transmitter Gas Temperature Transmitter Pressure Transmitter (Compressor discharg e)

LIQUID SIDE Flow Transmitter to Nozzle (Magmeter) PressureTransmitter (PC Pump discharge) FlowTran smitter Water to Mix Tank(Magmeter) Transmitter lime slurry to MixTank(Magmeter)

4.7 Two (2) Lots of valves, one lot per gas stream will be provided. Valves may or may not be shown in the proposal P&ID but all control valves, auto matic valves, manual valves required for an automatic operating system within the scope of battery limits will be provided.

4.8 Following items are not included in Ducon’s budgetary price

a. Ductwork from the Tilden Mine ESPs (existing) for each gas strea m to the inl et of the Ducon reactor
, and structural support
, expansion joints and inlet dampers before the inlet of the reactor. b. Ductwo rks from the outlet flange of ba ghouses to the fan inlet including structural support , expansion joints, and dampers afte r the outlet flange of ba ghouses b. Erection and assembly
c. Power and control cabling and cable laying accessories d. Control panels d. Civil design and construction
e. A/C and ventilation system f. Fire Detection and alarm device. g. All Insulation materia l s and installationDucon Technologies Inc.

For Tilden Mine Proposal No DC12

- 5173 for a Dry FGD/Baghouse System

The confidential information contained on this page is property of Ducon Technologies Inc. and is for the use of the recipien t or their authorized agents. Any unauthorized use is strictly prohibited. Page 11 of 12 

### 5 .0 TERMS & MISCELLANEOUS ITEMS

5 .1 DESIGN
All materials shall be in accordance with ASTM Standrads, be new, of the best quality and suitable for long operating life. All dimen sions and sizes in this proposal are subject t o modification and change upon completion of detailed engineering.

5 .2 PROJECT SCHEDULE
All basic engineering information, including plot plan, system drawings, and foundation details shall be provided within 2

- 3 months after the issuance of purchase o rder. Individual equipment shipments shall arri ve at the job site in approx. 10

- 12 months after start date. This estimate is contingent upon no delays in purchaser scope of work and no unforeseen site problems. Ducon sha ll not be responsible for delay s caused by reason s beyond its control

. Ducon estimates total time to install and commission to be approximately 18 to 20 months.

5 .3 PRICES
Total price indicated here is only for the above scope of supply of equipment for the Ducon FGD system as out lined in this proposal. It does not include any price for erection.

USD: $25,000,000 [Budgetary]

Very truly yours, DUCON ENVIRONMENTAL SYSTEMSDucon Technologies Inc.

For Tilden Mine Proposal No DC12

- 5173 for a Dry FGD/Baghouse System

The confidential information contained on this page is property of Ducon Technologies Inc. and is for the use of the recipien t or their authorized agents. Any unauthorized use is strictly prohibited. Page 12 of 12

# GSA for Pelletizing Budget Quotation for Air Pollution Control Equipment

Cliffs, Natural Resources Inc. , Tilden line 1

9-15-2012 FLS Airtech No. 12-47590 rev. A1Our ref. Date Page 12-47590A1; Tilden line 1 Tel +1 (610) 264-6600 · Fax +1 (610) 264-6400 · info@flsairtech.com www.flsairtech-us.com · 3231 Schoenersv ille R oad · 18017 · Bethlehem, Pennsylvania · USA

Project. JAS FLSmidth Airtech Inc.

9-15-2012

Pl f t th d i ht ifi ti i t hi l ifi ti f d t il d i f i t Budget Offer GSA for Pelletizing

With reference to above-mentioned, we are pleased to submit our initial proposal covering the design and supply of 2 Gas Suspension Absorbers ( GSA) and 2 Fabric Filters ( FF) for SO2 removal for the Pelletizing plant line 2 off-gas cleaning systems at the Cliffs Tilden plant facility ,N egaunee, Michigan. We have provided budget pricing for the GSA's and FF's based upon your operation information. Plant: Tilden line 1 Dear Sir/Madam, 200 Public Square, Suite 3300 Cleveland OH 44114-2315, USA

Attn. Jason Adams Cliffs, Natural Resources Inc.

Project No: 12-47590A1

We kindly ask you to review our detailed technical specification and preliminary layout drawing to ensure that we have designed the equipment according to your requirements, and that the scope of supply meets your expectations.

Pl ease re f e r t o th e summar y an d we i g ht spec ifi ca ti on i n ou r t ec h n i ca l spec ifi ca ti on f o r a d e t a il e d v i ew o f equ i pmen t included in our proposal; items marked FLS-AT are key-parts, items marked FAB are fabrication parts, both supplied by FLS Airtech, while items marked BCL and CLIENT are supplied by others.
The GSA Towers and the FF units hopper and penthouse area are provided with structural steel for installation of Purlins & Girts (by others). Insulation, Siding/Cladding are not included in our proposal. Offering two independent GSA units /FF units increases the operation range as the turndown ration is max. 50% of maximum design gas flow for each GSA unit. Offering 2 FF units prevent low flow problems in FF chambers and ducting and minimize operational problems when operating with gas temperatures close to the water dew points .Our ref. Date Page 12-47590A1; Tilden line 1 Tel +1 (610) 264-6600 · Fax +1 (610) 264-6400 · info@flsairtech.com www.flsairtech-us.com · 3231 Schoenersv ille R oad · 18017 · Bethlehem, Pennsylvania · USA

Project. JAS FLSmidth Airtech Inc.

9-15-2012

For regulating the 2 uneven gas volumes from the South Stack and the North Stack into 2 identical parallel GSC -FF lines. We have assumed upstream regulating Dampers (by others) please see attached flow sheet D1504689.

Direct fax number: Contact person: We have sized the FF's for a particulate emission of 10 mg/Nm3 dry.

You will notice that the proposed GSA-FF equipment exceed the initial given building envelope. FLS has proposed the GSA-FF with standard equipment lay-out. The FLS equipment foot-print arrangement to be discussed. For example 1 large FF instead of the proposed 2 FF's , there will be cost savings ,but it will depend of the building envelop if a 1 FF unit can be fitted in. We have sized the GSA's for a SO2 emission of 5 ppmv.

We trust that you will find our proposal of interest and shoul d very much welcome the opport unity of working with you on this project.

Meanwhile, you are most welcome to contact us :

Position:

+1 (610) 264 6400 Jeppe Albert Sørensen Product Specialist

jeppe sorensen@flsmidth com +1 (610) 264 6462

E mail address: Direct telephone number: For FLS scope of supply please also see the attached Flow sheet No. D1504689 & D1504690 and D1504691 which also indicate the limits of FLS supply.

Jacob Søndergaard Jeppe Albert Sørensen Direct telephone number: jeppe

. sorensen@flsmidth

. com

Jacob Søndergaard - in case Jeppe Albert Sørensen is not available, please contact Jacob Søndergaard: E

- mail address:

FLSmidth Airtech Inc. jacob.sondergaard@flsmidth.com Position:

We look forward to working with you on this project.

Manager of Sales Product Specialist Yours sincerely, E-mail address: Contact person:

Direct fax number: +1 (610) 264 6225 +1 (610) 264 6400 Manager of Sales

Typical project time schedule Attachments: GSA Drawings , typical Preliminary flow sheet .Our ref. Date Page 12-47590A1; Tilden line 1 Tel +1 (610) 264-6600 · Fax +1 (610) 264-6400 · info@flsairtech.com www.flsairtech-us.com · 3231 Schoenersv ille R oad · 18017 · Bethlehem, Pennsylvania · USA

Project. JAS FLSmidth Airtech Inc.

9-15-2012

Item Qty. Gross weight

mTon

1 2 296.0

2 2 1473.4 

### Our proposal includes the following:

Description

3,670,400
2 off GSA/R 6.5/2C7.1 Total USD

5,010,500 GSA , FLS-AT type: 2 off GSA/R 6.5/2C7.1 

### Pricing
Pelletizer off gas line, GSA

Key-parts (mechanical and electrical) and engineering for fabrication parts (steel parts).

GSA , FLS-AT type: [Items marked FLS-AT in our Technical Specification]

1769.4 8,680,900 Total Budget price delivered FOB, according to Incoterms 2000, including packing. [Items marked FAB in our Technical Specification] Fabrication parts (steel parts), excluding insulation and cladding materials (purchase specification included).Our ref. Date Page 12-47590A1; Tilden line 1 Tel +1 (610) 264-6600 · Fax +1 (610) 264-6400 · info@flsairtech.com www.flsairtech-us.com · 3231 Schoenersv ille R oad · 18017 · Bethlehem, Pennsylvania · USA

Project. JAS FLSmidth Airtech Inc.

9-15-2012

Item Qty. Gross weight

mTon

3 2 205.0

4 2 755.4 

### Our proposal includes the following:

2,588,000 FC-TD / PJ /4752 / 8x127 / ((11x2)x18)x2/6/P4/P6/6A Total USD Description

Fabrication parts (steel parts), excluding insulation and cladding materials (purchase specification included). Fabric Filter, FLS -AT type: Fabric Filter, FLS -AT type:

1,732,000

[I k d FAB i T h i l S ifi i ] [Items marked FLS-AT in our Technical Specification] 

### Pelletizer off gas line, FF

Key-parts (mechanical and electrical) and engineering for fabrication parts (steel parts).

960.4 Total Budget price delivery FOB, according to Incoterms 2000, including packing.

13,000,900 Total Budget price for GSA's and FF's delivery FOB, according to Incoterms 2000, including packing. 2729.8 4,320,000 [I tems mar k

e d FAB i n our T ec h n i ca l S pec ifi cat i on

]Our ref. Date Page 12-47590A1; Tilden line 1 Tel +1 (610) 264-6600 · Fax +1 (610) 264-6400 · info@flsairtech.com www.flsairtech-us.com · 3231 Schoenersv ille R oad · 18017 · Bethlehem, Pennsylvania · USA

Project. JAS FLSmidth Airtech Inc.

9-15-2012

2 months 6 months 7 months 10 months

9 months

Prices for delivery of equipment labeled FLS-AT are quoted FOB European &Indian Port of Export, delivery (liner terms) in accordance with Incoterms 2000 Seaworthy packing is included when necessary Stowage in containers in Maintenance & operation manuals: 

## Commercial terms

Contingent upon the present capacity and delivery conditions, we propose the following preliminary time schedule, which is calculated from the date of “Effective Contract”. The time schedule is prepared under the assumption, that all necessary information is available for FLSmidth Airtech when needed, and that arrangement drawings are approved within one (1) week of submission:

FOB delivery of equipment: 

### Time of delivery

GA & Load drawings:

Erection manuals: Drawings for local manufacture:



### Terms of delivery Scope of supply The scope of supply is according to our enclosed ''Supply & Weight Specification''.



### Validity terms) in accordance with Incoterms 2000

. Seaworthy packing is included when necessary

. Stowage in containers in the case of container-line shipment, SOC, and port storage charges (if any) are excluded. Prices for delivery of equipment labeled FAB are quoted FOB Indian and or Chinese port of export , delivery (liner terms) in accordance with Incoterms 2000. Seaworthy packing is included when necessary. Stowage in containers in the case of container-line shipment, SOC, and port storage charges (if any) are excluded.

Our proposal is fixed and firm as indicated above, conditioned on negotiating mutually acceptable terms and conditions. However, we reserve the right to adjust our price against variations in the ratio of exchanging USD for EUR in the spot currency markets in excess of 1.32 USD for 1.00 EUR. The applicable percentage of our total equipment price subject to this adjustment is 100% . Our offer is based on the currently quoted delivery times and pricing structure for carbon steel plate, rolled steel sections and similar. Should either of these change prior to order and / or during contract execution, we reserve the right to adjust our pricing and / or delivery time to reflect such changes. Our proposal expires Monday, 15th October 2012.Our ref. Date Page 12-47590A1; Tilden line 1 Tel +1 (610) 264-6600 · Fax +1 (610) 264-6400 · info@flsairtech.com www.flsairtech-us.com · 3231 Schoenersv ille R oad · 18017 · Bethlehem, Pennsylvania · USA

Project. JAS FLSmidth Airtech Inc.

9-15-2012

20%

80% 

### Terms of payment

FLSmidth Airtech's right to Suspend of the total price shall be paid in installments corresponding to the scheduled shipments against the presentation of an invoice accompanied by shipping documents or a Certificate of Readiness, in the event shipments cannot take place for reasons not attributable to FLSmidth Airtech.



### Overdue payments The L/C will be subject to the “Uniform Customs and Practice for Commercial Documentary Credits (1993 Revision), International Chamber of Commerce (Publication No. 500)”. All bank charges, stamp duties, confirmation charges or other dues, if any, must be paid by the client. of the total price shall be paid as a down payment directly to our bank account. Payment must be made no later than thirty days from the date of order against our advance payment bank or insurance company guarantee. The advance payment guarantee is to be valid until delivery of equipment.

The second installment is covered by an irrevocable letter of credit issued by a first class bank, confirmed by and made payable in a bank nominated by FLSmidth Airtech. It must be opened within thirty days from the date of order, and be valid until all payments have been effected in full.

Interest on overdue payments will be calculated as the official CIRR interest rate for the relevant currency plus 5% points.

The time schedule shall be revised due to the suspension of the work and cost incurred to FLSmidth Airtech as a result of the suspension shall be paid by Client, inclusive of profit.

In case any accumulated suspension of the work due to Client's delayed payments has lasted more than 90 days, or the work has been suspended more than 2 times FLSmidth Airtech has the right to Cancel the Contract and immediatly stop all work on the Contract inclusive work under progress by the subsuppliers. 

### FLSmidth Airtech's right to Cancel

Client shall pay for equipment delivered, as well as any and all costs resulting fro m the cancellin g of the order, including but not limited to profit. Equipment already delivered shall remain/become the property of Client. In case any of Client's payments are delayed more than 30 days, FLSmidth Airtech can suspend the order execution and stop eventual work under progress by the subsuppliers. When the delayed payment has been received, FLSmidth Airtech will resume the orderwork as soon as possible in order to minimise eventual delays and costs resulting from the suspension.Our ref. Date Page 12-47590A1; Tilden line 1 Tel +1 (610) 264-6600 · Fax +1 (610) 264-6400 · info@flsairtech.com www.flsairtech-us.com · 3231 Schoenersv ille R oad · 18017 · Bethlehem, Pennsylvania · USA

Project. JAS FLSmidth Airtech Inc.

9-15-2012

1) 

### Bonds / Guarantees

Per Diem Rate for supervision USD 1250/man/day, which is the net receivable to us, i.e. excl. local taxes. The basis of the calculation is to be from the date of leaving home base to the date of returning to home base. 

### Countries of origin Effective date of contract Effective date of contract is defined as the latest of the following events: a) the date when the down payment has been transferred to our account, or b) the date when a Letter of Credit in a form acceptable to FLSmidth Airtech has been opened (and confirmed).



### Supervision services For the purpose of local manufacture, erection or commissioning, we will dispatch our specialists on the following conditions (valid 2008): In case the date of Effective Contract is dalayed by more than 60 days after the Contract was signed, FLSmidth Airtech has the right to adjustment of prices and delivery time as a result of the delay. Guarantees issued by FLSmidth Airtech in favor of Client may not be drawn upon unless Client's claim of a default by FLSmidth Airtech with reference to the Contract can be substantiated and deemed justified by the Adjudicator or FLS Airtech gives written concent hereto .

Expected countries of origin (but not limited to): EU, Eastern Europe, India, Indonesia, China, and the Americas.

2)

3)

Other conditions are in accordance with the attached ''Conditions covering the services of FLSmidth Airtech personnel.'' The daily rate is based on the working hours and days which are normally applicable to the Client's or the Enduser's employee's of similar rank. However, maximum of 8 hours of work per day and on an average of 40 hours per calendar week. Overtime will be charged at USD 220/hour if 8 hours/day or 40 hours/week are exceeded. Expenses to be borne by Client: Round-trip business class air ticket from home base to the site, meals and lodging according to West European standards, and local transportation. Payment for supervision services is on a monthly basis and is due 30 days after the date of the invoice. Payment is to be covered by an irrevocable and confirmed L/C, which is to be opened by Client before the FLSmidth Airtech personnel arrives at site.Our ref. Date Page 12-47590A1; Tilden line 1 Tel +1 (610) 264-6600 · Fax +1 (610) 264-6400 · info@flsairtech.com www.flsairtech-us.com · 3231 Schoenersv ille R oad · 18017 · Bethlehem, Pennsylvania · USA

Project. JAS FLSmidth Airtech Inc.

9-15-2012

Unless settled amicably, any dispute or difference which arises between FLSmidth Airtech and Client shall be referred by either party to adjudication in accordance with the ''Rules for Adjudication'' (the Rules). The adjudicator shall be any person agreed by the parties and shall not be nationals of OH 44114-2315, USA or USA/Denmark. In the event of disagreement the adjudicator shall be appointed in accordance with the Rules 

### Disputes Taxes, duties and VAT

If a Party is dissatisfied with the decision of the adjudicator or if no decision is given within the time set out in the Rules, Should project changes be necessary, then the scope of supply, the pricing and the delivery schedule might have to be revised.



### Weights and units Our quotation does not include any kind of tax, duty, VAT or other charges levied by authorities outside country of origin.

The weights and units provided in our proposal (''Supply & Weight Specification''). are estimates and will be confirmed upon completion of the detailed engineering. The prices and delivery times assume that Client does not make any changes to the project after the effective contract date. 

### Changes after contract

the Part y ma y give notice of dissatisfaction within 28 days of receipt of the decision o r the expir y of the time fo r the decision. If no notice of dissatisfaction is given within the specified time, the decision shall be final and binding for the Parties. If notice of dissatisfaction is given within the specified time, the decision shall be binding on the Parties who shall give effect to it without delay unless and until the decision of the adjudicator is revised by an arbitrator.

Any dispute which has been the subject of a notice of dissatisfaction shall be finally settled under ICC's Rules of Arbitration. Court of arbitration shall be set in neutral country other than OH 44114-2315, USA or USA/Denmark. The arbitrators shall not be nationals of neither OH 44114-2315, USA, USA or Denmark.Our ref. Date Page 12-47590A1; Tilden line 1 Tel +1 (610) 264-6600 · Fax +1 (610) 264-6400 · info@flsairtech.com www.flsairtech-us.com · 3231 Schoenersv ille R oad · 18017 · Bethlehem, Pennsylvania · USA

Project. JAS FLSmidth Airtech Inc.

9-15-2012

All emission testing to be performed after the Fabric Filter. mg/Nm3

The performance guarantees are based on the equipment being operated at the design operating conditions below: 

### GSA Type: 2 off GSA/R 6.5/2C7.1 Estimated performances

Estimated Performance

14
mg/Nm3 (dry) 10 Dust emission 10 14 Normal flow Max. flow The following describes our performance and equipment guarantees :

SO2 emission

months 12 

### Equipment Warranty
GSA Type: 2 off GSA/R 6.5/2C7.1

Equipment supply

* mg/Nm3, dry Nm3/h, wet

150.00

9.0 deg C 

### GSA Type: 2 off GSA/R 6.5/2C7.1

Gas flow each GSA

vol% O2 dry 1,269,391

-608 149 The performance guarantees are based on the equipment being operated at the design operating conditions below:

Normal flow Max. flow

Measurement or verification of the gas flow rates stated in the Operating Conditions must be done with a pitot static tube e.g. according to the following standards : 10.5 vol% H2O Water content

CFR Promulgated Test Methods (TM) 10/17/00, Feb. 2000, Method 2 ‘D etermination of Stack Gas Velocity and Volumetric Flow rate (Type S pitot tube). mmWG

Dust content in flue gas 

### Operating Conditions of GSA ,

mg/Nm3, dry Gas temperature Operating pressure

SO2 content Oxygen content

10,000Our ref. Date Page 12-47590A1; Tilden line 1 Tel +1 (610) 264-6600 · Fax +1 (610) 264-6400 · info@flsairtech.com www.flsairtech-us.com · 3231 Schoenersv ille R oad · 18017 · Bethlehem, Pennsylvania · USA

Project. JAS FLSmidth Airtech Inc.

9-15-2012

mg/Nm3 mg/Nm3 Particles, class 3 6

Oil, class 3 max 1 max 5 Dew point Compressed air pressure required 

### GSA Type: 2 off GSA/R 6.5/2C7.1 Quality of Compressed Air:

The warranty period is 12 months from the initial start-up date for all material and workmanship; however, it is not longer than 18 months after shipment of the equipment. All equipment supplied by FLSmidth Airtech is guaranteed to be composed of first-class materials throughout and be of good and careful workmanship. Therefore we warrant to correct and make good any defect, which may develop under normal and proper use within the guarantee period - or any defects, which are due to faults in the design, the materials or the workmanship - provided that we are notified immediately after the defect is discovered, that such defective parts are properly returned to us or that we may have the option of repairing the defective part on site if feasible. The warranty period for such repaired part or replacement part shall be valid for 12 months from the date of re-delivery of such part. Notwithstanding the aforementioned, all obligations of FLSmidt h Airtech under this warranty will expire 36 months after the init ial date of delivery. Moreover, the guarantees are given according to the enclosed general conditions.

All liability on our part ceases when the w arranty period terminates or in the event of misuse or failure to operate and maintain the equipment in accordance with our instructions Our liability in all cases is limited to the aforementioned 

### Equipment Warranty Cleaning type DegC bar

Semi Off / On line cleaning -20

maintain the equipment in accordance with our instructions

. Our liability
, in all cases , is limited to the aforementioned conditions and does not extend to consequential damages, either direct or indirect.

FLSmidth Airtech's total liability shall under no circumst ances exceed 10% of the contra ct sum. Client's remedy or remedies against FLS Airtech and/or FLS Airtech's li ability relating to the performanc e of the warranties hereunder shall be solely and exclusively limited to those as provided herein. 

### General Our equipment warranty and guarantees are valid provided that the local manufacture and erection works are approved by FLSmidth Airtech. The installation must be installed, maintained and operated in accordance with the instructions of FLSmidth Airtech. FLSmidth Airtech's li ability for reworking, repair and replacement of defective items until the expiry of the warrenty period shall be limited to the same scope of supply and terms as the main supply contract.Our ref. Date Page 12-47590A1; Tilden line 1 Tel +1 (610) 264-6600 · Fax +1 (610) 264-6400 · info@flsairtech.com www.flsairtech-us.com · 3231 Schoenersv ille R oad · 18017 · Bethlehem, Pennsylvania · USA

Project. JAS FLSmidth Airtech Inc.

9-15-2012

If, at the test, the GSA does not fulfil the performance guarantee, FLSmidth Airtech shall be given sufficient time to investigate the reason and to make the necessary changes. Hereafter, one - or more if deemed essential by FLSmidth Airtech - repeated test(s) shall be carried out according to the same procedure as with the first test. At the time of contract the method of gas ,heavy metal emission guarantee testing shall be selected and mutually agreed upon. 

### Performance guarantee test

Due to existing measurement tolerances, the Perfor mance Guarantee Test shall be deemed fulfilled even if the measured / calculated emission is within 5% of the guaranteed maximum emission. Client may at his own expense have the test conducted by an independent qualified company or government agency. 

## Guarantees

The SO2 emission shall be calculated as an average (arithmetic mean) of not less than three (3) valid individual measurements performed during a maximum period of three (3) substantially consecutive days of operation. Each test should be longer than two (2) and less than eight (8) hours duration as required by the selected sampling method at or below the design operating conditions. The test shall be performed not later than two (2) months after commissioning the plant. If the test has not been performed within three (3) months from the time of start-up or twelve (12) months from date of delivery, whichever occurs first, for reasons not contributable to FLSmidth Airtech, the performance guarantees shall be deemed fulfilled.

*

* FLSmidth Airtech must be notified in writing at least two weeks prior to the intended test date.

*

*

*

* Stable plant operation is defined as attainment of normal volume rate and temperatures at the inlet to the GSA, after load or process mode changes. If the duct work is not part of our scope of supply, FLSmidth Airtech must approve the lay-out of the inlet and outlet duct work to and from the GSA and the location and design of the test ports to be used for performing the guarantee test. Moreover, the guarantee is subject to the following provisions:

FLSmidth Airtech is allowed to observe the guarantee test which must be performed by an experienced, impartial authority chosen jointly by Client and by FLSmidth Airtech. The plant is in normal and stable operation for a minimum of 4 hours prior to, as well as during, the entire guarantee test. FLSmidth Airtech is allowed 24 hours in advance of the guarantee test to adjust the controllers. During this period the plant should be in a normal operating mode.Our ref. Date Page 12-47590A1; Tilden line 1 Tel +1 (610) 264-6600 · Fax +1 (610) 264-6400 · info@flsairtech.com www.flsairtech-us.com · 3231 Schoenersv ille R oad · 18017 · Bethlehem, Pennsylvania · USA

Project. JAS FLSmidth Airtech Inc.

9-15-2012

*

*

*

*

*

*

* Client immediately investigates and corrects any significant deviations from normal operation such as increased, GSA differential pressure, dust emission, or oxygen level. Similarly if process variations cause dust build-ups or corrosion to occur, the cause is immediately investigated and remedied.

The compressed air quality being as specified. FLSmidth Airtech has the GSA available for inspection during the annual maintenance stop for at least 5 consecutive days. The GSA installation is operated and maintained according to the FLSmidth Airtech’s operation and maintenance manuals and to other written instructions given by FLSmidth Airtech. 

### General

Client informs FLSmidth Airtech of all maintenance or problems arising from the GSA without reasonable delay. This guarantee is valid provided t hat the above ment ioned and the following prov isions are fulfilled:

Client or Tilden line 1 has the recommended spare parts available. All liability on our part ceases when th e guarantee period terminates or in the e vent of misuse or failure to operate and maintain the equipment in accordance with our instructions. O ur liability, in all cases, is limited to the aforementioned conditions and does not extend to consequential damages, either direct or indirect. 

### Limitations

Client or Tilden line 1 must maintain daily records of the actual operation conditions for those items specified in the design conditions in the design conditions

.Our ref. Date Page 12-47590A1; Tilden line 1 Tel +1 (610) 264-6600 · Fax +1 (610) 264-6400 · info@flsairtech.com www.flsairtech-us.com · 3231 Schoenersv ille R oad · 18017 · Bethlehem, Pennsylvania · USA

Project. JAS FLSmidth Airtech Inc.

9-15-2012

*

*

*

*

*

*

*

*

*

*

*

*

*

* Supervision services (quoted separately as a daily rate). Performance Guarantee Test to be carried out by an impartial third party or official authority . Test and Certification of filter casing as pressure vessel Scada control system.

Finish painting on site. Erection consumables of any kind. Design, engineering, delivery or erection of ducts or expansion joints connected to the inlet or outlet flange of the FFand GSA

MCC controlcenters or PLC for start or interlocking of the ash transport machines in and outside the GSA Please note that our offer does not include : 

## Exemptions

Adequate housing for local control panels. Our Budget proposal includes only the Items and Services specifically mentioned in our pricing sheet and the attached technical specifications.

Civil works of any kind.

Delivery of any kind of Insulation and cladding materials or systems/part for their erection.

Electrical erection inclusive of delivery of cables, cable trays, cable glands, local start/stop switches, emergency stop etc. Process control equipment of any kind

Mechanical erection.

*

*

*

*

*

*

*

* Permanent lighting for the installation. Fire control or fire alarm systems.

Please note that our offer is made with the following provisions : Flight warning lights.

Engineering, documentation, etc. are offered according to FLS Airtech Standard. The 2 GSA's and 2 Fabric Filters are ordered as one package. Applications, approvals or any other type of authority orientation or contact in the country of the plant are handled by Client. General Site Earthing system for connection to the filter. Lightning protection.



### ProvisionsOur ref. Date Page 12-47590A1; Tilden line 1 Tel +1 (610) 264-6600 · Fax +1 (610) 264-6400 · info@flsairtech.com www.flsairtech-us.com · 3231 Schoenersv ille R oad · 18017 · Bethlehem, Pennsylvania · USA

Project. JAS FLSmidth Airtech Inc.

9-15-2012

Local leave under special circumstances shall be agreed upon by Client and FLSmidth Airtech. 

### Working hours The FLSmidth Airtech personnel will, upon arrival to site, contact the head of safety department for instructions. 

### Services of FLSmidth Airtech Personnel

Working hours are to be the same as those normally applicable to Client’s or Enduser's staff at the plant but, on average, not exceed 8 hours per day and 40 hours per calendar week. Overtime is normally to be avoided. If over-time is necessary, it will be charged for or, alternatively, the FLSmidth Airtech personnel is to be granted time off corresponding to the amount of overtime worked before departing from the plant.

Client shall apply for and obtain a visa, residency and work permit. If necessary, FLSmidth Airtech shall apply for and 

### Visa and work permit Leave Safety on site

The fee for the FLSmidth Airtech personnel includes salary during accumulated annual leave. Such leave should be taken after completion of the work concerned, unless otherwise agreed upon by the Client and FLSmidth Airtech.

Exit and re-entry visa when applicable are to be obtained by Client. All costs in connection with obtaining visa/work permit are for Client’s account. 

### Payment to FLSmidth Airtech

Client to provide, free of charge, a fully furnished house/flat to applicate European standards, suitable for the accommodation of the FLSmidth Airtech employee and his family. According to our Commercial terms.



### Accommodation obtain an entry visa supported by Client.Our ref. Date Page 12-47590A1; Tilden line 1 Tel +1 (610) 264-6600 · Fax +1 (610) 264-6400 · info@flsairtech.com www.flsairtech-us.com · 3231 Schoenersv ille R oad · 18017 · Bethlehem, Pennsylvania · USA

Project. JAS FLSmidth Airtech Inc.

9-15-2012

FLSmidth Airtech shall remain responsible for all costs resulting from personal injury to the FLSmidth Airtech employee, and will indemnify Client in respect of such costs, except where such injury is due to fault or negligence on the part of Client or Enduser, their servants or agents. 

### Replacement Personal injury to FLSmidth Airtech employee Client will arrange for a PTA (Prepaid Ticket Advice). When arrangements have been made, Client must inform FLSmidth Airtech by forwarding the reservation numbers/reference numbers as well as name of airline.

FLSmidth Airtech shall at all times have the right to replace a FLSmidth Airtech employee by another person equally If, owing to illness, the FLSmidth Airtech employee is absent from work, Client shall pay all costs as previously specified. In the event of such absence exceeding three wee ks, FLSmidth Airtech will, if requested by Client, replace the FLSmidth Airtec h employee concerned and meet all travelling costs involved. 

### Illness Transport Client shall defray travelling costs from the FLSmidth Airtech employee’s base station to the site and return and all costs of excess luggage relating to tools and equipment required for the job.

Client will forward an MCO (Miscell aneous Charge Order) covering excess luggage of kg for outward and return transport. Flight tickets shall be fare (non-restricted) tickets valid with an international airline on business class or similar class.

The FLSmidth Airtech employee shall at all times be under FLSmidth Airtech’s instruction, and FLSmidth Airtech shall only be held responsible for direct losses incurred by Client consequent to acts performed in accordance with advice given by an FLSmidth Airtech employee which proves incorrect. Client shall at all times be liable for damage to plant or property and consequential losses, and shall be liable for sickness, injury, and death of any person arising out of the services of the FLSmidth Airtech employee provided he has duly fulfilled his obligations. Client shall pay all costs in connection with the above requirements and shall pay or reimburse all taxes levied on FLSmidth Airtech or the FLSmidth Airtech employee. 

### Damage to works Insurance and taxes Client shall arrange and pay for any social security contributions, workmen’s compensation insurance, and the like, as required by applicable local laws. suited for the job. Replacement costs shall be borne by FLSmidth Airtech.

Client shall indemnify FLSmidth Airtech and the FLSmidth Airtech employee against any claims, costs, losses, charges, or proceedings whatsoever arising out of the above liabilities. It is the obligation of Client to cover such risks by insurance.