# Technical Memorandum

From: 

## Barr Engineering Subject: 

## United Taconite SO2 Control Cost Analysis Date: 

## September 2 8 , 2012 Project: 

## Multiple



# 1. Summary of SO 2 

# Control Cost Analysis for United Taconite Lines 1 and 2 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 (dry FGD) SO 2 

## controls for United Taconite
Lines 1 and 2

. US EPA claims that dry SO 2 

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

## control cost ef fectiveness of $ 2,000 to $ 3,000 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 controls 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 fo r BART cost effectiveness analys e s:

“ Physical modifications needed to resolve technical obstacles do not, in themselves, provide a justification for eliminating the control technique on the basis of technical infeasibility

. However, you may consider the co st of such modification in estimating costs

. This in turn, may form the basis for eliminating a control technology .”

There are several site specific technical obstacles to installing dry FGD control s on United Taconite Lines
1 and 2 including:

 S pace limi tations on where the dry FGD SO 2 

## emission control equipment can be installed

 Removal of the existing wet scrubbers and installing ESPs for iron ore recovery

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Subject: United Taconite SO2 Control Cost Analysis Date: September 2 8 , 2012 Page: 2 Project: Multiple



##  L imitations on where ductwork from Lines 1 and 2 to the new emission control system s can be
located due to the presence of existing equipment

 A ddition of new process waste gas blowers to operate the indura tion furnaces and induced draft
blowers to operate the emission control equipment

.

 I nstallation of new stack s at the outlet of each of the dry FGD emission control trains

. Given the high cost of the ductwork, installation of new stack s is less expensive than installing du cts back to the original stacks

A control cost analysis for installation of dry FGD on United Taconite Lines 1 and 2 was prepared f or 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 United Taconite Lines 1 and 2

 Site specific factors affecting the ins tallation costs of SO 2 

## controls on United Taconite Lines 1
and 2

 A construction schedule which takes sit e 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 Lines 1 and 2 as described above.

 Using supplier equipment cost information and the installed costs for the Line 1 and 2 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). These costs are summarized in Table 1 on the following page. The control cost calculations are located in App endix A of this report. Copies of the
emission control equipment supplier proposals for United Taconite are located in Appendix E
, of this report. Please note that the ESP proposal supplied by FL Smidth is for one ESP. Three ESPs are required; so the tot al cost for ESPs at United Taconite is three time the amount listed in the proposal.

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## In addition, SO 2 

## control costs were calculated using the in stalled equipment costs and operating costs from the prefeasibility study. This analysis resulted in SO 2 

## control costs similar to the SO 2 

## control costs using EPA methods. In all cases listed in Table 1 and 2, the SO 2 

## baseline emissions are based on SO2 continuous emission monitoring system (CEMS) data for 2012 prorated from current production levels to the full production capacity of the Green Production Project (GPP) permit 1 

## established in August, 2010.
The 2006 BART baseline did not include emissions from coal combustion on Lines 1 and 2 and are not representative of expected actual SO 2 

## emission rates based on CEMS data. The SO 2 

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

## for CFBA scrubbers and the control equipment suppliers’ performance guarantee (> 90% removal) for SDA scrubbers to calculate the assumed controlled emissions. The resulting SO 2 

## control costs of $12,970 to $26,420 per ton
SO 2 

## removed are significantly higher than the $2,000 to $3,000 per ton SO 2 

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

Table 1. United Taconite 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 $59,700,000 $10,700,000 650 $16,460
Engineering Prefeasibility Study $50,100,000 $8,450,000 650 $12,970

Spray Dryer

Absorber EPA Control Cost Manual $63,900,000 $11,150,000 660 $17,020
Engineering Prefeasibility Study $53,750,000 $8,950,000 660 $13,610

1 

### The GPP permit limits Line 1 SO 2 

### emissions to 1,293 tons/year and Line 2 emissions to 2,394 tons/year.

### From: Barr Engineering Company Subject: United Taconite SO2 Control Cost Analysis Date: September 28, 2012 Page: 4 Project: Multiple

Table 2. United Taconite Line 2 SO 2 

### Cost Effectiveness with Site Spe cific 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 $119,050,000 $21,100,000 760 $26,420
Engineering Prefeasibility Study $99,800,000 $19,400,000 760 $25,650

Spray Dryer

Absorber EPA Control Cost Manual $127,350,000 $21,100,000 820 $25,780
Engineering Prefeasibility Study $107,150,000 $20,400,000 820 $24,910

The SO 2 

## emission reduction of 1,164 and 2,475 tons per year , for Line 1 and Line 2 respectively, listed in Table V-B.17 of the proposed FIP did not accura tely consider the anticipated annual emissions 1 

## under the
GPP. For CFBA at controlled SO 2 

## concentration of 5 ppm, the calculated SO 2 

## reduction is 650 tons per year for Line 1 and 760 tons per year for Line 2. At the baseline emission rate and the proposed FIP limit
of a 95% SO 2 

## control efficiency, SO 2 

## concentrations at the outlet of a dry FGD on United Taconite Lines 1 and 2 would be below the CFBA supplier performan ce guarantee and the proposed FIP limit of 5 ppm.
The SO 2 

## emission reduction for SDA was calculated at a 90% control efficiency. The SDA equipment supplier proposed a performance guarantee of > 90% SO 2 

## control. Based on this performance guarantee, it is uncertain whether or not the proposed FIP limit of 5 ppm SO 2 

## could be met with a SDA scrubber.

1 

### The cost effectiveness guidance refers to use of “a realistic depiction of anticipated annual emissions for the source. .. for the existing sources subj ect to BART, you will estimate the antic ipated annual emissions based upon actual emissions from a baseline period.” 40 CFR Part 51, App. Y D.4.d.

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

Pollution control cost effectiveness is the total ann ual cost (TAC) of the emission controls divided by the emission reduction achieved by the emission controls.

In the US EPA Pollution Control Cost Manual (Control Cost Manual), the total annual cost is the sum 2 

## of:

 Direct operating costs such as labor, chem ical, utilities and maintenance

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

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

rate 3



## Direct operating costs s uch 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 replacing 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 u ses the cost factor method for estimating the installed costs of emission control 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, electrical, etc) and for indirect costs such as engineering, construction management, contingencies, etc

. The equipment costs plus the direct and indirect installation costs are summ ed to determine the total installed
cost of emission controls.

2 

### US EPA Office of Air Quality Planning and Standards, “ EPA Air Pollution
Control Cost Manua l ”, January 2002, at 2

- 7.

3 

### Ibid at 2

- 13.

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Subject: United Taconite SO2 Control Cost Analysis Date: September 2 8 , 2012 Page: 6 Project: Multiple



# 3. Approach to Estimating Site Specific Costs for United Taconite Lines 1 and 2 A prefeasibility study was conducted to assess the costs of site specific modifications for installation of dry FGD controls at both the United Taconite and Tilden plants

. A prefeasibility study is part of a common practice in engineering and design work which is used 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 screen various design options

. As the evaluation process continues, more accurate cost estimates are prepared for the remaining alternatives until a final design basis is selected and the accuracy of the cost estimate prepared from this information is sufficiently accurate to receive financing for the project

. For further information on the requirements of a prefeasibility study, please see report Appendix B, Explanation of Cost Estima te Classifications.

The results of a prefeasibility study are known as “a n opinion of probable cost ”

. This cost estimate is prepared based on facility specific equipment locations, equipment and material lists , new equipment design specifications, information gathered during a site visit and costs for recent similar projects

. An opinion of probable cost was developed for installation of dry FGD emission controls on Line s 1 and 2 at United Taconite based on the aforementioned procedures

. Sufficient engineering and design work was done to assess project costs to an accuracy of plus 40% or minus 20%

. Costs for the emission control equipment were provided by Ducon and t he CFBA supplier

. Costs for materials and equip ment 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. The prefeasibility study is titled “Dry Flue Gas Desulfurizat ion Study”; it is included as Appendix C to this report.



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

# Controls on United Taconite Lines 1 and 2 In order to prepare a cost estimate for installation of a dry FGD system on Unit ed Taconite Lines 1 and 2
, a dry FGD system design and scope of work for site specific modifications to the United Taconite plant
was needed

. This information was developed by doing the following:

 Identify the design basis for dry FGD controls based on the Lines 1 and 2 exhaust gas
characteristics

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## • Identify induration furnace opera tional requirements, operating scenarios and process stream characteristics which could affect the dry FGD system design and select dry FGD system design
basis

• Identify ancillary equipment need ed for the dry FGD system based on the Lines 1 and 2 exhaust
stream characteristics

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

• Identification of suitable tie-in locations to Lin es 1 and 2 for routing the exhaust streams to the dry FGD system

• Identification of potential ductwork routes from the Lines 1 and 2 exhaust points to the dry FGD system location

• Identify plant modifications need ed to accommodate installation of a dry FGD emission controls. This includes modifications to Lines 1 and 2, structural changes to support new ductwork and changes to United Taconite plant’s infrastructure

• Identify site specific constraints at United Tacon ite which could affect the dry FGD construction
schedule

Meetings between Cliffs Natural Resources, Ducon, Zachry Engineering and Ba rr Engineering were held at the United Taconite plant on September 4 and 5, 20 12. The purpose of the meetings were to review the characteristics of the Lines 1 and 2 exhaust streams, identify how those characteristics would affect the design of the dry FGD system, identify Lines 1 and 2 operating conditions which the dry FGD system must meet and to inspect the United Taconite plan t site and identify options for installing a dry FGD system equipment on Lines 1 and 2. The results of t hose meetings are discussed in the following sections.

4.1 Design basis for dry FGD controls Cliffs Natural Resources personnel developed Lines 1 and 2 exhuast stream parameters for the dry FGD system design from Lines 1 and 2 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 induration furnaces. The dry FGD system desi gn parameters reflect Lines 1 and 2 induration furnace operating conditions during maximum production rates. A copy of the design specifications submitted to Ducon and the CFBA supplie r are presented in Table 3 below.

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Subject: United Taconite SO2 Control Cost Analysis Date: September 2 8 , 2012 Page: 8 Project: Multiple

Table 3 . Assumed St r eam Characteristics for Each of Lines 1, 2A, and 2B



## Parameter Value Units
Inlet Gas Flow 436,000 acfm
Inlet Gas SO 2 

## 400 lb/hr Inlet Gas Temperature degrees F
Inlet PM to ESP lb/hr
MWw lb/p

- mol Inlet Humidity % v/v
Site Elevation above sea level Ft
Inlet Static Pressure to Wet Scrubber Inches w.g.

4.2 Dry FGD S ystem Conceptual D esign The dry FGD systems for Lines 1 and 2 proposed by Ducon and t he CFBA supplier include three parallel dry scrubbing systems

. Three emission control trains were proposed because:

 Line 1 has one process gas exhaust blower and Line 2 has two process gas exhaus t blowers

. All three blowers are approximately the same size

. Therefore, one common design can be used for all
three emission control trains

. Having three identical dry FGD trains would also simplify operation, maintenance and inventory requirements.

 Line 2 can operate on one process gas exhaust blower in the event that the other blower
malfunctions or must be taken out of service for maintenance

. Installation of two dry FGD systems for line 2 makes it feasible to maintain SO 2 

## control while operating Line 2 on one
blower.

It would not be feasible to operate the Line 2 dry FGD with one process gas exhaust blower if a single large dry FGD control system were installed for Line 2

. Dry FGD systems have a limited turn down capacity and operation 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. Use of two parallel

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## scrubber vessels allows the facility to take one dry FGD scrubber off line during low flow conditions so that the air flow rates through the operating dry FGD s ystem are maintained at the proper level

There are also modifications to Lines 1 and 2 which must be made to accommodate the installation of a dry FGD system:

 Removal of the existing wet scrubbers

 Conversion of the wet scrubber system water knock out vesse ls to particulate drop out boxes and
installation of new air headers an d ducts from the outlet of the waste gas wind boxes on the grate
sections of the induration furnaces to the new drop out boxes

 Installation of new dry ESPs to replace the existing wet s crubbers

 Installation of new process exhaust blower s which ar e matched to the operating pressure of the redesigned furnace exhaust system from the wind box exhaust points up though the new dry
ESPs.

 The dry FGD systems for Lines 1 and 2 proposed by Ducon a nd t he CFBA supplier each include

t hree parallel dry scrubbing vessels and baghouse systems

 An air blower with a variable speed motor would be used on each train, and the exhaust from
each blower would be routed to a new stack

 Spite

- specific costs include electrical system upgrades for the modifications listed above

 Block flow diagrams for the proposed systems are located in Appendix D

Taconite induration furnaces are designed 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

. United Taconite Lines 1 and 2 have three exhaust

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 temperature of this stream relative to its wat er dew point and
recommended that all three exhaust streams be combined to address this issue.

The parallel dry FGD trains are also needed to a llow 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 operation a t less than 50% of the

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## 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

. Use of parallel scrubber vessels allows t he facility to take one dry FGD scrubber off line during
low flow conditions so that the air flow rates through the operating dry FGD system are maintained at the proper levels

.
Baghouses would be used for sorbent recovery and control of spent sorbent part iculate emissions

. The baghouses would be sized to allow 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, Lines 1 and 2 would be forced to shut down when baghouse maintenance of this type is require d

.

4.3 Ancillary equipment needed for the dry FGD system based on the Line 1 and 2 process design and exhaust stream characteristics Several process modifications and s pecific pieces of equipment would be necessary for the implementation of this plan.

 Install d uct burners for furnace start up and shutdown

 Convert existing water knock out vessels to particulate dry out boxes

 Remov e the existing wet scrubbers ; wet particulate control systems cannot be used upstream of dry SO 2 

## controls

.

 Install new exhaust headers and duct work from the Line 1 and 2 furnaces up to the dry FGD systems.

 Install a new hot gas bypass line to help maintain dry FGD operating temperatures during normal operation

 Install new dry ESPs for particulate control and iron ore recovery

 Install a new mixer and slurry from the dry ESPs to the existing iron ore recovery system.

 Install new process exhaust gas blowers

 Install i nduced draft blower s equipped with variable speed motors at the outlet of each of parallel dry FGD train s

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##  Install a new exhaust stack and ductwork from the induced draft blower s to the stack

 Install 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

The ration ale for ancillary equipment will be discussed in the plant modifications needed to accommodate installation of a dry FGD emission controls in section s 4.6 through 4. 16 below

.

4.4 Selection of a location for the dry FGD system and ancillary equipment Directions referred to in reports are based on plant coordinates and not necessarily true coordinates (see Figure 1 for more information). The proposed site for installation of a dry FGD system for Lines 1 and 2
is located on the North side of the building which houses Lines 1 and 2 at United Taconite

. The proposed location is indicated on the attached aerial photograph of the United Taconite plant ( Figure 1 )

. 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 s directly south west (SW) and north east (NE) of the induration furnaces are open

. Land to the south and east is occupied by a building s and equipment for ore concentration and coal and ore deliveries

. The building area which
houses the equipment used to prepare the “greenball ” feedstock for the induration furnaces is on the north side of the building, but ductwork can be run through the rafters and upper levels of the building

.
The area to the west of the building has more available space, but there are a number of maintenance access doorways on the west side where access must be maintained (see Figure 2 and Figure 3 )

. United
Taconites induration furnaces run in a north south direction

. Therefore any duct runs to the west side of the building must be run over the roof top in order to clear the induration furnaces and ductwork inside the building

. The Lin e 1 and 2A stacks are located in the center of the building so duct runs from these stacks to the west side of the building would be long

.
The area to the north of the induration building is closer to the induration furnace exhaust points than the
west si de, and ducting could be run inside the building (see Figure 4 and Figure 5 )

. Figure 4 is a top view showing the general arrangement of Lines 1 and 2 inside the building, while Figure 5 is a side view.

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## Although the available space on the north side is smaller, it appeared to have sufficient plot space to house the 3 parallel dry FGD trains. Figure 6 , Figure 7 , and Figure 8 are photographs taken at grade of the north side. A roadway to the doors in Figure 6 must remain open for maintenance. Further evaluation by Zachry Engine ering determined that sufficient space was available

. A north side location for the dry FGD system would require that access be provided to equipment in the NE corner of the building and to leave space for access roads for trucks and heavy equipment to the west side of the plant

. The electric power lines which feed the United Taconite plant run underground through the area on the north side

. The underground tunnels which contain the electric lines would have to be relocated if a dry FGD was
constructed at t he north site.

On balance, the North side site was determined to be the best choice based on reduced duct lengths and the ability to run ducting through the building instead of running ducts over the building roof

. So, the
North site was selected as the ba sis for the SO 2 

## dry FGD location

4.5 Ductwork route from the Lines 1 and 2 exhaust points to the dry FGD system location
Lines 1 and 2 at the United Taconite plant run in a north south direction with the process exhuast gases being discharged from the furnaces at the north end

. Routing the process exhaust gas to the north site provided the most di rect route for the duct routing (see Figure 4 and Sketch 001 on page 20 of Appendix C for diagrams of the proposed duct routing). There is space at the upper levels of the building directly
north of Lines 1 and 2 for the duct runs

. However the area is congested with existing equipment and

str uctural steel

. This limits the amount of steel that can be moved with heavy equipment, and much of the
steel would have to be moved into place with “come alongs” (s ee Figure 9 , Figure 10 , and Figure 11 taken in the building where the duct runs w ould be located )

. Note how the small open space in Figure 6 limits the available space for cranes for moving steel

. The structural steel in this area of the building must be reinforced to support the additional loads of the new ducts

. Both of these factors were accounted for in Zachry’s cost estimates for duct installation

Another factor in the cost of du c t construction and the construction schedule is the lack of o verhead service at the north end of the induration furnaces and the congestion due to equipment placement

. See Figure 12
, Figure 13 , and Figure 14 showing the furnace, venturi scrubbers and water knockout pots in

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Subject: United Taconite SO2 Control Cost Analysis Date: September 2 8 , 2012 Page: 13 Project: Multiple



## this area

. M uch of the steel wo rk in this area must be accomplished by moving steel with come

- alongs.
These costs would be incurred regardless of the dry FGD site selected.

Lastly, the construction schedule would be significantly affected by construction of the new ductwork
headers from the furnaces to the new drop out boxes and conversion of the water knockout pots to dust settling chambers. Figure 15 is a drawing of Line 2 which shows where these changes would occur.

Based on these factors, construction of tie

- ins and furnace modifications is projected to take four weeks; twice as long as the normal annual maintenance outages; so, the facility is likely to lose two weeks of production in order to i nstall tie

- ins and furnace modifications needed to install a dry FGD system

. See the Zachry Engineering dry FGD construction schedule in Appendix C. The SO 2 

## control cost analysis includes the cost of the additional outage time based on the net revenue for pellet production that normally would have occurred during this two week period as a one

- time capital expense. Costs associated with the extended shutdown are significantly greater than the 1% of installed capital costs contemplated in the startup allowa nce of the cost manual. The extended outage time reflects installation times which cannot be avoided through maintenance planning due to the difficulty of making the modifications necessary for dry FGD, and is therefore a bona fide cost of installing dry FGD controls at
United Taconite.

Duct construction costs are based on new ductwork being insulated constructed of 316 stainless steel

. Under most operating conditions, the insulation would 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 shutdown

. Localized corrosion may also occur in areas where insulation has been removed or damaged over time

. Give n the remote location of the ductwork, it would be difficult to inspect it for damage and if problems are identified accessing the duct for repairs would be difficult

. To prevent these problems from occurring , 316 stainless steel was selected as the material of construction for
the n ew 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
shutd owns 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

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## 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 Convert existing water knock out vessels to particulate dry out boxes Because the dry FGD system must be installed outside of the existing induration furnace building, there
would be a long duct run between the induration furnace and the new dry ESP

. Larger dust particles in the furnace exhaust are too large to remain in sus pension and would be deposited in the duct rather than being
collected in the ESP

. The purpose of the drop out boxes is to capture large particle entrained in the
furnace exhaust gas before the gas stream enters the long duct run from the furnace to the ES P

. The existing water knock out vessels have a large enough diameter to drop the exhausts gas velocity down to a rate which would allow the larger particles to drop out of suspension.

4.8 Remove existing wet scrubbers In order for a dry FGD system to fu nction properly, the gas stream must be dry when it flows through the baghouses used to collect the spent sorbent; otherwise, the baghouse filter bags and dust collection hoppers would become plugged with wet filter cake (mud)

. The exhaust gas entering the dry FGD must be hot enough that any water added with the lime would evaporate before it reaches the baghouse

. The exhaust stream from the existing wet scrubbers contains entrained water and it is saturated with water

vapor

. A ny water injected into the exhaust stream for dry FGD would not evaporate

. Therefore, the existing wet scrubbers must be removed in order to install a dry FGD system

.

4.9 I nstall new process exhaust gas headers and ductwork from the Line 1 and 2 furnaces to the dry FGD systems

Currentl y, the process exhaust gas header on Line 1 directs the off

- gas to four venturi scrubbers, and the
Line 2 off

- gas headers direct the process exhaust gas to eight venturi scrubbers

. The venturi scrubbers must be removed if a dry FGD system is stalled

. So, n ew furnace exhaust headers must be installed to direct the process off

- gas from the furnace exhaust points to the new particulate drop out boxes

. New ductwork must be installed from the outlet of the drop out boxes to the new dry ESPs and then onto the
inl et of the dry FGD systems.

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## 4.10 Install new hot gas bypass line s to help maintain dry FGD operating temperatures during normal operation During the site visit, the Ducon representatives indicated that, based on the operating data provided, the
Line 1 and 2 process exhaust gases may not at times be hot enough to fully evaporate all the water added with the lime slurry injection

. They recommended that a hot gas bypass line be installed so that additional heat could be added to the process exhaust gas before e ntering the dry FGD system

. Hot process gases would be ducted from hot recuperative air streams

. Air flows would be controlled with a damper

. Use of the hot gas bypass would increase induration furnace fuel use because less recuperative heating would be

a vailable for pellet drying and preheating.

4. 11 Install new dry ESPs for particulate control and iron ore recovery The existing wet scrubber s are used to recover iron ore dust from the induration furnace s and recycle the iron ore for reprocessing

. As noted above, the wet scrubbers must be removed for the dry FGD system

. Dry ESPs are proposed to replace the existing wet scrubbers for iron ore recovery.

Without new ESP s , the particulate loading on the dry FGD system s would reach levels that could adversely af

fect the dry FGD system operations

. Both vendors have recommended that dry ESPs , not cyclones or multiclones
, be installed to replace the existing wet scrubbers for this reason.

The existing wet scrubber s are also used to remove dust in the furnace exhaust streams to protect the process waste gas exhaust blowers . Iron ore dust is very abrasive and the exhaust blowers could easily be damaged by iron dust if dust levels are not properly controlled. An exhaust blower failure would force the
shutdown of Line 1 and significantly reduce Line 2 during blower repairs for the affected line

.

If the ESP were not installed upstream of the dry FGD system, iron ore currently recovered in by the wet
scrubbers would have t o disposed of as solid waste because it would be contaminated with the spent sorbent from the dry FGD system

4.12 Install a slurry line from the ESP to the existing iron ore dust recycling system.
The new ESPs would be located outside of the induration fur nace building

. Therefore a new conveyance system would be needed to recycle the iron ore dust recovered in the ESPs

. The existing ore recycling system moves the recovered ore in water slurry pipelines

. So, a mixer would be needed to prepare the
ore/water s lurry and a pipeline constructed from the new ESP to the existing ore recycling system.

### From: Barr Engineering Company

Subject: United Taconite SO2 Control Cost Analysis Date: September 2 8 , 2012 Page: 16 Project: Multiple



## 4. 13 Install new process exhaust gas blowers After the removal of the existing wet scrubbers, the pressure drop from the induration furnace through the dry ESP would be significantly lower than the current pressure drop across the venturi scrubber system

.
Separate blowers are required for the process exhaust gas and the dry FGD exhaust

. A single speed blower is needed to maintain the current induration furnace operating pressures and air balances

. Maintaining the proper furnace operating conditions is critical to producing taconite pellets which meet product specifications

. Both emission control equipment suppliers concurred that installation of separate process exhaust gas and dry FGD exhaust blowers was appropriate in this application.

The new process waste gas blowers would be designed to maintain the existing induration furnace operating conditions and a reduced blower exhaust pressure to account for the low pressure drop across
the ESPs

. The new blowers would be located outside the induration building and downstream of the new dry ESPs

. New blowers are required because:

 A significant change in pressure requirements.

 A change in location which requires winterization of the blower (insulation, heat tracing and possibly different lubrication systems).

 The new blowers must be installed before the maintenance outage for installation of tie

- ins for the dry FGD system

. This is required to minimize production losses which wo uld be associated with the downtime needed to modify and relocate the existing blowers.

4. 14 Install i nduced draft blower s equipped with variable speed motors at the outlet of each of parallel dry FGD trains. As previously noted, new ESPs would be used to collect iron ore dust so it can be recycled and to prevent
the new process exhaust gas blowers from damage by the abrasive iron ore dust particles

. The new process waste gas blowers would be designed to maintain the existing induration furnace operating conditions and with a reduced the blower exhaust pressure to account for the low pressure drop across the ESPs versus the high pressure drop of the venturi scrubber systems the existing blowers must overcome.

The existing induration furnace exha ust blowers would be used to maintain air flows and the operating pressure of the induration furnace

. The existing blowers do not have sufficient horsepower to pressure the induration furnace exhaust through a dry FGD system

. Therefore new blowers would ne ed to be installed

### From: Barr Engineering Company

Subject: United Taconite SO2 Control Cost Analysis Date: September 2 8 , 2012 Page: 17 Project: Multiple



## downstream of each of the t wo dry FGD emission control trains

. The blowers would be equipped with variable speed drives so they can respond to varying operating conditions in the dry FGD systems

. These
blowers are outside the scope of th e emission control equipment vendor’s proposals and must be accounted for as ancillary equipment.

Installation of two induced draft blowers would allow the dry FGD trains to be operated independently

. This would allow the plant to operate on one dry FG D tr ain as necessary during low flow periods

. This
would also allow one dry FGD train to remain in service should one of the variable speed blower s malfunction.

4. 15 A new common exhaust stack and ductwork from the induced draft blower s to the stack
Individual stacks are proposed as the exhaust point for each of the three parallel dry FGD trains

. New
duct work would be required to route the dry FGD exhaust streams from the outlet of the induced draft
blower s to the new stack s . The dry FGD site on the North side of the induration furnace is too far from the exiting Line 1 and 2 stack s to cost effectively run ductwork back to the existing stack s

. Use of independent stacks allows operational flexibility to run each dry FGD system independently, so
individ ual Lines can be shut down and Line 2 can be run on one process exhaust blower when needed.
The exhaust gas ductwork and new stack s are outside the scope of the emission control equipment supplier ’s proposals and must be accounted for as ancillary equipmen t.

4. 16 A conveyor to transport spent lime collected in the baghouses to a storage silo, and truck loading facilities at the storage silo to transport spent lime to a solid waste disposal facility. The control equipment vendor 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 wou ld be needed to manage the spent lime and to ship it off site to a solid waste disposal facility for proper disposal.

### From: Barr Engineering Company

Subject: United Taconite SO2 Control Cost Analysis Date: September 2 8 , 2012 Page: 18 Project: Multiple



# 5. Summary of the Prefeasibility Study Results The “Dry Flue Gas Desulfurization Study” report in Appendix C contains estimates for the tota l 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 United Taconite Lines 1 and 2 :

 Tot al Installed Cost

- $ 149
, 35 0,000

 Annual Direct Operation and Maintenance Cost

- .$ 25,00 0,000 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 emission controls

 Costs for site specific modifications and ancillary equipment needed to insta ll an SDA system at
United Taconite . Site specific costs for United Taconite Lines 1 and 2 were $102,200,000 or 68%
of the total installed cost.

### From: Barr Engineering Company

Subject: United Taconite SO2 Control Cost Analysis Date: September 2 8 , 2012 Page: 19 Project: Multiple



# 6. Description of SO 2 

# Control Cost Spreadsheet Tables and Control Cost Calculation Methods

The SO 2 

## control cost a nd cost effectiveness calculations are located in Appendix A of this report

. The control cost calculations are presented in fourteen tables

. The tables contain the following information.

Table 4 . Summary of Appendix A Tables



## Table # Content
1 Summary of SO 2 

## Emission Control Cost Analysis
2 Utility, Chemical and Supply Costs
3 CFBA Line 1 EPA Control Cost Manual Method and Site Specific Costs
4 CFBA Line 1 EPA Control Cost Manual Method and Site Specific Costs with Production Losses
5 Line 1 2012 Dry FGD Study Costs for CFBA Scrubber Including Site Specific Costs
6 Line 1 2012 Dry FGD Study Costs for CFBA Scrubber Including Site Specific Costs with Production Losses
7 SDA Line 1 EPA Control Cost Manual Metho d and Site Specific Costs
8 SDA Line 1 EPA Control Cost Manual Method and Site Specific Costs with Production Losses
9 Line 1 2012 Dry FGD Study Costs for SDA Scrubber Including Site Specific Costs
10 Line 1 2012 Dry FGD Study Costs for SDA Scrubber Including Site Specific Costs with Production Losses
11 UTAC Dry ESP/CFBA/Baghouse Feasibility Study
12 UTAC Dry ESP/SDA/Baghouse Feasibility Study
13 UTAC ESP/SDA/Baghouse O&M Cost Estimates
14 Analysis of savings from wet scrubber shutdown.
15 CFBA Line 2 EPA Control Cost Manual Method and Site Specific Costs

### From: Barr Engineering Company

Subject: United Taconite SO2 Control Cost Analysis Date: September 2 8 , 2012 Page: 20 Project: Multiple



## 16 CFBA Line 2 EPA Control Cost Manual Method and Site Specific Costs with Production Losses
17 Line 2 2012 Dry FGD Study Costs for CFB A Scrubber Including Site Specific Costs
18 Line 2 2012 Dry FGD Study Costs for CFBA Scrubber Including Site Specific Costs with Production Losses
19 SDA Line 2 EPA Control Cost Manual Method and Site Specific Costs
20 SDA Line 2 EPA Control Cost Manual Method and Site Specific Costs with Production Losses
21 Line 2 2012 Dry FGD Study Costs for SDA Scrubber Including Site Specific Costs
22 Line 2 2012 Dry FGD Study Costs for SDA Scrubber Including Site Specific Costs with Production Losses

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 equipment costs were provided by Ducon
and the CFBA supplier

. The costs of site specific modifications an d ancillary equipment needed to operate the d ry FGD system are based on the 2012 Dry Flue Gas Desulfuri zation Study prepared by Zachry Engineering Company and Barr Engineering Company; a copy of this report is located in Appendix C of this report.

The control cost calculations presented in Appendix A Tables 3 , 5, 11 and 13 are based on the cost factors
for installation of a baghouse as found in Table 1.9 page 1

- 45 and operating 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 in clude a section which specifically addresses the
costs of the 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 a lso
include the periodic cost of filter bag replacement (Section 1.5.1.4) , which would be a significant operating expense

. The total capital investment factor for baghouses as presented in T able 1.9 is 2.19 times the purchased equipment cost

. One cost of a dry FGD system which is not accounted for in the

### From: Barr Engineering Company

Subject: United Taconite SO2 Control Cost Analysis Date: September 2 8 , 2012 Page: 21 Project: Multiple



## 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 li me 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 United Taconite Lines 1 and 2 CEMS data were used as the
SO 2 

## baseline emission rate 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 w hich 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 rep lacement 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 Com pany

. The estimated installed cost for installation of a spray dryer absorber system is presented in Table s 6 and 14 of the report and expected operating costs are also presented in Table s 6 and 14

. This information was used to:

A. Independently calculate the SO2 cost effectiveness of dry FGD
B. Identify the costs of site specific equipment modifications and ancillary equipment installation

The control cost calculations presented in Appendix A
, Tables 4, 6, 12, and 14 use the direct and indirect
installed costs a nd 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 annual operating costs.

The EPA cost control manual includes provisions for including site specific costs in cost of control analyses. In Tables 3, 5, 11, a nd 13, where EPA’s cost manual methods were used, site

- specific costs from Zachry were used as site

- specific cost/building modifications. The cost of materials was used,

### From: Barr Engineering Company

Subject: United Taconite SO2 Control Cost Analysis Date: September 2 8 , 2012 Page: 22 Project: Multiple



## without any labor costs. It was assumed that installation costs were captured in EPA ’s control cost
manual factors.

It should also be noted that the 2012 study prepared by Zachry and Barr determined costs as a lump sum for United Taconite Line 1 and Line 2 indurating furnaces. To determine cost of control for each furnace separately, it is necessary to break out the lump sum into costs for Line 1 and Line 2. Since Line 2 has twice the flow rate of Line 1, two

- thirds of the costs were attributed to Line 2, and one

- third of the cost
was attributed to Line 1.

# Appendix A

- SO 2 

# Control Cost Calculations

### Cliffs Natural Resources: United Taconite Appendix A - SO2 Emission Control Cost Analysis Table 1 - Summary Information

Study Year: 2012

Method Capital Costs ($) Annual Costs ($/yr) Pollution Reduction

(ton/yr) Control Cost ($/ton)
EPA Method 55,850,000 $ 10,200,000 $ 650 15,670 $ EPA Method with Production Losses 59,700,000 $ 10,700,000 $ 650 16,460 $ Independent Review 46,250,000 $ 7,900,000 $ 650 12,180 $ Independent Review with Production Losses 50,100,000 $ 8,450,000 $ 650 12,970 $

EPA Method 60,050,000 $ 10,650,000 $ 660 16,230 $ EPA Method with Production Losses 63,900,000 $ 11,150,000 $ 660 17,020 $ Independent Review 49,900,000 $ 8,400,000 $ 660 12,820 $ Independent Review with Production Losses 53,750,000 $ 8,950,000 $ 660 13,610 $

EPA Method 111,350,000 $ 20,050,000 $ 760 25,050 $ EPA Method with Production Losses 119,050,000 $ 21,100,000 $ 760 26,420 $ Independent Review 92,100,000 $ 18,350,000 $ 760 24,280 $ Independent Review with Production Losses 99,800,000 $ 19,400,000 $ 760 25,650 $

EPA Method 119,650,000 $ 20,050,000 $ 820 24,510 $ EPA Method with Production Losses 127,350,000 $ 21,100,000 $ 820 25,780 $ Independent Review 99,450,000 $ 19,350,000 $ 820 23,640 $ Independent Review with Production Losses 107,150,000 $ 20,400,000 $ 820 24,910 $

[a] Calculates the control cost based on the cost of the installed scrubber, and the cost of the auxiliary equipment associated with the scrubber. Assumes 6M LT/year production rate.

Calculation Inputs:

acfm dscfm @ 68o F lb/hr ppm EU 040 Line 1 Induration 468,050 355,472 324 91 7992
EU 042 Line 2 Induration 902,750 693,918 599 86 7992

Maximum SO2 Emission Rate Operating Hours Circulating Fluidized Bed

Spray Dry Absorber EU 040 Line 1 Induration

EU 042 Line 2 Induration Circulating Fluidized Bed

Spray Dry Absorber

Standard Flow RatesCliffs Natural Resources: United Taconite Appendix A - SO2 Emission Control Cost Analysis Summary of Utility, Chemical and Supply Costs Table 2 - Summary of Utility, Chemical and Supply Costs

Operating Unit: Line 1 Pellet Induration Study Year 2012 Emission Unit Number EU 040 Stack/Vent Number SV 046 Operating Unit: Line 2 Pellet Induration Emission Unit Number EU 042 Stack/Vent Number SV 048 & 049

Item Unit Cost Units Cost Year Data Source Notes

Line 1 Baseline Emission Rate Controlled SO2 Emission Rate at 90% SO2

Control Pollutant tpy tpy tpy Sulfur Dioxide (SO 2 ) 728.9 [2] 78.5 [4] 72.88591478 [5]

Line 2 Baseline Emission Rate Controlled SO2 Emission Rate at 5 ppm SO2 Pollutant tpy tpy Sulfur Dioxide (SO 2 ) 909.8 [3] 153.2 [4] 90.97611098 [5] Controlled SO2 Emission Rate at 5 ppm SO2

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### Cliffs Natural Resources: United Taconite Appendix A - SO2 Emission Control Cost Analysis Table 3 - CFBA - Line 1 - EPA Control Cost Manual Method + Site Specific Costs, Anticipated Annual Emissions
Operating Unit: Line 1 Pellet Induration

Emission Unit Number EU 040 Stack/Vent Number SV 046
Expected Utilization Rate 100% Temperature Deg F Expected Annual Hours of Operation 7,992 Hours Moisture Content Annual Interest Rate 7.0% Actual Flow Rate 578,225 acfm Expected Equipment Life 20 yrs Standardized Flow Rate 412,572 scfm @ 68o F

Dry Std Flow Rate 355,472 dscfm @ 68o F

CONTROL EQUIPMENT COSTS Capital Costs Direct Capital Costs (1) Purchased Equipment (A) 10,757,067 Purchased Equipment Total (B) 22% of control device cost (A) 13,102,107

Installation - Standard Costs 74% of purchased equip cost (B) 9,695,559 Installation - Site Specific Costs 26,735,327 Installation Total 9,695,559 Total Direct Capital Cost, DC 22,797,667 Total Indirect Capital Costs, IC 52% of purchased equip cost (B) 6,813,096 Total Capital Investment (TCI) = DC + IC 55,870,758
Operating Costs Total Annual Direct Operating Costs Labor, supervision, materials, replacement parts, utilities, etc. 2,930,142 Total Annual Indirect Operating Costs Sum indirect oper costs + capital recovery cost 7,899,778 Savings from Shutdown of Existing Emission Controls 4 -639,933 Total Annual Cost (Annualized Capital Cost + Operating Cost) 10,189,987

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 Nitrous Oxides (NOx) 414.2 #REF! 0% 0.0 #REF! NA Sulfur Dioxide (SO 2 ): 182.4 728.9 89.2% 5 ppm 78.5 650 15,668

Notes & Assumptions 1 Purchased equipment costs from independent review by Zachry Engineering. 2 Capital equipment cost includes the items listed below, which are calculated using EPA cost control manual guidance. 3 Exit concentration at 95% control efficiency is not technically feasible. The exit concentration at 95% control efficiency is shown below. 2.21 ppm 4 6/18/2012 email from Candice Maxwell, Cliffs Natural Resources in response to EPA Region 5 CAA Section 114 information request for scrubber operating costs. Email reported total annual operating costs for both scurbbers. Listed value excludes capital recover costs and is pro-rated by scrubber exhaust flow rate. Value includes continuing operations cost, per a 9/26/12 e-mail from Jen Krause, Cliffs Natural Resources. 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 3.21 of Chapter 3 of EPA's September 1999 Particulate Matter control design guidelines (for ESPs) 9 Labor and maintenance materials are 5% of capital costs per CueCost. "Average process with normal operating conditions should have maintenance labor and material costs" of 5 to 9% of fixed capital investment. (page 134, Plant Design and Economics for Chemical Engineers, Max Peters and Klaus Timmerhaus; McGraw-Hill Book Company) 10 Determined from Table 1.11 of Chapter 1 of EPA's December 1998 Particulate Matter control design guidelines (for FFs and baghouses) 11 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.

Modified 9/21/2012

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### Cliffs Natural Resources: United Taconite Appendix A - SO2 Emission Control Cost Analysis Table 3 - CFBA - Line 1 - EPA Control Cost Manual Method + Site Specific Costs, Anticipated Annual Emissions

CAPITAL COSTS Direct Capital Costs Purchased Equipment (A) 1,2 Purchased Equipment Costs (A) 10,757,067 Instrumentation 10% of control device cost (A) 1,075,707 MN Sales Taxes 7% of control device cost (A) 731,481 Freight 5% of control device cost (A) 537,853 Purchased Equipment Total (B) 22% 13,102,107

Installation Foundations & supports 4% of purchased equip cost (B) 524,084 Handling & erection 50% of purchased equip cost (B) 6,551,054 Electrical 8% of purchased equip cost (B) 1,048,169 Piping 1% of purchased equip cost (B) 131,021 Insulation 7% of purchased equip cost (B) 917,148 Painting 4% of purchased equip cost (B) 524,084 Installation Subtotal Standard Expenses 74% 9,695,559

Total Direct Capital Cost, DC 22,797,667

Indirect Capital Costs Engineering, supervision 10% of purchased equip cost (B) 1,310,211 Construction & field expenses 20% of purchased equip cost (B) 2,620,421 Contractor fees 10% of purchased equip cost (B) 1,310,211 Start-up 1% of purchased equip cost (B) 131,021 Performance test 1% of purchased equip cost (B) 131,021 Model Studies NA of purchased equip cost (B) NA Contingencies 11 10% of purchased equip cost (B) 1,310,211 Total Indirect Capital Costs, IC 52% of purchased equip cost (B) 6,813,096 Total Capital Investment (TCI) = DC + IC 29,610,762 TCI Adj for Baghouse Filter Replacement 29,135,431 Retrofit multiplier 5 0% of TCI 0 Site Specific Installed Equipment Costs 6 Civil/Structural 783,333 Mechanical Equipment 18,687,950 Electrical and Control 2,220,417 Freight 673,357 Total Indirect Costs + Contingencies 4,370,270

Total Site Specific Costs 26,735,327
Total Capital Investment (TCI) Retrofit Installed 55,870,758

OPERATING COSTS Direct Annual Operating Costs, DC
Operating Labor Operator 180,605 Supervisor 27,091 Maintenance Maintenance Labor 32,468 Maintenance Materials 411,743 Utilities, Supplies, Replacements & Waste Managem Compressed Air $ 209,698 Electricity 1,641,486 Filter Bag Replacement 181,126 Solid Waste Disposal 87,025 Lime 158,901
Total Annual Direct Operating Costs 2,930,142

Savings from Shutdown of Existing Emission Controls 4 -639,933
Indirect Operating Costs Overhead 391,143 Administration (2% total capital costs) 1,117,415 Property tax (1% total capital costs) 558,708 Insurance (1% total capital costs) 558,708 Capital Recovery 0.0944 for a 20- year equipment life and a 7% interest rate 5,273,804 Total Annual Indirect Operating Costs Sum indirect oper costs + capital recovery cost 7,899,778
Total Annual Cost (Annualized Capital Cost + Operating Cost) 10,189,987 See Summary page for notes and assumptions

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### Cliffs Natural Resources: United Taconite Appendix A - SO2 Emission Control Cost Analysis Table 3 - CFBA - Line 1 - EPA Control Cost Manual Method + Site Specific Costs, Anticipated Annual Emissions

Capital Recovery Factors Primary Installation Interest Rate 7.00% Equipment Life 20 years CRF 0.0944
Replacement Catalyst:

Total Installed Cost 0 Zero out if no replacement parts needed Annualized Cost 0
Replacement Parts & Equipment: Filter Bags and Cages

Total Installed Cost 475,332 Zero out if no replacement parts needed Annualized Cost 181,126

Electrical Use

Reagent Use & Other Operating Costs

Operating Cost Calculations Annual hours of operation: 7,992 Utilization Rate: 100%

Unit Unit of Use Unit of Annual Annual Comments Item Cost $ Measure Rate Measure Use* Cost Operating Labor Op Labor BH + ESP 8,10 158,591 Lime Handling Labor 7 22,013 Supervisor 8 27,091 Maintenance Maint Labor Baghouse 10 32,468 Maint Mtls Baghouse 10 32,468 ESP Maint Mtls and Lbr 9 379275 Utilities, Supplies, Replaceme Electricity 1,641,486 Water 0 Solid Waste Disposal 87,025 Lime 158,901 Filter Bag Replacement 181,126 Compressed Air $ 209,698

*annual use rate is in same units of measurement as the unit cost factor

See Summary page for notes and assumptions

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### Cliffs Natural Resources: United Taconite Appendix A - SO2 Emission Control Cost Analysis Table 4 - CFBA - Line 1 - EPA Control Cost Manual Method + Site Specific Costs, Anticipated Annual Emissions

(with Production Losses) Operating Unit: Line 1 Pellet Induration

Emission Unit Number EU 040 Stack/Vent Number SV 046
Expected Utilization Rate 100% Temperature Deg F Expected Annual Hours of Operation 7,992 Hours Moisture Content Annual Interest Rate 7.0% Actual Flow Rate 578,225 acfm Expected Equipment Life 20 yrs Standardized Flow Rate 412,572 scfm @ 68o F

Dry Std Flow Rate 355,472 dscfm @ 68o F

CONTROL EQUIPMENT COSTS Capital Costs Direct Capital Costs (1) Purchased Equipment (A) 10,757,067 Purchased Equipment Total (B) 22% of control device cost (A) 13,102,107

Installation - Standard Costs 74% of purchased equip cost (B) 9,695,559 Installation - Site Specific Costs 30,585,327 Installation Total 9,695,559 Total Direct Capital Cost, DC 22,797,667 Total Indirect Capital Costs, IC 52% of purchased equip cost (B) 6,813,096 Total Capital Investment (TCI) = DC + IC 59,720,758
Operating Costs Total Annual Direct Operating Costs Labor, supervision, materials, replacement parts, utilities, etc. 2,930,142 Total Annual Indirect Operating Costs Sum indirect oper costs + capital recovery cost 8,417,191 Savings from Shutdown of Existing Emission Controls 4 -639,933 Total Annual Cost (Annualized Capital Cost + Operating Cost) 10,707,400

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 Nitrous Oxides (NOx) 414.2 #REF! 0% 0.0 #REF! NA Sulfur Dioxide (SO 2 ): 182.4 728.9 89.2% 5 ppm 78.5 650 16,463

Notes & Assumptions 1 Purchased equipment costs from independent review by Zachry Engineering. 2 Capital equipment cost includes the items listed below, which are calculated using EPA cost control manual guidance. 3 Exit concentration at 95% control efficiency is not technically feasible. The exit concentration at 95% control efficiency is shown below. 2.21 ppm 4 6/18/2012 email from Candice Maxwell, Cliffs Natural Resources in response to EPA Region 5 CAA Section 114 information request for scrubber operating costs. Email reported total annual operating costs for both scurbbers. Listed value excludes capital recover costs and is pro-rated by scrubber exhaust flow rate. Value includes continuing operations cost, per a 9/26/12 e-mail from Jen Krause, Cliffs Natural Resources. 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 3.21 of Chapter 3 of EPA's September 1999 Particulate Matter control design guidelines (for ESPs) 9 Labor and maintenance materials are 5% of capital costs per CueCost. "Average process with normal operating conditions should have maintenance labor and material costs" of 5 to 9% of fixed capital investment. (page 134, Plant Design and Economics for Chemical Engineers, Max Peters and Klaus Timmerhaus; McGraw-Hill Book Company) 10 Determined from Table 1.11 of Chapter 1 of EPA's December 1998 Particulate Matter control design guidelines (for FFs and baghouses) 11 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. 12 Cost per ton based on Cliffs Natural Resources Inc. Reports Second-Quarter 2012 Results.

Modified 9/21/2012

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### Cliffs Natural Resources: United Taconite Appendix A - SO2 Emission Control Cost Analysis Table 4 - CFBA - Line 1 - EPA Control Cost Manual Method + Site Specific Costs, Anticipated Annual Emissions

CAPITAL COSTS Direct Capital Costs Purchased Equipment (A) 1,2 Purchased Equipment Costs (A) 10,757,067 Instrumentation 10% of control device cost (A) 1,075,707 MN Sales Taxes 7% of control device cost (A) 731,481 Freight 5% of control device cost (A) 537,853 Purchased Equipment Total (B) 22% 13,102,107

Installation Foundations & supports 4% of purchased equip cost (B) 524,084 Handling & erection 50% of purchased equip cost (B) 6,551,054 Electrical 8% of purchased equip cost (B) 1,048,169 Piping 1% of purchased equip cost (B) 131,021 Insulation 7% of purchased equip cost (B) 917,148 Painting 4% of purchased equip cost (B) 524,084 Installation Subtotal Standard Expenses 74% 9,695,559

Total Direct Capital Cost, DC 22,797,667

Indirect Capital Costs Engineering, supervision 10% of purchased equip cost (B) 1,310,211 Construction & field expenses 20% of purchased equip cost (B) 2,620,421 Contractor fees 10% of purchased equip cost (B) 1,310,211 Start-up 1% of purchased equip cost (B) 131,021 Performance test 1% of purchased equip cost (B) 131,021 Model Studies NA of purchased equip cost (B) NA Contingencies 11 10% of purchased equip cost (B) 1,310,211 Total Indirect Capital Costs, IC 52% of purchased equip cost (B) 6,813,096 Total Capital Investment (TCI) = DC + IC 29,610,762 TCI Adj for Baghouse Filter Replacement 29,135,431 Retrofit multiplier 5 0% of TCI 0 Site Specific Installed Equipment Costs 6 Civil/Structural 783,333 Mechanical Equipment 18,687,950 Electrical and Control 2,220,417 Freight 673,357 Total Indirect Costs + Contingencies 4,370,270 Extended Shutdown for Tie-ins 3,850,000

Total Site Specific Costs
Total Capital Investment (TCI) Retrofit Installed 59,720,758

OPERATING COSTS Direct Annual Operating Costs, DC
Operating Labor Operator 180,605 Supervisor 27,091 Maintenance Maintenance Labor 32,468 Maintenance Materials 411,743 Utilities, Supplies, Replacements & Waste Managem Compressed Air $ 209,698 Electricity 1,641,486 Filter Bag Replacement 181,126 Solid Waste Disposal 87,025 Lime 158,901
Total Annual Direct Operating Costs 2,930,142

Savings from Shutdown of Existing Emission Controls 4 -639,933
Indirect Operating Costs Overhead 391,143 Administration (2% total capital costs) 1,194,415 Property tax (1% total capital costs) 597,208 Insurance (1% total capital costs) 597,208 Capital Recovery 0.0944 for a 20- year equipment life and a 7% interest rate 5,637,217 Total Annual Indirect Operating Costs Sum indirect oper costs + capital recovery cost 8,417,191
Total Annual Cost (Annualized Capital Cost + Operating Cost) 10,707,400 See Summary page for notes and assumptions

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### Cliffs Natural Resources: United Taconite Appendix A - SO2 Emission Control Cost Analysis Table 4 - CFBA - Line 1 - EPA Control Cost Manual Method + Site Specific Costs, Anticipated Annual Emissions

Capital Recovery Factors Primary Installation Interest Rate 7.00% Equipment Life 20 years CRF 0.0944
Replacement Catalyst:

Total Installed Cost 0 Zero out if no replacement parts needed Annualized Cost 0
Replacement Parts & Equipment: Filter Bags and Cages

Total Installed Cost 475,332 Zero out if no replacement parts needed Annualized Cost 181,126

Electrical Use

Reagent Use & Other Operating Costs

Operating Cost Calculations Annual hours of operation: 7,992 Utilization Rate: 100%

Unit Unit of Use Unit of Annual Annual Comments Item Cost $ Measure Rate Measure Use* Cost Operating Labor Op Labor BH + ESP 8,10 158,591 Lime Handling Labor 7 22,013 Supervisor 8 27,091 Maintenance Maint Labor Baghouse 10 32,468 Maint Mtls Baghouse 10 32,468 ESP Maint Mtls and Lbr 9 379275 Utilities, Supplies, Replacement Electricity 1,641,486 Water 0 Solid Waste Disposal 87,025 Lime 158,901 Filter Bag Replacement 181,126 Compressed Air $ 209,698

*annual use rate is in same units of measurement as the unit cost factor

See Summary page for notes and assumptions

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### Cliffs Natural Resources: United Taconite Appendix A - SO2 Emission Control Cost Analysis Table 5 - Line 1 - 2012 Dry FGD Study Costs for CFBA Scrubber Including Site Specific Costs, Anticipated Annual Emissions
Operating Unit: Line 1 Pellet Induration

Emission Unit Number EU 040 Stack/Vent Number SV 046
Expected Utilization Rate 100% Temperature Deg F Expected Annual Hours of Operation 7,992 Hours Moisture Content Annual Interest Rate 7.0% Actual Flow Rate 578,225 acfm Expected Equipment Life 20 yrs Standardized Flow Rate 412,572 scfm @ 68o F

Dry Std Flow Rate 355,472 dscfm @ 68o F

CONTROL EQUIPMENT COSTS Capital Costs Direct Capital Costs (1) Purchased Equipment (A) 10,757,067 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 NA Installation Total 0 Total Direct Capital Cost, DC 0 Total Indirect Capital Costs, IC 0% of purchased equip cost (B) 3,795,000 Total Capital Investment (TCI) = DC + IC 46,257,943
Operating Costs Total Annual Direct Operating Costs Labor, supervision, materials, replacement parts, utilities, etc. 2,223,714 Total Annual Indirect Operating Costs Sum indirect oper costs + capital recovery cost 6,336,331 Savings from Shutdown of Existing Emission Controls 4 -639,933 Total Annual Cost (Annualized Capital Cost + Operating Cost) $7,920,111

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 Nitrous Oxides (NOx) 414.2 #REF! 0% 0.0 #REF! NA Sulfur Dioxide (SO 2 ): 182.4 728.9 89.2% 5 ppm 78.5 650 12,178

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. 2.21 ppm 4 6/18/2012 email from Candice Maxwell, Cliffs Natural Resources in response to EPA Region 5 CAA Section 114 information request for scrubber operating costs. Email reported total annual operating costs for both scrubbers. Listed value excludes capital recover costs and is pro-rated by scrubber exhaust flow rate. Value includes continuing operations cost, per a 9/26/12 e-mail from Jen Krause, Cliffs Natural Resources. 5 CUECost Workbook Version 1.0, USEPA Document Page 2 allows up to a 60% retrofit factor for installations in existing facilities

New 9/21/2012

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### Cliffs Natural Resources: United Taconite Appendix A - SO2 Emission Control Cost Analysis Table 5 - Line 1 - 2012 Dry FGD Study Costs for CFBA Scrubber Including Site Specific Costs, Anticipated Annual Emissions

CAPITAL COSTS Direct Capital Costs Purchased Equipment (A) 1,2 Purchased Equipment Costs (A) 10,757,067 Instrumentation MN 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 42,462,943 Indirect Capital Costs Engineering, supervision Construction & field expenses 0 Contractor fees 0 Start-up 0 Performance test 0 Model Studies 0 Contingencies 0 Total Indirect Capital Costs, IC 3,795,000 Total Capital Investment (TCI) = DC + IC 46,257,943 TCI Adj for Baghouse Filter Replacement 46,257,943 Retrofit multiplier 5 0% of TCI 0 Site Specific Installed Equipment Costs

Total Site Specific Costs NA
Total Capital Investment (TCI) Retrofit Installed 46,257,943

OPERATING COSTS Direct Annual Operating Costs, DC
Operating Labor Operator 53,946 Supervisor 8,092 Maintenance Maintenance Labor 53,946 Maintenance Materials 83,333
Utilities, Supplies, Replacements & Waste Managem Compressed Air $

- Electricity 1,378,620 Filter Bag Replacement 161,568 Solid Waste Disposal 143,856 Lime 262,670 Softener Salt 77,682 Total Annual Direct Operating Costs 2,223,714

Savings from Shutdown of Existing Emission Controls 4 -639,933
Indirect Operating Costs Overhead 119,590 Administration (2% total capital costs) 925,159 Property tax (1% total capital costs) 462,579 Insurance (1% total capital costs) 462,579 Capital Recovery 0.0944 for a 20- year equipment life and a 7% interest rate 4,366,423 Total Annual Indirect Operating Costs Sum indirect oper costs + capital recovery cost 6,336,331
Total Annual Cost (Annualized Capital Cost + Operating Cost) 7,920,111 See Summary page for notes and assumptions

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### Cliffs Natural Resources: United Taconite Appendix A - SO2 Emission Control Cost Analysis Table 5 - Line 1 - 2012 Dry FGD Study Costs for CFBA Scrubber Including Site Specific Costs, Anticipated Annual Emissions

Capital Recovery Factors Primary Installation Interest Rate 7.00% Equipment Life 20 years CRF 0.0944
Replacement Catalyst:

Total Installed Cost 0 Zero out if no replacement parts needed Annualized Cost 0

Replacement Parts & Equipment: Filter Bags and Cages

Total Installed Cost 0 Zero out if no replacement parts needed Annualized Cost 0

Electrical Use

Reagent Use & Other Operating Costs

Operating Cost Calculations Annual hours of operation: 7,992

Utilization Rate: 100%

Unit Unit of Use Unit of Annual Annual Comments Item Cost $ Measure Rate Measure Use* Cost Operating Labor Op Labor 53,946 Supervisor 8,092 Maintenance Maint Labor 53,946 Maint Mtls 83,333 Utilities, Supplies, Replacements & Waste Management Electricity 1,378,620 Water 0 Solid Waste Disposal 143,856 Lime 262,670 Filter Bag Replacement 161,568 Compressed Air

- Water and Softener Salt 77682.24

*annual use rate is in same units of measurement as the unit cost factor

See Summary page for notes and assumptions

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### Cliffs Natural Resources: United Taconite Appendix A - SO2 Emission Control Cost Analysis Table 6 - Line 1 - 2012 Dry FGD Study for CFBA Scrubber Including Site Specific Costs, Anticipated Annual Emissions

(with Production Losses) Operating Unit: Line 1 Pellet Induration

Emission Unit Number EU 040 Stack/Vent Number SV 046
Expected Utilization Rate 100% Temperature Deg F Expected Annual Hours of Operation 7,992 Hours Moisture Content Annual Interest Rate 7.0% Actual Flow Rate 578,225 acfm Expected Equipment Life 20 yrs Standardized Flow Rate 412,572 scfm @ 68o F

Dry Std Flow Rate 355,472 dscfm @ 68o F

CONTROL EQUIPMENT COSTS Capital Costs Direct Capital Costs (1) Purchased Equipment (A) 10,757,067 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 3,850,000 Installation Total 0 Total Direct Capital Cost, DC 0 Total Indirect Capital Costs, IC 0% of purchased equip cost (B) 3,795,000 Total Capital Investment (TCI) = DC + IC 50,107,943
Operating Costs Total Annual Direct Operating Costs Labor, supervision, materials, replacement parts, utilities, etc. 2,223,714 Total Annual Indirect Operating Costs Sum indirect oper costs + capital recovery cost 6,853,743 Savings from Shutdown of Existing Emission Controls 4 -639,933 Total Annual Cost (Annualized Capital Cost + Operating Cost) $8,437,524

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 Nitrous Oxides (NOx) 414.2 #REF! 0% 0.0 #REF! NA Sulfur Dioxide (SO 2 ): 182.4 728.9 89.2% 5 ppm 78.5 650 12,973

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. 2.21 ppm 4 6/18/2012 email from Candice Maxwell, Cliffs Natural Resources in response to EPA Region 5 CAA Section 114 information request for scrubber operating costs. Email reported total annual operating costs for both scrubbers. Listed value excludes capital recover costs and is pro-rated by scrubber exhaust flow rate. Value includes continuing operations cost, per a 9/26/12 e-mail from Jen Krause, Cliffs Natural Resources. 5 CUECost Workbook Version 1.0, USEPA Document Page 2 allows up to a 60% retrofit factor for installations in existing facilities 6 Cost per ton based on Cliffs Natural Resources Inc. Reports Second-Quarter 2012 Results.

New 9/21/2012

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### Cliffs Natural Resources: United Taconite Appendix A - SO2 Emission Control Cost Analysis Table 6 - Line 1 - 2012 Dry FGD Study for CFBA Scrubber Including Site Specific Costs, Anticipated Annual Emissions

CAPITAL COSTS Direct Capital Costs Purchased Equipment (A) 1,2 Purchased Equipment Costs (A) 10,757,067 Instrumentation MN 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 42,462,943 Indirect Capital Costs Engineering, supervision Construction & field expenses 0 Contractor fees 0 Start-up 0 Performance test 0 Model Studies 0 Contingencies 0 Total Indirect Capital Costs, IC 3,795,000 Total Capital Investment (TCI) = DC + IC 46,257,943 TCI Adj for Baghouse Filter Replacement 46,257,943 Retrofit multiplier 5 0% of TCI 0 Site Specific Installed Equipment Costs Extended Shutdown for Tie-ins

Total Site Specific Costs 3,850,000
Total Capital Investment (TCI) Retrofit Installed 50,107,943

OPERATING COSTS Direct Annual Operating Costs, DC
Operating Labor Operator 53,946 Supervisor 8,092 Maintenance Maintenance Labor 53,946 Maintenance Materials 83,333
Utilities, Supplies, Replacements & Waste Managem Compressed Air $

- Electricity 1,378,620 Filter Bag Replacement 161,568 Solid Waste D sposal 143,856 Lime 262,670 Softener Salt 77,682 Total Annual Direct Operating Costs 2,223,714

Savings from Shutdown of Existing Emission Controls 4 -639,933
Indirect Operating Costs Overhead 119,590 Administration (2% total capital costs) 1,002,159 Property tax (1% total capital costs) 501,079 Insurance (1% total capital costs) 501,079 Capital Recovery 0.0944 for a 20- year equipment life and a 7% interest rate 4,729,835 Total Annual Indirect Operating Costs Sum indirect oper costs + capital recovery cost 6,853,743
Total Annual Cost (Annualized Capital Cost + Operating Cost) 8,437,524 See Summary page for notes and assumptions

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### Cliffs Natural Resources: United Taconite Appendix A - SO2 Emission Control Cost Analysis Table 6 - Line 1 - 2012 Dry FGD Study for CFBA Scrubber Including Site Specific Costs, Anticipated Annual Emissions

Capital Recovery Factors Primary Installation Interest Rate 7.00% Equipment Life 20 years CRF 0.0944
Replacement Catalyst:

Total Installed Cost 0 Zero out if no replacement parts needed Annualized Cost 0

Replacement Parts & Equipment: Filter Bags and Cages

Total Installed Cost 0 Zero out if no replacement parts needed Annualized Cost 0

Electrical Use

Reagent Use & Other Operating Costs

Operating Cost Calculations Annual hours of operation: 7,992

Utilization Rate: 100%

Unit Unit of Use Unit of Annual Annual Comments Item Cost $ Measure Rate Measure Use* Cost Operating Labor Op Labor 53,946 Supervisor 8,092 Maintenance Maint Labor 53,946 Maint Mtls 83,333 Utilities, Supplies, Replacements & Waste Management Electricity 1,378,620 Water 0 Solid Waste Disposal 143,856 Lime 262,670 Filter Bag Replacement 161,568 Compressed Air

- Water and Softener Salt 77682.24

*annual use rate is in same units of measurement as the unit cost factor

See Summary page for notes and assumptions

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### Cliffs Natural Resources: United Taconite Appendix A - SO2 Emission Control Cost Analysis Table 7 - SDA - Line 1 - EPA Control Cost Manual Method + Site Specific Costs, Anticipated Annual Emissions
Operating Unit: Line 1 Pellet Induration

Emission Unit Number EU 040 Stack/Vent Number SV 046
Expected Utilization Rate 100% Temperature Deg F Expected Annual Hours of Operation 7,992 Hours Moisture Content Annual Interest Rate 7.0% Actual Flow Rate 578,225 acfm Expected Equipment Life 20 yrs Standardized Flow Rate 412,572 scfm @ 68o F

Dry Std Flow Rate 355,472 dscfm @ 68o F

CONTROL EQUIPMENT COSTS Capital Costs Direct Capital Costs (1) Purchased Equipment (A) 12,666,667 Purchased Equipment Total (B) 22% of control device cost (A) 15,428,000

Installation - Standard Costs 74% of purchased equip cost (B) 11,416,720 Installation - Site Specific Costs 25,642,627 Installation Total 11,416,720 Total Direct Capital Cost, DC 26,844,720 Total Indirect Capital Costs, IC 52% of purchased equip cost (B) 8,022,560 Total Capital Investment (TCI) = DC + IC 60,034,575
Operating Costs Total Annual Direct Operating Costs Labor, supervision, materials, replacement parts, utilities, etc. 2,865,867 Total Annual Indirect Operating Costs Sum indirect oper costs + capital recovery cost 8,420,800 Savings from Shutdown of Existing Emission Controls 4 -639,933 Total Annual Cost (Annualized Capital Cost + Operating Cost) 10,646,734

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 Nitrous Oxides (NOx) 414.2 #REF! 0% 0.0 #REF! NA Sulfur Dioxide (SO 2 ): 182.4 728.9 90.0% NA ppm 72.9 656 16,230

Notes & Assumptions 1 Purchased equipment costs from independent review by Zachry Engineering. 2 Capital equipment cost includes the items listed below, which are calculated using EPA cost control manual guidance. 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 4.43 ppm 4 6/18/2012 email from Candice Maxwell, Cliffs Natural Resources in response to EPA Region 5 CAA Section 114 information request for scrubber operating costs. Email reported total annual operating costs for both scurbbers. Listed value excludes capital recover costs and is pro-rated by scrubber exhaust flow rate. Value includes continuing operations cost, per a 9/26/12 e-mail from Jen Krause, Cliffs Natural Resources. 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 3.21 of Chapter 3 of EPA's September 1999 Particulate Matter control design guidelines (for ESPs) 9 Labor and maintenance materials are 5% of capital costs per CueCost. "Average process with normal operating conditions should have maintenance labor and material costs" of 5 to 9% of fixed capital investment. (page 134, Plant Design and Economics for Chemical Engineers, Max Peters and Klaus Timmerhaus; McGraw-Hill Book Company) 10 Determined from Table 1.11 of Chapter 1 of EPA's December 1998 Particulate Matter control design guidelines (for FFs and baghouses) 11 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.

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### Cliffs Natural Resources: United Taconite Appendix A - SO2 Emission Control Cost Analysis Table 7 - SDA - Line 1 - EPA Control Cost Manual Method + Site Specific Costs, Anticipated Annual Emissions

CAPITAL COSTS Direct Capital Costs Purchased Equipment (A) 1,2 Purchased Equipment Costs (A) 12,666,667 Instrumentation 10% of control device cost (A) 1,266,667 MN Sales Taxes 7% of control device cost (A) 861,333 Freight 5% of control device cost (A) 633,333 Purchased Equipment Total (B) 22% 15,428,000

Installation Foundations & supports 4% of purchased equip cost (B) 617,120 Handling & erection 50% of purchased equip cost (B) 7,714,000 Electrical 8% of purchased equip cost (B) 1,234,240 Piping 1% of purchased equip cost (B) 154,280 Insulation 7% of purchased equip cost (B) 1,079,960 Painting 4% of purchased equip cost (B) 617,120 Installation Subtotal Standard Expenses 74% 11,416,720

Total Direct Capital Cost, DC 26,844,720

Indirect Capital Costs Engineering, supervision 10% of purchased equip cost (B) 1,542,800 Construction & field expenses 20% of purchased equip cost (B) 3,085,600 Contractor fees 10% of purchased equip cost (B) 1,542,800 Start-up 1% of purchased equip cost (B) 154,280 Performance test 1% of purchased equip cost (B) 154,280 Model Studies NA of purchased equip cost (B) NA Contingencies 11 10% of purchased equip cost (B) 1,542,800 Total Indirect Capital Costs, IC 52% of purchased equip cost (B) 8,022,560 Total Capital Investment (TCI) = DC + IC 34,867,280 TCI Adj for Baghouse Filter Replacement 34,391,948 Retrofit multiplier 5 0% of TCI 0 Site Specific Installed Equipment Costs 6 Civil/Structural 783,333 Mechanical Equipment 17,959,500 Electrical and Control 2,220,417 Freight 647,602 Total Indirect Costs + Contingencies 4,031,775 Extended Shutdown for Tie-ins 0

Total Site Specific Costs 25,642,627
Total Capital Investment (TCI) Retrofit Installed 60,034,575

OPERATING COSTS Direct Annual Operating Costs, DC
Operating Labor Operator 180,605 Supervisor 27,091 Maintenance Maintenance Labor 32,468 Maintenance Materials 347,468 Utilities, Supplies, Replacements & Waste Managem Compressed Air $ 209,698 Electricity 1,641,486 Filter Bag Replacement 181,126 Solid Waste Disposal 87,025 Lime 158,901
Total Annual Direct Operating Costs 2,865,867

Savings from Shutdown of Existing Emission Controls 4 -639,933
Indirect Operating Costs Overhead 352,578 Administration (2% total capital costs) 1,200,692 Property tax (1% total capital costs) 600,346 Insurance (1% total capital costs) 600,346 Capital Recovery 0.0944 for a 20- year equipment life and a 7% interest rate 5,666,839 Total Annual Indirect Operating Costs Sum indirect oper costs + capital recovery cost 8,420,800
Total Annual Cost (Annualized Capital Cost + Operating Cost) 10,646,734 See Summary page for notes and assumptions

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### Cliffs Natural Resources: United Taconite Appendix A - SO2 Emission Control Cost Analysis Table 7 - SDA - Line 1 - EPA Control Cost Manual Method + Site Specific Costs, Anticipated Annual Emissions

Capital Recovery Factors Primary Installation Interest Rate 7.00% Equipment Life 20 years CRF 0.0944
Replacement Catalyst:

Total Installed Cost 0 Zero out if no replacement parts needed Annualized Cost 0
Replacement Parts & Equipment: Filter Bags and Cages

Total Installed Cost 475,332 Zero out if no replacement parts needed Annualized Cost 181,126

Electrical Use

Reagent Use & Other Operating Costs

Operating Cost Calculations Annual hours of operation: 7,992 Utilization Rate: 100%

Unit Unit of Use Unit of Annual Annual Comments Item Cost $ Measure Rate Measure Use* Cost Operating Labor Op Labor BH + ESP 8,10 158,591 Lime Handling Labor 7 22013.33333 Supervisor 8 27,091 Maintenance Maint Labor Baghouse 10 32,468 Maint Mtls Baghouse 10 32,468 ESP Maint Mtls and Lbr 9 315000 Utilities, Supplies, Replaceme Electricity 1,641,486 Water 0 Solid Waste Disposal 87,025 Lime 158,901 Filter Bag Replacement 181,126 Compressed Air $ 209,698

*annual use rate is in same units of measurement as the unit cost factor

See Summary page for notes and assumptions

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### Cliffs Natural Resources: United Taconite Appendix A - SO2 Emission Control Cost Analysis Table 8 - SDA - Line 1 - EPA Control Cost Manual Method + Site Specific Costs, Anticipated Annual Emissions

(with Production Losses) Operating Unit: Line 1 Pellet Induration

Emission Unit Number EU 040 Stack/Vent Number SV 046
Expected Utilization Rate 100% Temperature Deg F Expected Annual Hours of Operation 7,992 Hours Moisture Content Annual Interest Rate 7.0% Actual Flow Rate 578,225 acfm Expected Equipment Life 20 yrs Standardized Flow Rate 412,572 scfm @ 68o F

Dry Std Flow Rate 355,472 dscfm @ 68o F

CONTROL EQUIPMENT COSTS Capital Costs Direct Capital Costs (1) Purchased Equipment (A) 12,666,667 Purchased Equipment Total (B) 22% of control device cost (A) 15,428,000

Installation - Standard Costs 74% of purchased equip cost (B) 11,416,720 Installation - Site Specific Costs 29,492,627 Installation Total 11,416,720 Total Direct Capital Cost, DC 26,844,720 Total Indirect Capital Costs, IC 52% of purchased equip cost (B) 8,022,560 Total Capital Investment (TCI) = DC + IC 63,884,575
Operating Costs Total Annual Direct Operating Costs Labor, supervision, materials, replacement parts, utilities, etc. 2,865,867 Total Annual Indirect Operating Costs Sum indirect oper costs + capital recovery cost 8,938,213 Savings from Shutdown of Existing Emission Controls 4 -639,933 Total Annual Cost (Annualized Capital Cost + Operating Cost) 11,164,147

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 Nitrous Oxides (NOx) 414.2 #REF! 0% 0.0 #REF! NA Sulfur Dioxide (SO 2 ): 182.4 728.9 90.0% NA ppm 72.9 656 17,019

Notes & Assumptions 1 Purchased equipment costs from independent review by Zachry Engineering. 2 Capital equipment cost includes the items listed below, which are calculated using EPA cost control manual guidance. 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 4.43 ppm 4 6/18/2012 email from Candice Maxwell, Cliffs Natural Resources in response to EPA Region 5 CAA Section 114 information request for scrubber operating costs. Email reported total annual operating costs for both scurbbers. Listed value excludes capital recover costs and is pro-rated by scrubber exhaust flow rate. Value includes continuing operations cost, per a 9/26/12 e-mail from Jen Krause, Cliffs Natural Resources. 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 3.21 of Chapter 3 of EPA's September 1999 Particulate Matter control design guidelines (for ESPs) 9 Labor and maintenance materials are 5% of capital costs per CueCost. "Average process with normal operating conditions should have maintenance labor and material costs" of 5 to 9% of fixed capital investment. (page 134, Plant Design and Economics for Chemical Engineers, Max Peters and Klaus Timmerhaus; McGraw-Hill Book Company) 10 Determined from Table 1.11 of Chapter 1 of EPA's December 1998 Particulate Matter control design guidelines (for FFs and baghouses) 11 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. 12 Cost per ton based on Cliffs Natural Resources Inc. Reports Second-Quarter 2012 Results.

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### Cliffs Natural Resources: United Taconite Appendix A - SO2 Emission Control Cost Analysis Table 8 - SDA - Line 1 - EPA Control Cost Manual Method + Site Specific Costs, Anticipated Annual Emissions

CAPITAL COSTS Direct Capital Costs Purchased Equipment (A) 1,2 Purchased Equipment Costs (A) 12,666,667 Instrumentation 10% of control device cost (A) 1,266,667 MN Sales Taxes 7% of control device cost (A) 861,333 Freight 5% of control device cost (A) 633,333 Purchased Equipment Total (B) 22% 15,428,000

Installation Foundations & supports 4% of purchased equip cost (B) 617,120 Handling & erection 50% of purchased equip cost (B) 7,714,000 Electrical 8% of purchased equip cost (B) 1,234,240 Piping 1% of purchased equip cost (B) 154,280 Insulation 7% of purchased equip cost (B) 1,079,960 Painting 4% of purchased equip cost (B) 617,120 Installation Subtotal Standard Expenses 74% 11,416,720

Total Direct Capital Cost, DC 26,844,720

Indirect Capital Costs Engineering, supervision 10% of purchased equip cost (B) 1,542,800 Construction & field expenses 20% of purchased equip cost (B) 3,085,600 Contractor fees 10% of purchased equip cost (B) 1,542,800 Start-up 1% of purchased equip cost (B) 154,280 Performance test 1% of purchased equip cost (B) 154,280 Model Studies NA of purchased equip cost (B) NA Contingencies 11 10% of purchased equip cost (B) 1,542,800 Total Indirect Capital Costs, IC 52% of purchased equip cost (B) 8,022,560 Total Capital Investment (TCI) = DC + IC 34,867,280 TCI Adj for Baghouse Filter Replacement 34,391,948 Retrofit multiplier 5 0% of TCI 0 Site Specific Installed Equipment Costs 6 Civil/Structural 783,333 Mechanical Equipment 17,959,500 Electrical and Control 2,220,417 Freight 647,602 Total Indirect Costs + Contingencies 4,031,775 Extended Shutdown for Tie-ins

Total Site Specific Costs 29,492,627
Total Capital Investment (TCI) Retrofit Installed 63,884,575

OPERATING COSTS Direct Annual Operating Costs, DC
Operating Labor Operator 180,605 Supervisor 27,091 Maintenance Maintenance Labor 32,468 Maintenance Materials 347,468 Utilities, Supplies, Replacements & Waste Managem Compressed Air $ 209,698 Electricity 1,641,486 Filter Bag Replacement 181,126 Solid Waste Disposal 87,025 Lime 158,901
Total Annual Direct Operating Costs 2,865,867

Savings from Shutdown of Existing Emission Controls 4 -639,933
Indirect Operating Costs Overhead 352,578 Administration (2% total capital costs) 1,277,692 Property tax (1% total capital costs) 638,846 Insurance (1% total capital costs) 638,846 Capital Recovery 0.0944 for a 20- year equipment life and a 7% interest rate 6,030,252 Total Annual Indirect Operating Costs Sum indirect oper costs + capital recovery cost 8,938,213
Total Annual Cost (Annualized Capital Cost + Operating Cost) 11,164,147 See Summary page for notes and assumptions

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### Cliffs Natural Resources: United Taconite Appendix A - SO2 Emission Control Cost Analysis Table 8 - SDA - Line 1 - EPA Control Cost Manual Method + Site Specific Costs, Anticipated Annual Emissions

Capital Recovery Factors Primary Installation Interest Rate 7.00% Equipment Life 20 years CRF 0.0944
Replacement Catalyst:

Total Installed Cost 0 Zero out if no replacement parts needed Annualized Cost 0
Replacement Parts & Equipment: Filter Bags and Cages

Total Installed Cost 475,332 Zero out if no replacement parts needed Annualized Cost 181,126

Electrical Use

Reagent Use & Other Operating Costs

Operating Cost Calculations Annual hours of operation: 7,992 Utilization Rate: 100%

Unit Unit of Use Unit of Annual Annual Comments Item Cost $ Measure Rate Measure Use* Cost Operating Labor Op Labor BH + ESP 8,10 158,591 Lime Handling Labor 7 22013.33333 Supervisor 8 27,091 Maintenance Maint Labor Baghouse 10 32,468 Maint Mtls Baghouse 10 32,468 ESP Maint Mtls and Lbr 9 315000 Utilities, Supplies, Replacement Electricity 1,641,486 Water 0 Solid Waste Disposal 87,025 Lime 158,901 Filter Bag Replacement 181,126 Compressed Air $ 209,698

*annual use rate is in same units of measurement as the unit cost factor

See Summary page for notes and assumptions

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### Cliffs Natural Resources: United Taconite Appendix A - SO2 Emission Control Cost Analysis Table 9 - Line 1 - 2012 Dry FGD Study Costs for SDA Scrubber Including Site Specific Costs, Anticipated Annual Emissions
Operating Unit: Line 1 Pellet Induration

Emission Unit Number EU 040 Stack/Vent Number SV 046
Expected Utilization Rate 100% Temperature Deg F Expected Annual Hours of Operation 7,992 Hours Moisture Content Annual Interest Rate 7.0% Actual Flow Rate 578,225 acfm Expected Equipment Life 20 yrs Standardized Flow Rate 412,572 scfm @ 68o F

Dry Std Flow Rate 355,472 dscfm @ 68o F

CONTROL EQUIPMENT COSTS Capital Costs Direct Capital Costs (1) Purchased Equipment (A) 12,666,667 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 NA Installation Total 0 Total Direct Capital Cost, DC 0 Total Indirect Capital Costs, IC 0% of purchased equip cost (B) 3,795,000 Total Capital Investment (TCI) = DC + IC 49,924,375
Operating Costs Total Annual Direct Operating Costs Labor, supervision, materials, replacement parts, utilities, etc. 2,223,714 Total Annual Indirect Operating Costs Sum indirect oper costs + capital recovery cost 6,829,073 Savings from Shutdown of Existing Emission Controls 4 -639,933 Total Annual Cost (Annualized Capital Cost + Operating Cost) $8,412,854

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 Nitrous Oxides (NOx) 414.2 #REF! 0% 0.0 #REF! NA Sulfur Dioxide (SO 2 ): 182.4 728.9 90.0% NA ppm 72.9 656 12,825

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 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 4.43 ppm 4 6/18/2012 email from Candice Maxwell, Cliffs Natural Resources in response to EPA Region 5 CAA Section 114 information request for scrubber operating costs. Email reported total annual operating costs for both scrubbers. Listed value excludes capital recover costs and is pro-rated by scrubber exhaust flow rate. Value includes continuing operations cost, per a 9/26/12 e-mail from Jen Krause, Cliffs Natural Resources. 5 CUECost Workbook Version 1.0, USEPA Document Page 2 allows up to a 60% retrofit factor for installations in existing facilities

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### Cliffs Natural Resources: United Taconite Appendix A - SO2 Emission Control Cost Analysis Table 9 - Line 1 - 2012 Dry FGD Study Costs for SDA Scrubber Including Site Specific Costs, Anticipated Annual Emissions

CAPITAL COSTS Direct Capital Costs Purchased Equipment (A) 1,2 Purchased Equipment Costs (A) 12,666,667 Instrumentation MN 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 46,129,375 Indirect Capital Costs Engineering, supervision Construction & field expenses 0 Contractor fees 0 Start-up 0 Performance test 0 Model Studies 0 Contingencies 0 Total Indirect Capital Costs, IC 3,795,000 Total Capital Investment (TCI) = DC + IC 49,924,375 TCI Adj for Baghouse Filter Replacement 49,924,375 Retrofit multiplier 5 0% of TCI 0 Site Specific Installed Equipment Costs Cost of Extended Shutdown for Tie-ins Cost of extended shutdown to be provided byCNR

Total Site Specific Costs NA
Total Capital Investment (TCI) Retrofit Installed 49,924,375

OPERATING COSTS Direct Annual Operating Costs, DC
Operating Labor Operator 53,946 Supervisor 8,092 Maintenance Maintenance Labor 53,946 Maintenance Materials 83,333 Utilities, Supplies, Replacements & Waste Manageme Compressed Air $

- Electricity 1,378,620 Filter Bag Replacement 161,568 Solid Waste Disposal 143,856 Lime 262,670 Softener Salt 77,682 Total Annual Direct Operating Costs 2,223,714

Savings from Shutdown of Existing Emission Controls 4 -639,933
Indirect Operating Costs Overhead 119,590 Administration (2% total capital costs) 998,488 Property tax (1% total capital costs) 499,244 Insurance (1% total capital costs) 499,244 Capital Recovery 0.0944 for a 20- year equipment life and a 7% interest rate 4,712,508 Total Annual Indirect Operating Costs Sum indirect oper costs + capital recovery cost 6,829,073
Total Annual Cost (Annualized Capital Cost + Operating Cost) 8,412,854 See Summary page for notes and assumptions

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### Cliffs Natural Resources: United Taconite Appendix A - SO2 Emission Control Cost Analysis Table 9 - Line 1 - 2012 Dry FGD Study Costs for SDA Scrubber Including Site Specific Costs, Anticipated Annual Emissions

Capital Recovery Factors Primary Installation Interest Rate 7.00% Equipment Life 20 years CRF 0.0944
Replacement Catalyst:

Total Installed Cost 0 Zero out if no replacement parts needed Annualized Cost 0

Replacement Parts & Equipment: Filter Bags and Cages

Total Installed Cost 0 Zero out if no replacement parts needed Annualized Cost 0

Electrical Use

Reagent Use & Other Operating Costs

Operating Cost Calculations Annual hours of operation: 7,992 Utilization Rate: 100%

Unit Unit of Use Unit of Annual Annual Comments Item Cost $ Measure Rate Measure Use* Cost Operating Labor Op Labor 53,946 Supervisor 8,092 Maintenance Maint Labor 53,946 Maint Mtls 83,333 Utilities, Supplies, Replacements & Waste Management Electricity 1,378,620 Water 0 Solid Waste Disposal 143,856 Lime 262,670 Filter Bag Replacement 161,568 Compressed Air

- Water and Softener Salt 77682.24

*annual use rate is in same units of measurement as the unit cost factor

See Summary page for notes and assumptions

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### Cliffs Natural Resources: United Taconite Appendix A - SO2 Emission Control Cost Analysis Table 10 - Line 1 - 2012 Dry FGD Study Costs for SDA Scrubber Including Site Specific Costs, Anticipated Annual Emissions

(with Production Losses) Operating Unit: Line 1 Pellet Induration

Emission Unit Number EU 040 Stack/Vent Number SV 046
Expected Utilization Rate 100% Temperature Deg F Expected Annual Hours of Operation 7,992 Hours Moisture Content Annual Interest Rate 7.0% Actual Flow Rate 578,225 acfm Expected Equipment Life 20 yrs Standardized Flow Rate 412,572 scfm @ 68o F

Dry Std Flow Rate 355,472 dscfm @ 68o F

CONTROL EQUIPMENT COSTS Capital Costs Direct Capital Costs (1) Purchased Equipment (A) 12,666,667 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 3,850,000 Installation Total 0 Total Direct Capital Cost, DC 0 Total Indirect Capital Costs, IC 0% of purchased equip cost (B) 3,795,000 Total Capital Investment (TCI) = DC + IC 53,774,375
Operating Costs Total Annual Direct Operating Costs Labor, supervision, materials, replacement parts, utilities, etc. 2,223,714 Total Annual Indirect Operating Costs Sum indirect oper costs + capital recovery cost 7,346,486 Savings from Shutdown of Existing Emission Controls 4 -639,933 Total Annual Cost (Annualized Capital Cost + Operating Cost) $8,930,267

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 Nitrous Oxides (NOx) 414.2 #REF! 0% 0.0 #REF! NA Sulfur Dioxide (SO 2 ): 182.4 728.9 90.0% NA ppm 72.9 656 13,614

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 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 4.43 ppm 4 6/18/2012 email from Candice Maxwell, Cliffs Natural Resources in response to EPA Region 5 CAA Section 114 information request for scrubber operating costs. Email reported total annual operating costs for both scrubbers. Listed value excludes capital recover costs and is pro-rated by scrubber exhaust flow rate. Value includes continuing operations cost, per a 9/26/12 e-mail from Jen Krause, Cliffs Natural Resources. 5 CUECost Workbook Version 1.0, USEPA Document Page 2 allows up to a 60% retrofit factor for installations in existing facilities 6 Cost per ton based on Cliffs Natural Resources Inc. Reports Second-Quarter 2012 Results.

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### Cliffs Natural Resources: United Taconite Appendix A - SO2 Emission Control Cost Analysis Table 10 - Line 1 - 2012 Dry FGD Study Costs for SDA Scrubber Including Site Specific Costs, Anticipated Annual Emissions

CAPITAL COSTS Direct Capital Costs Purchased Equipment (A) 1,2 Purchased Equipment Costs (A) 12,666,667 Instrumentation MN 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 46,129,375 Indirect Capital Costs Engineering, supervision Construction & field expenses 0 Contractor fees 0 Start-up 0 Performance test 0 Model Studies 0 Contingencies 0 Total Indirect Capital Costs, IC 3,795,000 Total Capital Investment (TCI) = DC + IC 49,924,375 TCI Adj for Baghouse Filter Replacement 49,924,375 Retrofit multiplier 5 0% of TCI 0 Site Specific Installed Equipment Costs Extended Shutdown for Tie-ins

Total Site Specific Costs 3,850,000
Total Capital Investment (TCI) Retrofit Installed 53,774,375

OPERATING COSTS Direct Annual Operating Costs, DC
Operating Labor Operator 53,946 Supervisor 8,092 Maintenance Maintenance Labor 53,946 Maintenance Materials 83,333 Utilities, Supplies, Replacements & Waste Manageme Compressed Air $

- Electricity 1,378,620 Filter Bag Replacement 161,568 Solid Waste Disposal 143,856 Lime 262,670 Softener Salt 77,682 Total Annual Direct Operating Costs 2,223,714

Savings from Shutdown of Existing Emission Controls 4 -639,933
Indirect Operating Costs Overhead 119,590 Administration (2% total capital costs) 1,075,488 Property tax (1% total capital costs) 537,744 Insurance (1% total capital costs) 537,744 Capital Recovery 0.0944 for a 20- year equipment life and a 7% interest rate 5,075,921 Total Annual Indirect Operating Costs Sum indirect oper costs + capital recovery cost 7,346,486
Total Annual Cost (Annualized Capital Cost + Operating Cost) 8,930,267 See Summary page for notes and assumptions

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### Cliffs Natural Resources: United Taconite Appendix A - SO2 Emission Control Cost Analysis Table 10 - Line 1 - 2012 Dry FGD Study Costs for SDA Scrubber Including Site Specific Costs, Anticipated Annual Emissions

Capital Recovery Factors Primary Installation Interest Rate 7.00% Equipment Life 20 years CRF 0.0944
Replacement Catalyst:

Total Installed Cost Annualized Cost 0

Replacement Parts & Equipment: Filter Bags and Cages

Total Installed Cost 0 Zero out if no replacement parts needed Annualized Cost 0

Electrical Use

Reagent Use & Other Operating Costs

Operating Cost Calculations Annual hours of operation: 7,992 Utilization Rate: 100%

Unit Unit of Use Unit of Annual Annual Comments Item Cost $ Measure Rate Measure Use* Cost Operating Labor Op Labor 53,946 Supervisor 8,092 Maintenance Maint Labor 53,946 Maint Mtls 83,333 Utilities, Supplies, Replacements & Waste Management Electricity 1,378,620 Water 0 Solid Waste Disposal 143,856 Lime 262,670 Filter Bag Replacement 161,568 Compressed Air

- Water and Softener Salt 77682.24

*annual use rate is in same units of measurement as the unit cost factor

See Summary page for notes and assumptions

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## Cliffs Natural Resources: United Taconite Appendix A - SO2 Emission Control Cost Analysis
Table 11 - UTAC DRY ESP/CFBA/BAGHOUSE FEASIBILITY STUDY Opinion of Probable Cost - PRELIMINARY 14-Sep-12 Line 1 Line 2

Item Material Labor Total Retrofit

Cost GSA/SDA UTACRetrofit Costs SDA/Baghouse Costs UTAC Line 1 Retrofit Costs Line 1 SDA/Baghouse Costs UTAC Line 1 Total UTAC Line 2 Retrofit Costs Line 2 SDA/Baghouse Costs UTAC Line 2 Total


### DIRECT COST ITEMS

CIVIL/STRUCTURAL

Demo Existing Equip. and Building Penetrations $25,000 $375,000 $400,000 100% 0% $400,000 $0 $133,333 $0 $133,333 $266,667 $0 $266,667 Structural Modifications $175,000 $400,000 $575,000 100% 0% $575,000 $0 $191,667 $0 $191,667 $383,333 $0 $383,333 Misc. Platforms, Support, Access & Enclosures $1,125,000 $750,000 $1,875,000 40% 60% $750,000 $1,125,000 $250,000 $375,000 $625,000 $500,000 $750,000 $1,250,000 Concrete $1,050,000 $700,000 $1,750,000 25% 75% $437,500 $1,312,500 $145,833 $437,500 $583,333 $291,667 $875,000 $1,166,667 Piling $300,000 $450,000 $750,000 25% 75% $187,500 $562,500 $62,500 $187,500 $250,000 $125,000 $375,000 $500,000 Subtotal - Civil Structural $2,675,000 $2,675,000 $5,350,000 $2,350,000 $3,000,000 $783,333 $1,000,000 $1,783,333 $1,566,667 $2,000,000 $3,566,667

MECHANICAL

Demolition $25,000 $125,000 $150,000 100% 0% $150,000 $0 $50,000 $0 $50,000 $100,000 $0 $100,000 Lead Paint Abatement $10,000 $90,000 $100,000 100% 0% $100,000 $0 $33,333 $0 $33,333 $66,667 $0 $66,667 Line 1 Ductwork $6,125,000 $2,200,000 $8,325,000 100% 0% $8,325,000 $0 $8,325,000 $0 $8,325,000 $0 $0 Line 2A Ductwork $6,500,000 $2,350,000 $8,850,000 100% 0% $8,850,000 $0 $0 $0 $8,850,000 $0 $8,850,000 Line 2B Ductwork $5,500,000 $1,925,000 $7,425,000 100% 0% $7,425,000 $0 $0 $0 $7,425,000 $0 $7,425,000 Added Ductwork Per Zachry Layout Total $2,250,000 $750,000 $3,000,000 100% 0% $3,000,000 $0 $1,000,000 $0 $1,000,000 $2,000,000 $0 $2,000,000 3 Electrostatic Precipitators $7,585,500 $5,309,850 $12,895,350 100% 0% $12,895,350 $0 $4,298,450 $0 $4,298,450 $8,596,900 $0 $8,596,900 3 SDA/Baghouse Treatment Trains $24,685,700 $17,279,990 $41,965,690 0% 100% $0 $41,965,690 $0 $13,988,563 $13,988,563 $0 $27,977,127 $27,977,127 Process Waste Gas Fan $2,325,000 $1,627,500 $3,952,500 100% 0% $3,952,500 $0 $1,317,500 $0 $1,317,500 $2,635,000 $0 $2,635,000 Duct Burner $900,000 $630,000 $1,530,000 100% 0% $1,530,000 $0 $510,000 $0 $510,000 $1,020,000 $0 $1,020,000 ID Fan $2,025,000 $1,417,500 $3,442,500 100% 0% $3,442,500 $0 $1,147,500 $0 $1,147,500 $2,295,000 $0 $2,295,000 Stack $1,725,000 $1,207,500 $2,932,500 100% 0% $2,932,500 $0 $977,500 $0 $977,500 $1,955,000 $0 $1,955,000 Ash Handling System $1,650,000 $1,155,000 $2,805,000 100% 0% $2,805,000 $0 $935,000 $0 $935,000 $1,870,000 $0 $1,870,000 Water Softener $100,000 $70,000 $170,000 100% 0% $170,000 $0 $56,667 $0 $56,667 $113,333 $0 $113,333 Air Compressors $225,000 $67,500 $292,500 0% 100% $0 $292,500 $0 $97,500 $97,500 $0 $195,000 $195,000 Compressed Air Piping $22,500 $22,500 $45,000 0% 100% $0 $45,000 $0 $15,000 $15,000 $0 $30,000 $30,000 SDA Water Supply Piping $25,000 $25,000 $50,000 0% 100% $0 $50,000 $0 $16,667 $16,667 $0 $33,333 $33,333 Lime Slurry Piping $50,000 $50,000 $100,000 0% 100% $0 $100,000 $0 $33,333 $33,333 $0 $66,667 $66,667 Natural Gas Piping for Duct Burners $18,000 $18,000 $36,000 100% 0% $36,000 $0 $12,000 $0 $12,000 $24,000 $0 $24,000 Fire Protection $15,000 $15,000 $30,000 0% 100% $0 $30,000 $0 $10,000 $10,000 $0 $20,000 $20,000 HVAC for ESP, SDA & PJFF Enclosures $100,000 $100,000 $200,000 0% 100% $0 $200,000 $0 $66,667 $66,667 $0 $133,333 $133,333 Relocate CEMS $15,000 $60,000 $75,000 100% 0% $75,000 $0 $25,000 $0 $25,000 $50,000 $0 $50,000 Vendor Support - Service Engineers $0 $650,000 $650,000 0% 100% $0 $650,000 $0 $216,667 $216,667 $0 $433,333 $433,333 Miscellaneous Mechanical Equipment $50,000 $50,000 $100,000 0% 100% $0 $100,000 $0 $33,333 $33,333 $0 $66,667 $66,667 Subtotal - Mechanical $61,926,700 $37,195,340 $99,122,040 $55,688,850 $43,433,190 $18,687,950 $14,477,730 $33,165,680 $37,000,900 $28,955,460 $65,956,360

ELECTRICAL & CONTROLS GSA/SDA 15% percent of total electrical load percent of total electrical load percent of total electrical load

Demolition $0 $50,000 $50,000 100% 0% $50,000 $0 $16,667 $0 $16,667 $33,333 $0 $33,333 4160 UG Duct Bank $150,000 $150,000 $300,000 100% 0% $300,000 $0 $100,000 $0 $100,000 $200,000 $0 $200,000 Power Distribution Center $3,275,000 $50,000 $3,325,000 85% 15% $2,826,250 $498,750 $942,083 $166,250 $1,108,333 $1,884,167 $332,500 $2,216,667 4160 Volt Switchgear $200,000 $50,000 $250,000 85% 15% $212,500 $37,500 $70,833 $12,500 $83,333 $141,667 $25,000 $166,667 480 Volt Transformer $180,000 $45,000 $225,000 85% 15% $191,250 $33,750 $63,750 $11,250 $75,000 $127,500 $22,500 $150,000 Indoor/Outdoor LightingLighting $25,000 $25,000 $50,000 85% 15% $42,500 $7,500 $14,167 $2,500 $16,667 $28,333 $5,000 $33,333 Safety Switches & Terminations $25,000 $25,000 $50,000 85% 15% $42,500 $7,500 $14,167 $2,500 $16,667 $28,333 $5,000 $33,333 Cable Tray and Miscellaneous Conduit $225,000 $350,000 $575,000 85% 15% $488,750 $86,250 $162,917 $28,750 $191,667 $325,833 $57,500 $383,333 Power Distribution & Instrument Cable $750,000 $1,250,000 $2,000,000 85% 15% $1,700,000 $300,000 $566,667 $100,000 $666,667 $1,133,333 $200,000 $1,333,333

27 C:\Users\arm3\AppData\Local\Temp\United Taconite Appendix A SO2 Control Costs 09282012_2E30A1.xlsx CFBA Opinion Probable Cost

### Table 11 - UTAC DRY ESP/CFBA/BAGHOUSE FEASIBILITY STUDY Opinion of Probable Cost - PRELIMINARY 14-Sep-12 Line 1 Line 2

Item Material Labor Total Retrofit

Cost GSA/SDA UTACRetrofit Costs SDA/Baghouse Costs UTAC Line 1 Retrofit Costs Line 1 SDA/Baghouse Costs UTAC Line 1 Total UTAC Line 2 Retrofit Costs Line 2 SDA/Baghouse Costs UTAC Line 2 Total Gounding System $25,000 $25,000 $50,000 85% 15% $42,500 $7,500 $14,167 $2,500 $16,667 $28,333 $5,000 $33,333 Medium Voltage Emergency Generator Rental $50,000 $0 $50,000 85% 15% $42,500 $7,500 $14,167 $2,500 $16,667 $28,333 $5,000 $33,333 Control System Hardware & Panels $450,000 $150,000 $600,000 85% 15% $510,000 $90,000 $170,000 $30,000 $200,000 $340,000 $60,000 $400,000 Field Devices $125,000 $75,000 $200,000 85% 15% $170,000 $30,000 $56,667 $10,000 $66,667 $113,333 $20,000 $133,333 Fiber Optic Cable $10,000 $40,000 $50,000 85% 15% $42,500 $7,500 $14,167 $2,500 $16,667 $28,333 $5,000 $33,333 Subtotal - Electrical & Controls $5,490,000 $2,285,000 $7,775,000 $6,661,250 $1,113,750 $2,220,417 $371,250 $2,591,667 $4,440,833 $742,500 $5,183,333

Subtotal of Above $70,091,700 $42,155,340 $112,247,040 $64,700,100 $47,546,940 $21,691,700 $15,848,980 $37,540,680 $43,008,400 $31,697,960 $74,706,360 Freight $3,504,585 $0 $3,504,585 $2,020,071 $1,484,514 $673,357 $494,838 $1,168,195 $1,346,714 $989,676 $2,336,390 Direct Cost Contingency $7,009,170 $4,215,534 $11,224,704 $6,470,010 $4,754,694 $2,169,170 $1,584,898 $3,754,068 $4,300,840 $3,169,796 $7,470,636 Total Direct Costs $80,605,455 $46,370,874 $126,976,329 $73,190,181 $53,786,148 $24,534,227 $17,928,716 $42,462,943 $48,655,954 $35,857,432 $84,513,386



### INDIRECT COST ITEMS 58% 42% Performance Bonds, All Contracts - not required. $0 $0 $0 58% 42% $0 $0 $0 $0 $0 $0 $0 $0 Sales Tax, All Materials $0 $0 $0 58% 42% $0 $0 $0 $0 $0 $0 $0 $0 Engineering - Design $0 $7,000,000 $7,000,000 58% 42% $4,060,000 $2,940,000 $1,353,333 $980,000 $2,333,333 $2,706,667 $1,960,000 $4,666,667 Construction Management Services $0 $2,100,000 $2,100,000 58% 42% $1,218,000 $882,000 $406,000 $294,000 $700,000 $812,000 $588,000 $1,400,000 Startup and Commissioning Services $0 $700,000 $700,000 58% 42% $406,000 $294,000 $135,333 $98,000 $233,333 $270,667 $196,000 $466,667 Construction Testing Services $0 $200,000 $200,000 58% 42% $116,000 $84,000 $38,667 $28,000 $66,667 $77,333 $56,000 $133,333 Soil Borings $0 $150,000 $150,000 58% 42% $87,000 $63,000 $29,000 $21,000 $50,000 $58,000 $42,000 $100,000 Emission Testing $0 $100,000 $100,000 58% 42% $58,000 $42,000 $19,333 $14,000 $33,333 $38,667 $28,000 $66,667 Owner's Finance Cost $0 $0 $0 0% 100% $0 $0 $0 $0 $0 $0 $0 $0 Owner's Staff Time $0 $0 $0 58% 42% $0 $0 $0 $0 $0 $0 $0 $0 Startup Materials, EG, lime $100,000 $0 $100,000 58% 42% $58,000 $42,000 $19,333 $14,000 $33,333 $38,667 $28,000 $66,667 Subtotal Above $100,000 $10,250,000 $10,350,000 $6,003,000 $4,347,000 $2,001,000 $1,449,000 $3,450,000 $4,002,000 $2,898,000 $6,900,000 Indirect Cost Contingency $10,000 $1,025,000 $1,035,000 $600,300 $434,700 $200,100 $144,900 $345,000 $400,200 $289,800 $690,000 Total Indirect Cost $110,000 $11,275,000 $11,385,000 $6,603,300 $4,781,700 $2,201,100 $1,593,900 $3,795,000 $4,402,200 $3,187,800 $7,590,000
Grand Total Opinion of Probable Cost $80,715,455 $57,645,874 $138,361,329 $79,793,481 $58,567,848 $26,735,327 $19,522,616 $46,257,943 $53,058,154 $39,045,232 $92,103,386
NOTE: O&M inputs provided separately

$46,257,943 $92,103,386

28 C:\Users\arm3\AppData\Local\Temp\United Taconite Appendix A SO2 Control Costs 09282012_2E30A1.xlsx CFBA Opinion Probable Cost

## Cliffs Natural Resources: United Taconite Appendix A - SO2 Emission Control Cost Analysis
Table 12 - UTAC DRY ESP/SDA/BAGHOUSE FEASIBILITY STUDY Opinion of Probable Cost - PRELIMINARY 14-Sep-12 Line 1 Line 2

Item Material Labor Total Retrofit

Cost GSA/SDA UTACRetrofit Costs SDA/Baghouse Costs UTAC Line 1 Retrofit Costs Line 1 SDA/Baghouse Costs UTAC Line 1 Total UTAC Line 2 Retrofit Costs Line 2 SDA/Baghouse Costs UTAC Line 2 Total 

### DIRECT COST ITEMS

CIVIL/STRUCTURAL
Demo Existing Equip. and Building Penetrations $25,000 $375,000 $400,000 100% 0% $400,000 $0 $133,333 $0 $133,333 $266,667 $0 $266,667 Structural Modifications $175,000 $400,000 $575,000 100% 0% $575,000 $0 $191,667 $0 $191,667 $383,333 $0 $383,333 Misc. Platforms, Support, Access & Enclosures $1,125,000 $750,000 $1,875,000 40% 60% $750,000 $1,125,000 $250,000 $375,000 $625,000 $500,000 $750,000 $1,250,000 Concrete $1,050,000 $700,000 $1,750,000 25% 75% $437,500 $1,312,500 $145,833 $437,500 $583,333 $291,667 $875,000 $1,166,667 Piling $300,000 $450,000 $750,000 25% 75% $187,500 $562,500 $62,500 $187,500 $250,000 $125,000 $375,000 $500,000 Subtotal - Civil Structural $2,675,000 $2,675,000 $5,350,000 $2,350,000 $3,000,000 $783,333 $1,000,000 $1,783,333 $1,566,667 $2,000,000 $3,566,667

MECHANICAL

Demolition and Wet Scrubber Conversion $25,000 $125,000 $150,000 100% 0% $150,000 $0 $50,000 $0 $50,000 $100,000 $0 $100,000 Lead Paint Abatement $10,000 $90,000 $100,000 100% 0% $100,000 $0 $33,333 $0 $33,333 $66,667 $0 $66,667 Line 1 Ductwork $6,125,000 $2,200,000 $8,325,000 100% 0% $8,325,000 $0 $8,325,000 $0 $8,325,000 $0 $0 Line 2A Ductwork $6,500,000 $2,350,000 $8,850,000 100% 0% $8,850,000 $0 $0 $0 $8,850,000 $0 $8,850,000 Line 2B Ductwork $5,500,000 $1,925,000 $7,425,000 100% 0% $7,425,000 $0 $0 $0 $7,425,000 $0 $7,425,000
Added Ductwork Per Zachry Layout Total $2,250,000 $750,000 $3,000,000 100% 0% $3,000,000 $0 $1,000,000 $0 $1,000,000 $2,000,000 $0 $2,000,000 3 Electrostatic Precipitators $6,300,000 $4,410,000 $10,710,000 100% 0% $10,710,000 $0 $3,570,000 $0 $3,570,000 $7,140,000 $0 $7,140,000 3 SDA/Baghouse Treatment Trains $31,700,000 $22,190,000 $53,890,000 0% 100% $0 $53,890,000 $0 $17,963,333 $17,963,333 $0 $35,926,667 $35,926,667 Process Waste Gas Fan $2,325,000 $1,627,500 $3,952,500 100% 0% $3,952,500 $0 $1,317,500 $0 $1,317,500 $2,635,000 $0 $2,635,000 Duct Burner $900,000 $630,000 $1,530,000 100% 0% $1,530,000 $0 $510,000 $0 $510,000 $1,020,000 $0 $1,020,000 ID Fan $2,025,000 $1,417,500 $3,442,500 100% 0% $3,442,500 $0 $1,147,500 $0 $1,147,500 $2,295,000 $0 $2,295,000 Stack $1,725,000 $1,207,500 $2,932,500 100% 0% $2,932,500 $0 $977,500 $0 $977,500 $1,955,000 $0 $1,955,000 Ash Handling System $1,650,000 $1,155,000 $2,805,000 100% 0% $2,805,000 $0 $935,000 $0 $935,000 $1,870,000 $0 $1,870,000 Water Softener $100,000 $70,000 $170,000 100% 0% $170,000 $0 $56,667 $0 $56,667 $113,333 $0 $113,333 Air Compressors $225,000 $67,500 $292,500 0% 100% $0 $292,500 $0 $97,500 $97,500 $0 $195,000 $195,000 Compressed Air Piping $22,500 $22,500 $45,000 0% 100% $0 $45,000 $0 $15,000 $15,000 $0 $30,000 $30,000 SDA Water Supply Piping $25,000 $25,000 $50,000 0% 100% $0 $50,000 $0 $16,667 $16,667 $0 $33,333 $33,333 Lime Slurry Piping $50,000 $50,000 $100,000 0% 100% $0 $100,000 $0 $33,333 $33,333 $0 $66,667 $66,667 Natural Gas Piping for Duct Burners $18,000 $18,000 $36,000 100% 0% $36,000 $0 $12,000 $0 $12,000 $24,000 $0 $24,000 Fire Protection $15,000 $15,000 $30,000 0% 100% $0 $30,000 $0 $10,000 $10,000 $0 $20,000 $20,000 HVAC for ESP, SDA & PJFF Enclosures $100,000 $100,000 $200,000 0% 100% $0 $200,000 $0 $66,667 $66,667 $0 $133,333 $133,333 Relocate CEMS $15,000 $60,000 $75,000 100% 0% $75,000 $0 $25,000 $0 $25,000 $50,000 $0 $50,000 Vendor Support - Service Engineers $0 $650,000 $650,000 0% 100% $0 $650,000 $0 $216,667 $216,667 $0 $433,333 $433,333 Miscellaneous Mechanical Equipment $50,000 $50,000 $100,000 0% 100% $0 $100,000 $0 $33,333 $33,333 $0 $66,667 $66,667 Subtotal - Mechanical $67,655,500 $41,205,500 $108,861,000 $53,503,500 $55,357,500 $17,959,500 $18,452,500 $36,412,000 $35,544,000 $36,905,000 $72,449,000

ELECTRICAL & CONTROLS GSA/SDA 15% percent of total electrical load percent of total electrical load percent of total electrical load

Demolition $0 $50,000 $50,000 100% 0% $50,000 $0 $16,667 $0 $16,667 $33,333 $0 $33,333 4160 UG Duct Bank $150,000 $150,000 $300,000 100% 0% $300,000 $0 $100,000 $0 $100,000 $200,000 $0 $200,000 Power Distribution Center $3,275,000 $50,000 $3,325,000 85% 15% $2,826,250 $498,750 $942,083 $166,250 $1,108,333 $1,884,167 $332,500 $2,216,667 4160 Volt Switchgear $200,000 $50,000 $250,000 85% 15% $212,500 $37,500 $70,833 $12,500 $83,333 $141,667 $25,000 $166,667 480 Volt Transformer $180,000 $45,000 $225,000 85% 15% $191,250 $33,750 $63,750 $11,250 $75,000 $127,500 $22,500 $150,000 Indoor/Outdoor LightingLighting $25,000 $25,000 $50,000 85% 15% $42,500 $7,500 $14,167 $2,500 $16,667 $28,333 $5,000 $33,333 Safety Switches & Terminations $25,000 $25,000 $50,000 85% 15% $42,500 $7,500 $14,167 $2,500 $16,667 $28,333 $5,000 $33,333 Cable Tray and Miscellaneous Conduit $225,000 $350,000 $575,000 85% 15% $488,750 $86,250 $162,917 $28,750 $191,667 $325,833 $57,500 $383,333 Power Distribution & Instrument Cable $750,000 $1,250,000 $2,000,000 85% 15% $1,700,000 $300,000 $566,667 $100,000 $666,667 $1,133,333 $200,000 $1,333,333

29 C:\Users\arm3\AppData\Local\Temp\United Taconite Appendix A SO2 Control Costs 09282012_2E30A1.xlsx SDA Opinion Probable Cost

### Table 12 - UTAC DRY ESP/SDA/BAGHOUSE FEASIBILITY STUDY Opinion of Probable Cost - PRELIMINARY 14-Sep-12 Line 1 Line 2

Item Material Labor Total Retrofit

Cost GSA/SDA UTACRetrofit Costs SDA/Baghouse Costs UTAC Line 1 Retrofit Costs Line 1 SDA/Baghouse Costs UTAC Line 1 Total UTAC Line 2 Retrofit Costs Line 2 SDA/Baghouse Costs UTAC Line 2 Total Gounding System $25,000 $25,000 $50,000 85% 15% $42,500 $7,500 $14,167 $2,500 $16,667 $28,333 $5,000 $33,333 Medium Voltage Emergency Generator Rental $50,000 $0 $50,000 85% 15% $42,500 $7,500 $14,167 $2,500 $16,667 $28,333 $5,000 $33,333 Control System Hardware & Panels $450,000 $150,000 $600,000 85% 15% $510,000 $90,000 $170,000 $30,000 $200,000 $340,000 $60,000 $400,000 Field Devices $125,000 $75,000 $200,000 85% 15% $170,000 $30,000 $56,667 $10,000 $66,667 $113,333 $20,000 $133,333 Fiber Optic Cable $10,000 $40,000 $50,000 85% 15% $42,500 $7,500 $14,167 $2,500 $16,667 $28,333 $5,000 $33,333 Subtotal - Electrical & Controls $5,490,000 $2,285,000 $7,775,000 $6,661,250 $1,113,750 $2,220,417 $371,250 $2,591,667 $4,440,833 $742,500 $5,183,333

Subtotal of Above $75,820,500 $46,165,500 $121,986,000 $62,514,750 $59,471,250 $20,963,250 $19,823,750 $40,787,000 $41,551,500 $39,647,500 $81,199,000 Freight $3,791,025 $0 $3,791,025 $1,942,805 $1,848,220 $647,602 $616,073 $1,263,675 $1,295,203 $1,232,147 $2,527,350 Direct Cost Contingency $7,582,050 $4,616,550 $12,198,600 $6,251,475 $5,947,125 $2,096,325 $1,982,375 $4,078,700 $4,155,150 $3,964,750 $8,119,900 Total Direct Costs $87,193,575 $50,782,050 $137,975,625 $70,709,030 $67,266,595 $23,707,177 $22,422,198 $46,129,375 $47,001,853 $44,844,397 $91,846,250



### INDIRECT COST ITEMS 51% 49% Performance Bonds, All Contracts - not required. $0 $0 $0 51% 49% $0 $0 $0 $0 $0 $0 $0 $0 Sales Tax, All Materials $0 $0 $0 51% 49% $0 $0 $0 $0 $0 $0 $0 $0 Engineering - Design $0 $7,000,000 $7,000,000 51% 49% $3,570,000 $3,430,000 $1,190,000 $1,143,333 $2,333,333 $2,380,000 $2,286,667 $4,666,667 Construction Management Services $0 $2,100,000 $2,100,000 51% 49% $1,071,000 $1,029,000 $357,000 $343,000 $700,000 $714,000 $686,000 $1,400,000 Startup and Commissioning Services $0 $700,000 $700,000 51% 49% $357,000 $343,000 $119,000 $114,333 $233,333 $238,000 $228,667 $466,667 Construction Testing Services $0 $200,000 $200,000 51% 49% $102,000 $98,000 $34,000 $32,667 $66,667 $68,000 $65,333 $133,333 Soil Borings $0 $150,000 $150,000 51% 49% $76,500 $73,500 $25,500 $24,500 $50,000 $51,000 $49,000 $100,000 Emission Testing $0 $100,000 $100,000 51% 49% $51,000 $49,000 $17,000 $16,333 $33,333 $34,000 $32,667 $66,667 Owner's Finance Cost $0 $0 $0 0% 100% $0 $0 $0 $0 $0 $0 $0 $0 Owner's Staff Time $0 $0 $0 51% 49% $0 $0 $0 $0 $0 $0 $0 $0 Startup Materials, EG, lime $100,000 $0 $100,000 51% 49% $51,000 $49,000 $17,000 $16,333 $33,333 $34,000 $32,667 $66,667 Subtotal Above $100,000 $10,250,000 $10,350,000 $5,278,500 $5,071,500 $1,759,500 $1,690,500 $3,450,000 $3,519,000 $3,381,000 $6,900,000 Indirect Cost Contingency $10,000 $1,025,000 $1,035,000 $527,850 $507,150 $175,950 $169,050 $345,000 $351,900 $338,100 $690,000 Total Indirect Cost $110,000 $11,275,000 $11,385,000 $5,806,350 $5,578,650 $1,935,450 $1,859,550 $3,795,000 $3,870,900 $3,719,100 $7,590,000
Grand Total Opinion of Probable Cost $87,303,575 $62,057,050 $149,360,625 $76,515,380 $72,845,245 $25,642,627 $24,281,748 $49,924,375 $50,872,753 $48,563,497 $99,436,250
NOTE: O&M inputs provided separately

30 C:\Users\arm3\AppData\Local\Temp\United Taconite Appendix A SO2 Control Costs 09282012_2E30A1.xlsx SDA Opinion Probable Cost

## Cliffs Natural Resources: United Taconite Appendix A - SO2 Emission Control Cost Analysis

Direct Annual Operating & Maintenance Costs (Preliminary) Operations: Hours Operator Cost 161,838

$ Operator Supervisor Cost 24,276

$ Maintenance: Maintenance Hours 161,838

$ Maintenance Materials 250,000

$ Utilities, Supplies, Replacement & Waste Disposal: Compressed Air Included Electricity 4,135,860

$ Filter Bag & Cage Replacement 484,704

$ Solid Waste Disposal 431,568

$ Lime 788,011

$ Water & Softener Salt 233,047

$ 

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

$ 

### Table 13 - UTAC ESP/SDA/BAGHOUSE O&M COST ESTIMATES

C:\Users\arm3\AppData\Local\Temp\United Taconite Appendix A SO2 Control Costs 09282012_2E30A1.xlsx O&M CostsCliffs Natural Resources: United Taconite Appendix A - SO2 Emission Control Cost Analysis Table 14 - Savings from Scrubber

Maint Item Labor Costs Total Cost Labor Costs

Ducting Prior to Dry ESP Repair Consists of patching leaks 2,304 5,004 2,304

Ducting After Dry ESP Repair Consists of patching leaks 3,456 6,456 3,456

Fan After ESP Rotor and motor replaced every 10 years; lubrication 2,208 28,683 4,416

Fan After Baghouse Rotor and motor replaced every 10 years and lubriation 2,208 28,683 4,416 Thickeners solids of ESP report. Known currently as Waste Gas Thickeners

Repair consts of replacing 1 make-up auto valve and 1 manual value every 2 years. Along with patching 1,344 9,382 1,344 Thickener Uflow Costs 576 1,076 576 Cleaning Costs 7,392 7,392 9,408 CEMS Costs 11,667

98,343

Line1 Line2 Total Total Materials $67,188 $120,138 $187,325 Total CEMS Annual Cost $11,667 $23,333 $35,000 Total Labor $19,488 $25,920 $45,408 Grand Total $98,342 $169,391 $267,733

Scrubber Total Annual Cost: 2,363,432.53 $ (From Utac Scrubber Cost calculation spreadsheet)

Capital Recovery From Scrubber Costs: 148,605.27 $ 20 yr life @7%, total capital investment from 2010-2012

Line 1 Prorated Annual Cost 639,933.25 $

Line 2 Prorated Annual Cost 1,307,161.00 $ Esimated Annual Line 1 Maint Repair Costs for New Dry Scrubbing System Esimated Annual Line 2 Maint Repair Costs for New Dry Scrubbing System Material Cost Estimate Hours Labor Rate Material Cost Estimate Hours Labor Rate Total Cost

5,004

3,000 3,000 6,456 2,700 2,700

57,366

26,475 52,950 57,366 26,475 52,950

9,382 500 500 1,076 8,038 8,038

23,333

9,408

169,391

C:\Users\arm3\AppData\Local\Temp\United Taconite Appendix A SO2 Control Costs 09282012_2E30A1.xlsx Savings from Scrubber

### Cliffs Natural Resources: United Taconite Appendix A - SO2 Emission Control Cost Analysis Table 15 - CFBA - Line 2 - EPA Control Cost Manual Method + Site Specific Costs, Anticipated Annual Emissions
Operating Unit: Line 2 Pellet Induration

Emission Unit Number EU 042 Stack/Vent Number SV 048 & 049
Expected Utilization Rate 100% Temperature Deg F Expected Annual Hours of Operation 7,992 Hours Moisture Content Annual Interest Rate 7.0% Actual Flow Rate 1,128,438 acfm Expected Equipment Life 20 yrs Standardized Flow Rate 805,155 scfm @ 68o F

Dry Std Flow Rate 693,918 dscfm @ 68o F

CONTROL EQUIPMENT COSTS Capital Costs Direct Capital Costs (1) Purchased Equipment (A) 21,514,133 Purchased Equipment Total (B) 22% of control device cost (A) 26,204,214

Installation - Standard Costs 74% of purchased equip cost (B) 19,391,119 Installation - Site Specific Costs 53,058,154 Installation Total 19,391,119 Total Direct Capital Cost, DC 45,595,333 Total Indirect Capital Costs, IC 52% of purchased equip cost (B) 13,626,191 Total Capital Investment (TCI) = DC + IC 111,329,015
Operating Costs Total Annual Direct Operating Costs Labor, supervision, materials, replacement parts, utilities, etc. 4,943,524 Total Annual Indirect Operating Costs Sum indirect oper costs + capital recovery cost 15,314,410 Savings from Shutdown of Existing Emission Controls 4 -1,307,161 Total Annual Cost (Annualized Capital Cost + Operating Cost) 18,950,773

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 Nitrous Oxides (NOx) 923.9 #REF! 0% 0.0 #REF! NA Sulfur Dioxide (SO 2 ): 227.7 910 83.2% 5 ppm 153.2 757 25,048

Notes & Assumptions 1 Purchased equipment costs from independent review by Zachry Engineering. 2 Capital equipment cost includes the items listed below, which are calculated using EPA cost control manual guidance. 3 Exit concentration at 95% control efficiency is not technically feasible. The exit concentration at 95% control efficiency is shown below. 1.42 ppm 4 6/18/2012 email from Candice Maxwell, Cliffs Natural Resources in response to EPA Region 5 CAA Section 114 information request for scrubber operating costs. Email reported total annual operating costs for both scurbbers. Listed value excludes capital recover costs and is pro-rated by scrubber exhaust flow rate. Value includes continuing operations cost, per a 9/26/12 e-mail from Jen Krause, Cliffs Natural Resources. 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 3.21 of Chapter 3 of EPA's September 1999 Particulate Matter control design guidelines (for ESPs) 9 Labor and maintenance materials are 5% of capital costs per CueCost. "Average process with normal operating conditions should have maintenance labor and material costs" of 5 to 9% of fixed capital investment. (page 134, Plant Design and Economics for Chemical Engineers, Max Peters and Klaus Timmerhaus; McGraw-Hill Book Company) 10 Determined from Table 1.11 of Chapter 1 of EPA's December 1998 Particulate Matter control design guidelines (for FFs and baghouses) 11 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.

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### Cliffs Natural Resources: United Taconite Appendix A - SO2 Emission Control Cost Analysis Table 15 - CFBA - Line 2 - EPA Control Cost Manual Method + Site Specific Costs, Anticipated Annual Emissions

CAPITAL COSTS Direct Capital Costs Purchased Equipment (A) 1,2 Purchased Equipment Costs (A) 21,514,133 Instrumentation 10% of control device cost (A) 2,151,413 MN Sales Taxes 7% of control device cost (A) 1,462,961 Freight 5% of control device cost (A) 1,075,707 Purchased Equipment Total (B) 22% 26,204,214

Installation Foundations & supports 4% of purchased equip cost (B) 1,048,169 Handling & erection 50% of purchased equip cost (B) 13,102,107 Electrical 8% of purchased equip cost (B) 2,096,337 Piping 1% of purchased equip cost (B) 262,042 Insulation 7% of purchased equip cost (B) 1,834,295 Painting 4% of purchased equip cost (B) 1,048,169 Installation Subtotal Standard Expenses 74% 19,391,119

Total Direct Capital Cost, DC 45,595,333

Indirect Capital Costs Engineering, supervision 10% of purchased equip cost (B) 2,620,421 Construction & field expenses 20% of purchased equip cost (B) 5,240,843 Contractor fees 10% of purchased equip cost (B) 2,620,421 Start-up 1% of purchased equip cost (B) 262,042 Performance test 1% of purchased equip cost (B) 262,042 Model Studies NA of purchased equip cost (B) NA Contingencies 11 10% of purchased equip cost (B) 2,620,421 Total Indirect Capital Costs, IC 52% of purchased equip cost (B) 13,626,191 Total Capital Investment (TCI) = DC + IC 59,221,525 TCI Adj for Baghouse Filter Replacement 58,270,861 Retrofit multiplier 5 0% of TCI 0 Site Specific Installed Equipment Costs 6 Civil/Structural 1,566,667 Mechanical Equipment 37,000,900 Electrical and Control 4,440,833 Freight 1,346,714 Total Indirect Costs + Contingencies 8,703,040 Extended Shutdown for Tie-ins 0

Total Site Specific Costs 53,058,154
Total Capital Investment (TCI) Retrofit Installed 111,329,015

OPERATING COSTS Direct Annual Operating Costs, DC
Operating Labor Operator 180,605 Supervisor 27,091 Maintenance Maintenance Labor 32,468 Maintenance Materials 347,468 Utilities, Supplies, Replacements & Waste Managem Compressed Air $ 409,237 Electricity 3,277,439 Filter Bag Replacement 362,252 Solid Waste Disposal 108,625 Lime 198,340
Total Annual Direct Operating Costs 4,943,524

Savings from Shutdown of Existing Emission Controls 4 -1,307,161
Indirect Operating Costs Overhead 352,578 Administration (2% total capital costs) 2,226,580 Property tax (1% total capital costs) 1,113,290 Insurance (1% total capital costs) 1,113,290 Capital Recovery 0.0944 for a 20- year equipment life and a 7% interest rate 10,508,671 Total Annual Indirect Operating Costs Sum indirect oper costs + capital recovery cost 15,314,410
Total Annual Cost (Annualized Capital Cost + Operating Cost) 18,950,773 See Summary page for notes and assumptions

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### Cliffs Natural Resources: United Taconite Appendix A - SO2 Emission Control Cost Analysis Table 15 - CFBA - Line 2 - EPA Control Cost Manual Method + Site Specific Costs, Anticipated Annual Emissions

Capital Recovery Factors Primary Installation Interest Rate 7.00% Equipment Life 20 years CRF 0.0944
Replacement Catalyst:

Total Installed Cost 0 Zero out if no replacement parts needed Annualized Cost 0
Replacement Parts & Equipment: Filter Bags and Cages

Total Installed Cost 950,663 Zero out if no replacement parts needed Annualized Cost 362,252

Electrical Use

Reagent Use & Other Operating Costs

Operating Cost Calculations Annual hours of operation: 7,992 Utilization Rate: 100%

Unit Unit of Use Unit of Annual Annual Comments Item Cost $ Measure Rate Measure Use* Cost Operating Labor Op Labor BH + ESP 8,10 158,591 Lime Handling Labor 7 22013.33333 Supervisor 8 27,091 Maintenance Maint Labor Baghouse 10 32,468 Maint Mtls Baghouse 10 32,468 ESP Maint Mtls and Lbr 9 315000 Utilities, Supplies, Replacement Electricity 3,277,439 Water 0 Solid Waste Disposal 108,625 Lime 198,340 Filter Bag Replacement 362,252 Compressed Air $ 409,237

*annual use rate is in same units of measurement as the unit cost factor

See Summary page for notes and assumptions

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### Cliffs Natural Resources: United Taconite Appendix A - SO2 Emission Control Cost Analysis Table 16 - CFBA - Line 2 - EPA Control Cost Manual Method + Site Specific Costs, Anticipated Annual Emissions

(with Production Losses) Operating Unit: Line 2 Pellet Induration

Emission Unit Number EU 042 Stack/Vent Number SV 048 & 049
Expected Utilization Rate 100% Temperature Deg F Expected Annual Hours of Operation 7,992 Hours Moisture Content Annual Interest Rate 7.0% Actual Flow Rate 1,128,438 acfm Expected Equipment Life 20 yrs Standardized Flow Rate 805,155 scfm @ 68o F

Dry Std Flow Rate 693,918 dscfm @ 68o F

CONTROL EQUIPMENT COSTS Capital Costs Direct Capital Costs (1) Purchased Equipment (A) 21,514,133 Purchased Equipment Total (B) 22% of control device cost (A) 26,204,214

Installation - Standard Costs 74% of purchased equip cost (B) 19,391,119 Installation - Site Specific Costs 60,758,154 Installation Total 19,391,119 Total Direct Capital Cost, DC 45,595,333 Total Indirect Capital Costs, IC 52% of purchased equip cost (B) 13,626,191 Total Capital Investment (TCI) = DC + IC 119,029,015
Operating Costs Total Annual Direct Operating Costs Labor, supervision, materials, replacement parts, utilities, etc. 4,943,524 Total Annual Indirect Operating Costs Sum indirect oper costs + capital recovery cost 16,349,236 Savings from Shutdown of Existing Emission Controls 4 -1,307,161 Total Annual Cost (Annualized Capital Cost + Operating Cost) 19,985,599

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 Nitrous Oxides (NOx) 923.9 #REF! 0% 0.0 #REF! NA Sulfur Dioxide (SO 2 ): 227.7 910 83.2% 5 ppm 153.2 757 26,415

Notes & Assumptions 1 Purchased equipment costs from independent review by Zachry Engineering. 2 Capital equipment cost includes the items listed below, which are calculated using EPA cost control manual guidance. 3 Exit concentration at 95% control efficiency is not technically feasible. The exit concentration at 95% control efficiency is shown below. 1.42 ppm 4 6/18/2012 email from Candice Maxwell, Cliffs Natural Resources in response to EPA Region 5 CAA Section 114 information request for scrubber operating costs. Email reported total annual operating costs for both scurbbers. Listed value excludes capital recover costs and is pro-rated by scrubber exhaust flow rate. Value includes continuing operations cost, per a 9/26/12 e-mail from Jen Krause, Cliffs Natural Resources. 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 3.21 of Chapter 3 of EPA's September 1999 Particulate Matter control design guidelines (for ESPs) 9 Labor and maintenance materials are 5% of capital costs per CueCost. "Average process with normal operating conditions should have maintenance labor and material costs" of 5 to 9% of fixed capital investment. (page 134, Plant Design and Economics for Chemical Engineers, Max Peters and Klaus Timmerhaus; McGraw-Hill Book Company) 10 Determined from Table 1.11 of Chapter 1 of EPA's December 1998 Particulate Matter control design guidelines (for FFs and baghouses) 11 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. 12 Cost per ton based on Cliffs Natural Resources Inc. Reports Second-Quarter 2012 Results.

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### Cliffs Natural Resources: United Taconite Appendix A - SO2 Emission Control Cost Analysis Table 16 - CFBA - Line 2 - EPA Control Cost Manual Method + Site Specific Costs, Anticipated Annual Emissions

CAPITAL COSTS Direct Capital Costs Purchased Equipment (A) 1,2 Purchased Equipment Costs (A) 21,514,133 Instrumentation 10% of control device cost (A) 2,151,413 MN Sales Taxes 7% of control device cost (A) 1,462,961 Freight 5% of control device cost (A) 1,075,707 Purchased Equipment Total (B) 22% 26,204,214

Installation Foundations & supports 4% of purchased equip cost (B) 1,048,169 Handling & erection 50% of purchased equip cost (B) 13,102,107 Electrical 8% of purchased equip cost (B) 2,096,337 Piping 1% of purchased equip cost (B) 262,042 Insulation 7% of purchased equip cost (B) 1,834,295 Painting 4% of purchased equip cost (B) 1,048,169 Installation Subtotal Standard Expenses 74% 19,391,119

Total Direct Capital Cost, DC 45,595,333

Indirect Capital Costs Engineering, supervision 10% of purchased equip cost (B) 2,620,421 Construction & field expenses 20% of purchased equip cost (B) 5,240,843 Contractor fees 10% of purchased equip cost (B) 2,620,421 Start-up 1% of purchased equip cost (B) 262,042 Performance test 1% of purchased equip cost (B) 262,042 Model Studies NA of purchased equip cost (B) NA Contingencies 11 10% of purchased equip cost (B) 2,620,421 Total Indirect Capital Costs, IC 52% of purchased equip cost (B) 13,626,191 Total Capital Investment (TCI) = DC + IC 59,221,525 TCI Adj for Baghouse Filter Replacement 58,270,861 Retrofit multiplier 5 0% of TCI 0 Site Specific Installed Equipment Costs 6 Civil/Structural 1,566,667 Mechanical Equipment 37,000,900 Electrical and Control 4,440,833 Freight 1,346,714 Total Indirect Costs + Contingencies 8,703,040 Extended Shutdown for Tie-ins 7,700,000

Total Site Specific Costs
Total Capital Investment (TCI) Retrofit Installed 119,029,015

OPERATING COSTS Direct Annual Operating Costs, DC
Operating Labor Operator 180,605 Supervisor 27,091 Maintenance Maintenance Labor 32,468 Maintenance Materials 347,468 Utilities, Supplies, Replacements & Waste Managem Compressed Air $ 409,237 Electricity 3,277,439 Filter Bag Replacement 362,252 Solid Waste Disposal 108,625 Lime 198,340
Total Annual Direct Operating Costs 4,943,524

Savings from Shutdown of Existing Emission Controls 4 -1,307,161
Indirect Operating Costs Overhead 352,578 Administration (2% total capital costs) 2,380,580 Property tax (1% total capital costs) 1,190,290 Insurance (1% total capital costs) 1,190,290 Capital Recovery 0.0944 for a 20- year equipment life and a 7% interest rate 11,235,497 Total Annual Indirect Operating Costs Sum indirect oper costs + capital recovery cost 16,349,236
Total Annual Cost (Annualized Capital Cost + Operating Cost) 19,985,599 See Summary page for notes and assumptions

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### Cliffs Natural Resources: United Taconite Appendix A - SO2 Emission Control Cost Analysis Table 16 - CFBA - Line 2 - EPA Control Cost Manual Method + Site Specific Costs, Anticipated Annual Emissions

Capital Recovery Factors Primary Installation Interest Rate 7.00% Equipment Life 20 years CRF 0.0944
Replacement Catalyst:

Total Installed Cost Annualized Cost 0
Replacement Parts & Equipment: Filter Bags and Cages

Total Installed Cost 950,663 Zero out if no replacement parts needed Annualized Cost 362,252

Electrical Use

Reagent Use & Other Operating Costs

Operating Cost Calculations Annual hours of operation: 7,992 Utilization Rate: 100%

Unit Unit of Use Unit of Annual Annual Comments Item Cost $ Measure Rate Measure Use* Cost Operating Labor Op Labor BH + ESP 8,10 158,591 Lime Handling Labor 7 22013.33333 Supervisor 8 27,091 Maintenance Maint Labor Baghouse 10 32,468 Maint Mtls Baghouse 10 32,468 ESP Maint Mtls and Lbr 9 315000 Utilities, Supplies, Replaceme Electricity 3,277,439 Water 0 Solid Waste Disposal 108,625 Lime 198,340 Filter Bag Replacement 362,252 Compressed Air $ 409,237

*annual use rate is in same units of measurement as the unit cost factor

See Summary page for notes and assumptions

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### Cliffs Natural Resources: United Taconite Appendix A - SO2 Emission Control Cost Analysis Table 17 - Line 2 - 2012 Dry FGD Study Costs for CFBA Scrubber Including Site Specific Costs, Anticipated Annual Emissions
Operating Unit: Line 2 Pellet Induration

Emission Unit Number EU 042 Stack/Vent Number SV 048 & 049
Expected Utilization Rate 100% Temperature Deg F Expected Annual Hours of Operation 7,992 Hours Moisture Content Annual Interest Rate 7.0% Actual Flow Rate 1,128,438 acfm Expected Equipment Life 20 yrs Standardized Flow Rate 805,155 scfm @ 68o F

Dry Std Flow Rate 693,918 dscfm @ 68o F

CONTROL EQUIPMENT COSTS Capital Costs Direct Capital Costs (1) Purchased Equipment (A) 21,514,133 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 NA Installation Total 0 Total Direct Capital Cost, DC 0 Total Indirect Capital Costs, IC 0% of purchased equip cost (B) 7,590,000 Total Capital Investment (TCI) = DC + IC 92,103,386
Operating Costs Total Annual Direct Operating Costs Labor, supervision, materials, replacement parts, utilities, etc. 4,447,428 Total Annual Indirect Operating Costs Sum indirect oper costs + capital recovery cost 12,617,224 Savings from Shutdown of Existing Emission Controls 4 1,307,161 Total Annual Cost (Annualized Capital Cost + Operating Cost) $18,371,813

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 Nitrous Oxides (NOx) 923.9 #REF! 0% 0.0 #REF! NA Sulfur Dioxide (SO 2 ): 227.7 910 83.2% 5 ppm 153.2 757 24,282

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. 1.42 ppm 4 6/18/2012 email from Candice Maxwell, Cliffs Natural Resources in response to EPA Region 5 CAA Section 114 information request for scrubber operating costs. Email reported total annual operating costs for both scrubbers. Listed value excludes capital recover costs and is pro-rated by scrubber exhaust flow rate. Value includes continuing operations cost, per a 9/26/12 e-mail from Jen Krause, Cliffs Natural Resources. 5 CUECost Workbook Version 1.0, USEPA Document Page 2 allows up to a 60% retrofit factor for installations in existing facilities

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### Cliffs Natural Resources: United Taconite Appendix A - SO2 Emission Control Cost Analysis Table 17 - Line 2 - 2012 Dry FGD Study Costs for CFBA Scrubber Including Site Specific Costs, Anticipated Annual Emissions

CAPITAL COSTS Direct Capital Costs Purchased Equipment (A) 1,2 Purchased Equipment Costs (A) 21,514,133 Instrumentation MN 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 84,513,386 Indirect Capital Costs Engineering, supervision Construction & field expenses 0 Contractor fees 0 Start-up 0 Performance test 0 Model Studies 0 Contingencies 0 Total Indirect Capital Costs, IC 7,590,000 Total Capital Investment (TCI) = DC + IC 92,103,386 TCI Adj for Baghouse Filter Replacement 92,103,386 Retrofit multiplier 5 0% of TCI 0 Site Specific Installed Equipment Costs Cost of Extended Shutdown for Tie-ins Cost of extended shutdown to be provided byCNR

Total Site Specific Costs NA
Total Capital Investment (TCI) Retrofit Installed 92,103,386

OPERATING COSTS Direct Annual Operating Costs, DC
Operating Labor Operator 107,892 Supervisor 16,184 Maintenance Maintenance Labor 107,892 Maintenance Materials 166,667 Utilities, Supplies, Replacements & Waste Manageme Compressed Air $

- Electricity 2,757,240 Filter Bag Replacement 323,136 Solid Waste Disposal 287,712 Lime 525,341 Softener Salt 155,364 Total Annual Direct Operating Costs 4,447,428

Savings from Shutdown of Existing Emission Controls 4 1,307,161
Indirect Operating Costs Overhead 239,181 Administration (2% total capital costs) 1,842,068 Property tax (1% total capital costs) 921,034 Insurance (1% total capital costs) 921,034 Capital Recovery 0.0944 for a 20- year equipment life and a 7% interest rate 8,693,908 Total Annual Indirect Operating Costs Sum indirect oper costs + capital recovery cost 12,617,224
Total Annual Cost (Annualized Capital Cost + Operating Cost) 18,371,813 See Summary page for notes and assumptions

9/28/2012 Page 40 of 56 C:\Users\arm3\AppData\Local\Temp\United Taconite Appendix A SO2 Control Costs 09282012_2E30A1.xlsx Line 2 CFBA Independent Review

### Cliffs Natural Resources: United Taconite Appendix A - SO2 Emission Control Cost Analysis Table 17 - Line 2 - 2012 Dry FGD Study Costs for CFBA Scrubber Including Site Specific Costs, Anticipated Annual Emissions

Capital Recovery Factors Primary Installation Interest Rate 7.00% Equipment Life 20 years CRF 0.0944
Replacement Catalyst:

Total Installed Cost 0 Zero out if no replacement parts needed Annualized Cost 0

Replacement Parts & Equipment: Filter Bags and Cages

Total Installed Cost 0 Zero out if no replacement parts needed Annualized Cost 0

Electrical Use

Reagent Use & Other Operating Costs

Operating Cost Calculations Annual hours of operation: 7,992 Utilization Rate: 100%

Unit Unit of Use Unit of Annual Annual Comments Item Cost $ Measure Rate Measure Use* Cost Operating Labor Op Labor 107,892 Supervisor 16,184 Maintenance Maint Labor 107,892 Maint Mtls 166,667 Utilities, Supplies, Replacements & Waste Management Electricity 2,757,240 Water 0 Solid Waste Disposal 287,712 Lime 525,341 Filter Bag Replacement 323,136 Compressed Air

- Softener Salt 155364.48

*annual use rate is in same units of measurement as the unit cost factor

See Summary page for notes and assumptions

9/28/2012 Page 41 of 56 C:\Users\arm3\AppData\Local\Temp\United Taconite Appendix A SO2 Control Costs 09282012_2E30A1.xlsx Line 2 CFBA Independent Review

### Cliffs Natural Resources: United Taconite Appendix A - SO2 Emission Control Cost Analysis Table 18 - Line 2 - 2012 Dry FGD Study Costs for CFBA Scrubber Including Site Specific Costs, Anticipated Annual Emissions

(with Production Losses) Operating Unit: Line 2 Pellet Induration

Emission Unit Number EU 042 Stack/Vent Number SV 048 & 049
Expected Utilization Rate 100% Temperature Deg F Expected Annual Hours of Operation 7,992 Hours Moisture Content Annual Interest Rate 7.0% Actual Flow Rate 1,128,438 acfm Expected Equipment Life 20 yrs Standardized Flow Rate 805,155 scfm @ 68o F

Dry Std Flow Rate 693,918 dscfm @ 68o F

CONTROL EQUIPMENT COSTS Capital Costs Direct Capital Costs (1) Purchased Equipment (A) 21,514,133 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 7,700,000 Installation Total 0 Total Direct Capital Cost, DC 0 Total Indirect Capital Costs, IC 0% of purchased equip cost (B) 7,590,000 Total Capital Investment (TCI) = DC + IC 99,803,386
Operating Costs Total Annual Direct Operating Costs Labor, supervision, materials, replacement parts, utilities, etc. 4,447,428 Total Annual Indirect Operating Costs Sum indirect oper costs + capital recovery cost 13,652,050 Savings from Shutdown of Existing Emission Controls 4 1,307,161 Total Annual Cost (Annualized Capital Cost + Operating Cost) $19,406,638

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 Nitrous Oxides (NOx) 923.9 #REF! 0% 0.0 #REF! NA Sulfur Dioxide (SO 2 ): 227.7 910 83.2% 5 ppm 153.2 757 25,650

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. 1.42 ppm 4 6/18/2012 email from Candice Maxwell, Cliffs Natural Resources in response to EPA Region 5 CAA Section 114 information request for scrubber operating costs. Email reported total annual operating costs for both scrubbers. Listed value excludes capital recover costs and is pro-rated by scrubber exhaust flow rate. Value includes continuing operations cost, per a 9/26/12 e-mail from Jen Krause, Cliffs Natural Resources. 5 CUECost Workbook Version 1.0, USEPA Document Page 2 allows up to a 60% retrofit factor for installations in existing facilities 6 Cost per ton based on Cliffs Natural Resources Inc. Reports Second-Quarter 2012 Results.

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### Cliffs Natural Resources: United Taconite Appendix A - SO2 Emission Control Cost Analysis Table 18 - Line 2 - 2012 Dry FGD Study Costs for CFBA Scrubber Including Site Specific Costs, Anticipated Annual Emissions

CAPITAL COSTS Direct Capital Costs Purchased Equipment (A) 1,2 Purchased Equipment Costs (A) 21,514,133 Instrumentation MN 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 84,513,386 Indirect Capital Costs Engineering, supervision Construction & field expenses 0 Contractor fees 0 Start-up 0 Performance test 0 Model Studies 0 Contingencies 0 Total Indirect Capital Costs, IC 7,590,000 Total Capital Investment (TCI) = DC + IC 92,103,386 TCI Adj for Baghouse Filter Replacement 92,103,386 Retrofit multiplier 5 0% of TCI 0 Site Specific Installed Equipment Costs Extended Shutdown for Tie-ins

Total Site Specific Costs 7,700,000
Total Capital Investment (TCI) Retrofit Installed 99,803,386

OPERATING COSTS Direct Annual Operating Costs, DC
Operating Labor Operator 107,892 Supervisor 16,184 Maintenance Maintenance Labor 107,892 Maintenance Materials 166,667 Utilities, Supplies, Replacements & Waste Managem Compressed Air $

- Electricity 2,757,240 Filter Bag Replacement 323,136 Solid Waste Disposal 287,712 Lime 525,341 Softener Salt 155,364 Total Annual Direct Operating Costs 4,447,428

Savings from Shutdown of Existing Emission Controls 4 1,307,161
Indirect Operating Costs Overhead 239,181 Administration (2% total capital costs) 1,996,068 Property tax (1% total capital costs) 998,034 Insurance (1% total capital costs) 998,034 Capital Recovery 0.0944 for a 20- year equipment life and a 7% interest rate 9,420,734 Total Annual Indirect Operating Costs Sum indirect oper costs + capital recovery cost 13,652,050
Total Annual Cost (Annualized Capital Cost + Operating Cost) 19,406,638 See Summary page for notes and assumptions

9/28/2012 Page 43 of 56 C:\Users\arm3\AppData\Local\Temp\United Taconite Appendix A SO2 Control Costs 09282012_2E30A1.xlsx Line 2 CFBA Independent PL

### Cliffs Natural Resources: United Taconite Appendix A - SO2 Emission Control Cost Analysis Table 18 - Line 2 - 2012 Dry FGD Study Costs for CFBA Scrubber Including Site Specific Costs, Anticipated Annual Emissions

Capital Recovery Factors Primary Installation Interest Rate 7.00% Equipment Life 20 years CRF 0.0944
Replacement Catalyst:

Total Installed Cost 0 Zero out if no replacement parts needed Annualized Cost 0

Replacement Parts & Equipment: Filter Bags and Cages

Total Installed Cost 0 Zero out if no replacement parts needed Annualized Cost 0

Electrical Use

Reagent Use & Other Operating Costs

Operating Cost Calculations Annual hours of operation: 7,992 Utilization Rate: 100%

Unit Unit of Use Unit of Annual Annual Comments Item Cost $ Measure Rate Measure Use* Cost Operating Labor Op Labor 107,892 Supervisor 16,184 Maintenance Maint Labor 107,892 Maint Mtls 166,667 Utilities, Supplies, Replacements & Waste Management Electricity 2,757,240 Water 0 Solid Waste Disposal 287,712 Lime 525,341 Filter Bag Replacement 323,136 Compressed Air

- Softener Salt 155364.48

*annual use rate is in same units of measurement as the unit cost factor

See Summary page for notes and assumptions

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### Cliffs Natural Resources: United Taconite Appendix A - SO2 Emission Control Cost Analysis Table 19 - SDA - Line 2 - EPA Control Cost Manual Method + Site Specific Costs, Anticipated Annual Emissions
Operating Unit: Line 2 Pellet Induration

Emission Unit Number EU 042 Stack/Vent Number SV 048 & 049
Expected Utilization Rate 100% Temperature Deg F Expected Annual Hours of Operation 7,992 Hours Moisture Content Annual Interest Rate 7.0% Actual Flow Rate 1,128,438 acfm Expected Equipment Life 20 yrs Standardized Flow Rate 805,155 scfm @ 68o F

Dry Std Flow Rate 693,918 dscfm @ 68o F

CONTROL EQUIPMENT COSTS Capital Costs Direct Capital Costs (1) Purchased Equipment (A) 25,333,333 Purchased Equipment Total (B) 22% of control device cost (A) 30,856,000

Installation - Standard Costs 74% of purchased equip cost (B) 22,833,440 Installation - Site Specific Costs 50,872,753 Installation Total 22,833,440 Total Direct Capital Cost, DC 53,689,440 Total Indirect Capital Costs, IC 52% of purchased equip cost (B) 16,045,120 Total Capital Investment (TCI) = DC + IC 119,656,650
Operating Costs Total Annual Direct Operating Costs Labor, supervision, materials, replacement parts, utilities, etc. 4,943,524 Total Annual Indirect Operating Costs Sum indirect oper costs + capital recovery cost 16,433,585 Savings from Shutdown of Existing Emission Controls 4 -1,307,161 Total Annual Cost (Annualized Capital Cost + Operating Cost) 20,069,948

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 Nitrous Oxides (NOx) 923.9 #REF! 0% 0.0 #REF! NA Sulfur Dioxide (SO 2 ): 227.7 910 90.0% 5 ppm 91.0 819 24,512

Notes & Assumptions 1 Purchased equipment costs from independent review by Zachry Engineering. 2 Capital equipment cost includes the items listed below, which are calculated using EPA cost control manual guidance. 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 2.83 ppm 4 6/18/2012 email from Candice Maxwell, Cliffs Natural Resources in response to EPA Region 5 CAA Section 114 information request for scrubber operating costs. Email reported total annual operating costs for both scurbbers. Listed value excludes capital recover costs and is pro-rated by scrubber exhaust flow rate. Value includes continuing operations cost, per a 9/26/12 e-mail from Jen Krause, Cliffs Natural Resources. 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 3.21 of Chapter 3 of EPA's September 1999 Particulate Matter control design guidelines (for ESPs) 9 Labor and maintenance materials are 5% of capital costs per CueCost. "Average process with normal operating conditions should have maintenance labor and material costs" of 5 to 9% of fixed capital investment. (page 134, Plant Design and Economics for Chemical Engineers, Max Peters and Klaus Timmerhaus; McGraw-Hill Book Company) 10 Determined from Table 1.11 of Chapter 1 of EPA's December 1998 Particulate Matter control design guidelines (for FFs and baghouses) 11 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.

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### Cliffs Natural Resources: United Taconite Appendix A - SO2 Emission Control Cost Analysis Table 19 - SDA - Line 2 - EPA Control Cost Manual Method + Site Specific Costs, Anticipated Annual Emissions

CAPITAL COSTS Direct Capital Costs Purchased Equipment (A) 1,2 Purchased Equipment Costs (A) 25,333,333 Instrumentation 10% of control device cost (A) 2,533,333 MN Sales Taxes 7% of control device cost (A) 1,722,667 Freight 5% of control device cost (A) 1,266,667 Purchased Equipment Total (B) 22% 30,856,000

Installation Foundations & supports 4% of purchased equip cost (B) 1,234,240 Handling & erection 50% of purchased equip cost (B) 15,428,000 Electrical 8% of purchased equip cost (B) 2,468,480 Piping 1% of purchased equip cost (B) 308,560 Insulation 7% of purchased equip cost (B) 2,159,920 Painting 4% of purchased equip cost (B) 1,234,240 Installation Subtotal Standard Expenses 74% 22,833,440

Total Direct Capital Cost, DC 53,689,440

Indirect Capital Costs Engineering, supervision 10% of purchased equip cost (B) 3,085,600 Construction & field expenses 20% of purchased equip cost (B) 6,171,200 Contractor fees 10% of purchased equip cost (B) 3,085,600 Start-up 1% of purchased equip cost (B) 308,560 Performance test 1% of purchased equip cost (B) 308,560 Model Studies NA of purchased equip cost (B) NA Contingencies 11 10% of purchased equip cost (B) 3,085,600 Total Indirect Capital Costs, IC 52% of purchased equip cost (B) 16,045,120 Total Capital Investment (TCI) = DC + IC 69,734,560 TCI Adj for Baghouse Filter Replacement 68,783,897 Retrofit multiplier 5 0% of TCI 0 Site Specific Installed Equipment Costs 6 Civil/Structural 1,566,667 Mechanical Equipment 35,544,000 Electrical and Control 4,440,833 Freight 1,295,203 Total Indirect Costs + Contingencies 8,026,050 Extended Shutdown for Tie-ins 0

Total Site Specific Costs 50,872,753
Total Capital Investment (TCI) Retrofit Installed 119,656,650

OPERATING COSTS Direct Annual Operating Costs, DC
Operating Labor Operator 180,605 Supervisor 27,091 Maintenance Maintenance Labor 32,468 Maintenance Materials 347,468 Utilities, Supplies, Replacements & Waste Managem Compressed Air $ 409,237 Electricity 3,277,439 Filter Bag Replacement 362,252 Solid Waste Disposal 108,625 Lime 198,340
Total Annual Direct Operating Costs 4,943,524

Savings from Shutdown of Existing Emission Controls 4 -1,307,161
Indirect Operating Costs Overhead 352,578 Administration (2% total capital costs) 2,393,133 Property tax (1% total capital costs) 1,196,567 Insurance (1% total capital costs) 1,196,567 Capital Recovery 0.0944 for a 20- year equipment life and a 7% interest rate 11,294,741 Total Annual Indirect Operating Costs Sum indirect oper costs + capital recovery cost 16,433,585
Total Annual Cost (Annualized Capital Cost + Operating Cost) 20,069,948 See Summary page for notes and assumptions

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### Cliffs Natural Resources: United Taconite Appendix A - SO2 Emission Control Cost Analysis Table 19 - SDA - Line 2 - EPA Control Cost Manual Method + Site Specific Costs, Anticipated Annual Emissions

Capital Recovery Factors Primary Installation Interest Rate 7.00% Equipment Life 20 years CRF 0.0944
Replacement Catalyst:

Total Installed Cost 0 Zero out if no replacement parts needed Annualized Cost 0
Replacement Parts & Equipment: Filter Bags and Cages

Total Installed Cost 950,663 Zero out if no replacement parts needed Annualized Cost 362,252

Electrical Use

Reagent Use & Other Operating Costs

Operating Cost Calculations Annual hours of operation: 7,992 Utilization Rate: 100%

Unit Unit of Use Unit of Annual Annual Comments Item Cost $ Measure Rate Measure Use* Cost Operating Labor Op Labor BH + ESP 8,10 158,591 Lime Handling Labor 7 22013.33333 Supervisor 8 27,091 Maintenance Maint Labor Baghouse 10 32,468 Maint Mtls Baghouse 10 32,468 ESP Maint Mtls and Lbr 9 315000 Utilities, Supplies, Replaceme Electricity 3,277,439 Water 0 Solid Waste Disposal 108,625 Lime 198,340 Filter Bag Replacement 362,252 Compressed Air $ 409,237

*annual use rate is in same units of measurement as the unit cost factor

See Summary page for notes and assumptions

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### Cliffs Natural Resources: United Taconite Appendix A - SO2 Emission Control Cost Analysis Table 20 - SDA - Line 2 - EPA Control Cost Manual Method + Site Specific Costs, Anticipated Annual Emissions

(with Production Losses) Operating Unit: Line 2 Pellet Induration

Emission Unit Number EU 042 Stack/Vent Number SV 048 & 049
Expected Utilization Rate 100% Temperature Deg F Expected Annual Hours of Operation 7,992 Hours Moisture Content Annual Interest Rate 7.0% Actual Flow Rate 1,128,438 acfm Expected Equipment Life 20 yrs Standardized Flow Rate 805,155 scfm @ 68o F

Dry Std Flow Rate 693,918 dscfm @ 68o F

CONTROL EQUIPMENT COSTS Capital Costs Direct Capital Costs (1) Purchased Equipment (A) 25,333,333 Purchased Equipment Total (B) 22% of control device cost (A) 30,856,000

Installation - Standard Costs 74% of purchased equip cost (B) 22,833,440 Installation - Site Specific Costs 58,572,753 Installation Total 22,833,440 Total Direct Capital Cost, DC 53,689,440 Total Indirect Capital Costs, IC 52% of purchased equip cost (B) 16,045,120 Total Capital Investment (TCI) = DC + IC 127,356,650
Operating Costs Total Annual Direct Operating Costs Labor, supervision, materials, replacement parts, utilities, etc. 4,943,524 Total Annual Indirect Operating Costs Sum indirect oper costs + capital recovery cost 17,468,411 Savings from Shutdown of Existing Emission Controls 4 -1,307,161 Total Annual Cost (Annualized Capital Cost + Operating Cost) 21,104,774

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 Nitrous Oxides (NOx) 923.9 #REF! 0% 0.0 #REF! NA Sulfur Dioxide (SO 2 ): 227.7 910 90.0% 5 ppm 91.0 819 25,776

Notes & Assumptions 1 Purchased equipment costs from independent review by Zachry Engineering. 2 Capital equipment cost includes the items listed below, which are calculated using EPA cost control manual guidance. 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 2.83 ppm 4 6/18/2012 email from Candice Maxwell, Cliffs Natural Resources in response to EPA Region 5 CAA Section 114 information request for scrubber operating costs. Email reported total annual operating costs for both scurbbers. Listed value excludes capital recover costs and is pro-rated by scrubber exhaust flow rate. Value includes continuing operations cost, per a 9/26/12 e-mail from Jen Krause, Cliffs Natural Resources. 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 3.21 of Chapter 3 of EPA's September 1999 Particulate Matter control design guidelines (for ESPs) 9 Labor and maintenance materials are 5% of capital costs per CueCost. "Average process with normal operating conditions should have maintenance labor and material costs" of 5 to 9% of fixed capital investment. (page 134, Plant Design and Economics for Chemical Engineers, Max Peters and Klaus Timmerhaus; McGraw-Hill Book Company) 10 Determined from Table 1.11 of Chapter 1 of EPA's December 1998 Particulate Matter control design guidelines (for FFs and baghouses) 11 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. 12 Cost per ton based on Cliffs Natural Resources Inc. Reports Second-Quarter 2012 Results.

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### Cliffs Natural Resources: United Taconite Appendix A - SO2 Emission Control Cost Analysis Table 20 - SDA - Line 2 - EPA Control Cost Manual Method + Site Specific Costs, Anticipated Annual Emissions

CAPITAL COSTS Direct Capital Costs Purchased Equipment (A) 1,2 Purchased Equipment Costs (A) 25,333,333 Instrumentation 10% of control device cost (A) 2,533,333 MN Sales Taxes 7% of control device cost (A) 1,722,667 Freight 5% of control device cost (A) 1,266,667 Purchased Equipment Total (B) 22% 30,856,000

Installation Foundations & supports 4% of purchased equip cost (B) 1,234,240 Handling & erection 50% of purchased equip cost (B) 15,428,000 Electrical 8% of purchased equip cost (B) 2,468,480 Piping 1% of purchased equip cost (B) 308,560 Insulation 7% of purchased equip cost (B) 2,159,920 Painting 4% of purchased equip cost (B) 1,234,240 Installation Subtotal Standard Expenses 74% 22,833,440

Total Direct Capital Cost, DC 53,689,440

Indirect Capital Costs Engineering, supervision 10% of purchased equip cost (B) 3,085,600 Construction & field expenses 20% of purchased equip cost (B) 6,171,200 Contractor fees 10% of purchased equip cost (B) 3,085,600 Start-up 1% of purchased equip cost (B) 308,560 Performance test 1% of purchased equip cost (B) 308,560 Model Studies NA of purchased equip cost (B) NA Contingencies 11 10% of purchased equip cost (B) 3,085,600 Total Indirect Capital Costs, IC 52% of purchased equip cost (B) 16,045,120 Total Capital Investment (TCI) = DC + IC 69,734,560 TCI Adj for Baghouse Filter Replacement 68,783,897 Retrofit multiplier 5 0% of TCI 0 Site Specific Installed Equipment Costs 6 Civil/Structural 1,566,667 Mechanical Equipment 35,544,000 Electrical and Control 4,440,833 Freight 1,295,203 Total Indirect Costs + Contingencies 8,026,050 Extended Shutdown for Tie-ins 7,700,000

Total Site Specific Costs
Total Capital Investment (TCI) Retrofit Installed 127,356,650

OPERATING COSTS Direct Annual Operating Costs, DC
Operating Labor Operator 180,605 Supervisor 27,091 Maintenance Maintenance Labor 32,468 Maintenance Materials 347,468 Utilities, Supplies, Replacements & Waste Managem Compressed Air $ 409,237 Electricity 3,277,439 Filter Bag Replacement 362,252 Solid Waste Disposal 108,625 Lime 198,340
Total Annual Direct Operating Costs 4,943,524

Savings from Shutdown of Existing Emission Controls 4 -1,307,161
Indirect Operating Costs Overhead 352,578 Administration (2% total capital costs) 2,547,133 Property tax (1% total capital costs) 1,273,567 Insurance (1% total capital costs) 1,273,567 Capital Recovery 0.0944 for a 20- year equipment life and a 7% interest rate 12,021,567 Total Annual Indirect Operating Costs Sum indirect oper costs + capital recovery cost 17,468,411
Total Annual Cost (Annualized Capital Cost + Operating Cost) 21,104,774 See Summary page for notes and assumptions

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### Cliffs Natural Resources: United Taconite Appendix A - SO2 Emission Control Cost Analysis Table 20 - SDA - Line 2 - EPA Control Cost Manual Method + Site Specific Costs, Anticipated Annual Emissions

Capital Recovery Factors Primary Installation Interest Rate 7.00% Equipment Life 20 years CRF 0.0944
Replacement Catalyst:

Total Installed Cost 0 Zero out if no replacement parts needed Annualized Cost 0
Replacement Parts & Equipment: Filter Bags and Cages

Total Installed Cost 950,663 Zero out if no replacement parts needed Annualized Cost 362,252

Electrical Use

Reagent Use & Other Operating Costs

Operating Cost Calculations Annual hours of operation: 7,992 Utilization Rate: 100%

Unit Unit of Use Unit of Annual Annual Comments Item Cost $ Measure Rate Measure Use* Cost Operating Labor Op Labor BH + ESP 8,10 158,591 Lime Handling Labor 7 22013.33333 Supervisor 8 27,091 Maintenance Maint Labor Baghouse 10 32,468 Maint Mtls Baghouse 10 32,468 ESP Maint Mtls and Lbr 9 315000 Utilities, Supplies, Replacem Electricity 3,277,439 Water 0 Solid Waste Disposal 108,625 Lime 198,340 Filter Bag Replacement 362,252 Compressed Air $ 409,237

*annual use rate is in same units of measurement as the unit cost factor

See Summary page for notes and assumptions

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### Cliffs Natural Resources: United Taconite Appendix A - SO2 Emission Control Cost Analysis Table 21 - Line 2 - 2012 Dry FGD Study Costs for SDA Scrubber Including Site Specific Costs, Anticipated Annual Emissions
Operating Unit: Line 2 Pellet Induration

Emission Unit Number EU 042 Stack/Vent Number SV 048 & 049
Expected Utilization Rate 100% Temperature Deg F Expected Annual Hours of Operation 7,992 Hours Moisture Content Annual Interest Rate 7.0% Actual Flow Rate 1,128,438 acfm Expected Equipment Life 20 yrs Standardized Flow Rate 805,155 scfm @ 68o F

Dry Std Flow Rate 693,918 dscfm @ 68o F

CONTROL EQUIPMENT COSTS Capital Costs Direct Capital Costs (1) Purchased Equipment (A) 25,333,333 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 NA Installation Total 0 Total Direct Capital Cost, DC 0 Total Indirect Capital Costs, IC 0% of purchased equip cost (B) 7,590,000 Total Capital Investment (TCI) = DC + IC 99,436,250
Operating Costs Total Annual Direct Operating Costs Labor, supervision, materials, replacement parts, utilities, etc. 4,447,428 Total Annual Indirect Operating Costs Sum indirect oper costs + capital recovery cost 13,602,709 Savings from Shutdown of Existing Emission Controls 4 1,307,161 Total Annual Cost (Annualized Capital Cost + Operating Cost) $19,357,298

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 Nitrous Oxides (NOx) 923.9 #REF! 0% 0.0 #REF! NA Sulfur Dioxide (SO 2 ): 227.7 910 90.0% 5 ppm 91.0 819 23,641

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 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 2.83 ppm 4 6/18/2012 email from Candice Maxwell, Cliffs Natural Resources in response to EPA Region 5 CAA Section 114 information request for scrubber operating costs. Email reported total annual operating costs for both scrubbers. Listed value excludes capital recover costs and is pro-rated by scrubber exhaust flow rate. Value includes continuing operations cost, per a 9/26/12 e-mail from Jen Krause, Cliffs Natural Resources. 5 CUECost Workbook Version 1.0, USEPA Document Page 2 allows up to a 60% retrofit factor for installations in existing facilities

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### Cliffs Natural Resources: United Taconite Appendix A - SO2 Emission Control Cost Analysis Table 21 - Line 2 - 2012 Dry FGD Study Costs for SDA Scrubber Including Site Specific Costs, Anticipated Annual Emissions

CAPITAL COSTS Direct Capital Costs Purchased Equipment (A) 1,2 Purchased Equipment Costs (A) 25,333,333 Instrumentation MN 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 91,846,250 Indirect Capital Costs Engineering, supervision Construction & field expenses 0 Contractor fees 0 Start-up 0 Performance test 0 Model Studies 0 Contingencies 0 Total Indirect Capital Costs, IC 7,590,000 Total Capital Investment (TCI) = DC + IC 99,436,250 TCI Adj for Baghouse Filter Replacement 99,436,250 Retrofit multiplier 5 0% of TCI 0 Site Specific Installed Equipment Costs 7 Cost of Extended Shutdown for Tie-ins Cost of extended shutdown to be provided byCNR

Total Site Specific Costs NA
Total Capital Investment (TCI) Retrofit Installed 99,436,250

OPERATING COSTS Direct Annual Operating Costs, DC
Operating Labor Operator 107,892 Supervisor 16,184 Maintenance Maintenance Labor 107,892 Maintenance Materials 166,667 Utilities, Supplies, Replacements & Waste Manageme Compressed Air $

- Electricity 2,757,240 Filter Bag Replacement 323,136 Solid Waste Disposal 287,712 Lime 525,341 Softening Salt 155,364 Total Annual Direct Operating Costs 4,447,428

Savings from Shutdown of Existing Emission Controls 4 1,307,161
Indirect Operating Costs Overhead 239,181 Administration (2% total capital costs) 1,988,725 Property tax (1% total capital costs) 994,363 Insurance (1% total capital costs) 994,363 Capital Recovery 0.0944 for a 20- year equipment life and a 7% interest rate 9,386,079 Total Annual Indirect Operating Costs Sum indirect oper costs + capital recovery cost 13,602,709
Total Annual Cost (Annualized Capital Cost + Operating Cost) 19,357,298 See Summary page for notes and assumptions

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### Cliffs Natural Resources: United Taconite Appendix A - SO2 Emission Control Cost Analysis Table 21 - Line 2 - 2012 Dry FGD Study Costs for SDA Scrubber Including Site Specific Costs, Anticipated Annual Emissions

Capital Recovery Factors Primary Installation Interest Rate 7.00% Equipment Life 20 years CRF 0.0944
Replacement Catalyst:

Total Installed Cost 0 Zero out if no replacement parts needed Annualized Cost 0

Replacement Parts & Equipment: Filter Bags and Cages

Total Installed Cost 0 Zero out if no replacement parts needed Annualized Cost 0

Electrical Use

Reagent Use & Other Operating Costs

Operating Cost Calculations Annual hours of operation: 7,992 Utilization Rate: 100%

Unit Unit of Use Unit of Annual Annual Comments Item Cost $ Measure Rate Measure Use* Cost Operating Labor Op Labor 107,892 Supervisor 16,184 Maintenance Maint Labor 107,892 Maint Mtls 166,667 Utilities, Supplies, Replacements & Waste Management Electricity 2,757,240 Water 0 Solid Waste Disposal 287,712 Lime 525,341 Filter Bag Replacement 323,136 Compressed Air

- Softening Salt 155364.48

*annual use rate is in same units of measurement as the unit cost factor

See Summary page for notes and assumptions

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### Cliffs Natural Resources: United Taconite Appendix A - SO2 Emission Control Cost Analysis Table 22 - Line 2 - 2012 Dry FGD Study Costs for SDA Scrubber Including Site Specific Costs, Anticipated Annual Emissions

(with Production Losses) Operating Unit: Line 2 Pellet Induration

Emission Unit Number EU 042 Stack/Vent Number SV 048 & 049
Expected Utilization Rate 100% Temperature Deg F Expected Annual Hours of Operation 7,992 Hours Moisture Content Annual Interest Rate 7.0% Actual Flow Rate 1,128,438 acfm Expected Equipment Life 20 yrs Standardized Flow Rate 805,155 scfm @ 68o F

Dry Std Flow Rate 693,918 dscfm @ 68o F

CONTROL EQUIPMENT COSTS Capital Costs Direct Capital Costs (1) Purchased Equipment (A) 25,333,333 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 7,700,000 Installation Total 0 Total Direct Capital Cost, DC 0 Total Indirect Capital Costs, IC 0% of purchased equip cost (B) 7,590,000 Total Capital Investment (TCI) = DC + IC 107,136,250
Operating Costs Total Annual Direct Operating Costs Labor, supervision, materials, replacement parts, utilities, etc. 4,447,428 Total Annual Indirect Operating Costs Sum indirect oper costs + capital recovery cost 14,637,535 Savings from Shutdown of Existing Emission Controls 4 1,307,161 Total Annual Cost (Annualized Capital Cost + Operating Cost) $20,392,124

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 Nitrous Oxides (NOx) 923.9 #REF! 0% 0.0 #REF! NA Sulfur Dioxide (SO 2 ): 227.7 910 90.0% 5 ppm 91.0 819 24,905

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 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 2.83 ppm 4 6/18/2012 email from Candice Maxwell, Cliffs Natural Resources in response to EPA Region 5 CAA Section 114 information request for scrubber operating costs. Email reported total annual operating costs for both scrubbers. Listed value excludes capital recover costs and is pro-rated by scrubber exhaust flow rate. Value includes continuing operations cost, per a 9/26/12 e-mail from Jen Krause, Cliffs Natural Resources. 5 CUECost Workbook Version 1.0, USEPA Document Page 2 allows up to a 60% retrofit factor for installations in existing facilities 6 Cost per ton based on Cliffs Natural Resources Inc. Reports Second-Quarter 2012 Results.

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### Cliffs Natural Resources: United Taconite Appendix A - SO2 Emission Control Cost Analysis Table 22 - Line 2 - 2012 Dry FGD Study Costs for SDA Scrubber Including Site Specific Costs, Anticipated Annual Emissions

CAPITAL COSTS Direct Capital Costs Purchased Equipment (A) 1,2 Purchased Equipment Costs (A) 25,333,333 Instrumentation MN 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 91,846,250 Indirect Capital Costs Engineering, supervision Construction & field expenses 0 Contractor fees 0 Start-up 0 Performance test 0 Model Studies 0 Contingencies 0 Total Indirect Capital Costs, IC 7,590,000 Total Capital Investment (TCI) = DC + IC 99,436,250 TCI Adj for Baghouse Filter Replacement 99,436,250 Retrofit multiplier 5 0% of TCI 0 Site Specific Installed Equipment Costs 7 Extended Shutdown for Tie-ins

Total Site Specific Costs 7,700,000
Total Capital Investment (TCI) Retrofit Installed 107,136,250

OPERATING COSTS Direct Annual Operating Costs, DC
Operating Labor Operator 107,892 Supervisor 16,184 Maintenance Maintenance Labor 107,892 Maintenance Materials 166,667 Utilities, Supplies, Replacements & Waste Manageme Compressed Air $

- Electricity 2,757,240 Filter Bag Replacement 323,136 Solid Waste Disposal 287,712 Lime 525,341 Softening Salt 155,364 Total Annual Direct Operating Costs 4,447,428

Savings from Shutdown of Existing Emission Controls 4 1,307,161
Indirect Operating Costs Overhead 239,181 Administration (2% total capital costs) 2,142,725 Property tax (1% total capital costs) 1,071,363 Insurance (1% total capital costs) 1,071,363 Capital Recovery 0.0944 for a 20- year equipment life and a 7% interest rate 10,112,904 Total Annual Indirect Operating Costs Sum indirect oper costs + capital recovery cost 14,637,535
Total Annual Cost (Annualized Capital Cost + Operating Cost) 20,392,124 See Summary page for notes and assumptions

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### Cliffs Natural Resources: United Taconite Appendix A - SO2 Emission Control Cost Analysis Table 22 - Line 2 - 2012 Dry FGD Study Costs for SDA Scrubber Including Site Specific Costs, Anticipated Annual Emissions

Capital Recovery Factors Primary Installation Interest Rate 7.00% Equipment Life 20 years CRF 0.0944
Replacement Catalyst:

Total Installed Cost 0 Zero out if no replacement parts needed Annualized Cost 0

Replacement Parts & Equipment: Filter Bags and Cages

Total Installed Cost Annualized Cost 0

Electrical Use

Reagent Use & Other Operating Costs

Operating Cost Calculations Annual hours of operation: 7,992 Utilization Rate: 100%

Unit Unit of Use Unit of Annual Annual Comments Item Cost $ Measure Rate Measure Use* Cost Operating Labor Op Labor 107,892 Supervisor 16,184 Maintenance Maint Labor 107,892 Maint Mtls 166,667 Utilities, Supplies, Replacements & Waste Management Electricity 2,757,240 Water 0 Solid Waste Disposal 287,712 Lime 525,341 Filter Bag Replacement 323,136 Compressed Air

- Softening Salt 155364.48

*annual use rate is in same units of measurement as the unit cost factor

See Summary page for notes and assumptions

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# Appendix B

– Explanation of Cost Estimate Classifications

## Quantification of Engineer’s Opinion of Probable Cost

Estimate Process The pollution abate ment 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 information was received back from the vendors for equipment cost, erection cost, required footprint, and expected emissions performance

3. Zachry , Ducon and Barr conducted site inspections for Tilden and United Taconite

. Major items evaluated were the available footprint, interconnections to existing systems and routes for the new
ductwo rk

.

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

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

.

6. Zachry developed a total installed cost estimation for Tilden and United Taconite dry FGD assuming a SDA system

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 eq uipment 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 fairly 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 has an end use

for developin g 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 (A merican
A ssociation of C ost E ngineering Internat ional 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 calculate 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 in the 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

## The overall accuracy of the cost estimate is 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 project is in t he 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 accuracy as
+40%

.
Qualification of Estimated Cost The feasibility

- level construction cost estimate provided in this report is made on the basis of
Barr/ Zachry ’s (Engineers) combined experience and qualifications and represents our best judgment as experienced and qualifi ed 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 would 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 contractor’s
methods of det ermining prices; competitive bidding; or market conditions, the Engineers’ cannot and do not guarantee that proposals, bids, or actual construction costs would not vary from the opinion of 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.

## probable construction cost presented in this report. Greater assura nce as to the probable construction cost

would be achieved through additional design to provide a more refined project definition.

# Appendix C

– Dry Flue Gas Desulfurization Study September 2012

## 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 

## 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

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

## 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

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

## 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

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

## 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

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

## 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

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

## 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

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

## 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

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



## 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

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

## 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 

## 161,838 $ Operator Supervisor Cost 

## 24,276 $ Maintenance: Maintenance Hours 

## 161,838 $ Maintenance Materials 250,000 $ Utilities, Supplies, Replacement & Waste Disposal: Compressed Air Included Electricity 4,135,860 $ Filter Bag & Cage Replacement 484,704 $ Solid Waste Disposal 431,568 $ Lime 788,011 $ Water & Softener Salt 233,047 $


## 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 

## 107,892 $ Operator Supervisor Cost 

## 16,184 $ Maintenance: Maintenance Hours 

## 107,892 $ Maintenance Materials 250,000 $ Utilities, Supplies, Replacement & Waste Disposal: Compressed Air Included Electricity 933,066 $ Filter Bag & Cage Replacement 367,200 $ Solid Waste Disposal 303,696 $ Lime 556,243 $ Softener Salt 224,415 $


## 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.gn1

2

3

4

5

6

7

8

01.dgn#32 C ON

# Appendix D

– Figures

Figure 1 UTAC Aerial View

................................ ................................ ................................ .................. 31 Figure 2 W Side Building #1

................................ ................................ ................................ ................. 32 Figure 3 W Side Building #2

................................ ................................ ................................ ................. 33 Figure 4 General Arrangement of Lines 1 and 2

................................ ................................ ................... 34 Figure 5 General Arrangement Lines 1 and 2 Side View

................................ ................................ ...... 35 Figure 6 N Side Building #1

................................ ................................ ................................ .................. 36 Figure 7 N Side Building #2

................................ ................................ ................................ .................. 37 Figure 8 N Side Building #3

................................ ................................ ................................ .................. 38 Figure 9 New Duct Locatin #1

................................ ................................ ................................ .............. 39 Figure 10 New Duct Locatin #2

................................ ................................ ................................ .............. 40 Figure 11 New Duct Locatin #3

................................ ................................ ................................ ............. 41 Figure 12 Area Between Furnace and Wet Scrubber

................................ ................................ .............. 42 Figure 13 Duct into Venturi Scrubbers

................................ ................................ ................................ .. 43 Figure 14 Water Knock Out

................................ ................................ ................................ .................... 44 Figure 15 Venturi and Water Knockout 42

- 511

- 278 (Section Looking North at Colm 12

- 13)

.............. 45

### Figure 1

. - UTAC Aerial View

### Figure 2

. - W Side Building #1

### Figure 3

. - W Side Building #2

### Figure 4

. - General Arrangement of Lines 1 and 2

### Figure 5

. - General Arrangement Lines 1 and 2 Side View

### Figure 6

. - N Side Building #1

### Figure 7

. - N Side Building #2

### Figure 8

. - N Side Building #3

### Figure 9

. - New Duct Locati o n #1

### Figure 10

. - New Duct Locati o n #2

### Figure 11

. - New Duct Locati o n #3

### Figure 12

. - Area Between Furnace and Wet Scrubbe r

### Figure 13

. - Duct into Venturi Scrubbers

### Figure 14

. - Water Knock Out

### Figure 15

. - Venturi and Water Knockout 42

- 511

- 278 (Section Looking North at Colm 12

- 13)

# Appendix E

– Emission Control Equipment Supplier Dry FGD

Proposals

# CONFIDENTIAL

- DRAFT BUDGETARY PROPOSAL FOR

THREE (3) TR EATMENT SYSTEMS CONSISTING OF A DRY ESP, DRY FGD AND BAGFILTER

FOR
United Taconite/CliffsNR, in Preparation to Respond to the USEP A Federal Implementation Plan (BART for Regional Haze Reduction)

Submitted to:

UNITED TACONITE LLC

Date: September 19 , 2012

PROPOSAL No: DC12

- 5173
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.com

### Ducon Technologies Inc.

For UTAC Proposal No DC12

- 5173 for a ESP, Dry FGD /Baghouse

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

### Page 2 of 13 

## 1.0 INTRODUCTION

Ducon Environmental Systems (Ducon), is pleased to su bmit its proposal for three treatment trains for the UTAC Iron mine processing facility in Forbes, Minnesota. E ach train is to consist of a ESP
, a Dry FGD recirculating r eactor and Baghouse Filter system , in series, to capture Iron particulate in the gas exhaust stream and return it to process
, and to control SOx emissions to the local environment
, because both contribute to regional h aze

. The proposed scope of supply is Ducon’s recommended technology for use in complying with the USEPA Federal Implementat ion Plan (FIP)
, aimed at conformance with the Regional Haze Rule (reference 40 CFR, Part 51.308)

. The technology treated by this draft proposal is subject to the USEPA mandate for th e UTAC site to use dry FGD technology as Best Achievable Retrofit Technol ogy (BART) for SOx control. The Ducon dry technologies available to this site include : 1. Ducon Dry Absorbers which, with a baghouse, can remove up to 95 % of the SO 2


## . 2. D ry reagent injection to ductwork, which has a low efficiency of SO 2 

## re moval (~50 to 70%)

. The Dry FGD r eactors can take several designs depending on the application. These dry reactors can also operate successfully at 228 ° F (the proposed design temperature) and with a relatively small footprint (needed at UTAC)

. Duc t injection wi ll not be used at UTAC since it requires high inlet temperatures for proper operation (> ° F). During the meeting it was noted by Barr Engineering, that hot air from the kiln can be made available to optimize operating temperatures for the Ducon reacto r, if needed.
This proposal is tentative owing to the outstanding need to 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 performance of the system. In addition, the moisture levels in the gas stream can vary because the system draws in outside air at the travelli ng grate s , subject to cha nges in weather. Equipment sizing and the resulting budgetary price es timate therefore include a reasonable allow ance for these extra pollutants in the gas stream . The final, formal proposal will require actual data for these pollutant concentrations, conforming to measu red 30 day rolling averages at the inlet to the existing venturi scrubbers operating on lines 1 and 2

. Ducon’s scope is complete
, as outlined in this proposal
, and is based on mutually agreed upon decisions made during the UTAC site meeting, held in For bes MN, 9/4

- 9/6
, and includes all engineering, procurement, design and equipment
, as defined within our scope
, delivered to the jobsite. This proposal does not include any site erection or assembly of delivered

### Ducon Technologies Inc.

For UTAC Proposal No DC12

- 5173 for a ESP, Dry FGD /Baghouse

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

### Page 3 of 13 

## equipment. Ducon will provide supervision fo r startup, commissioning and testing for the project. Per agreement with Barr Engineering and CliffsNR, the scope of Ducon’s propo sal for equipment supply is flange

- to

- flange, and does not encompass external ducts, dampers, expansion joints, fans, stack, instruments, material handling and other necessary items for system integration . Systems for l ime preparation and delivery serving the Dry FGD reactor s are an agreed

- to extension of Ducon’s scope and therefore included in the budgetary price.

DUCON Envir onmental Systems 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 utilit ies.
Since 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 poll ution control 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, enab ling it to meet 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 treme ndous 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

- R od 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 Scrubb er, 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

### Ducon Technologies Inc.

For UTAC Proposal No DC12

- 5173 for a ESP, Dry FGD /Baghouse

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

### Page 4 of 13 

## engineering staff is experienced in the design of systems, which meet the required objectives with the lowest system costs.

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

PATENT NO. TITLE 3,410,055 Fabric Bed Filter 3,798,882 Granular Bed Filter Apparatus & Method 3 ,854,902 Method 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 Fi lter (Method) 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 Co ntrolling Fume & 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 Det ermining the 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 Sy stem 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 Oriclone Trademark

### Ducon Technologies Inc.

For UTAC Proposal No DC12

- 5173 for a ESP, Dry FGD /Baghouse

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

### Page 5 of 13



## 791,355 Ducon Trademark 933,511 Multivane Trademark 1,068,066 Ventri

- Rod Trademark 1,068,479 Hydro

- Flight Trademark 1,098,676 Environeering Trademark

### Ducon Technologies Inc.

For UTAC Proposal No DC12

- 5173 for a ESP, Dry FGD /Baghouse

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

### Page 6 of 13 

## 2.0 PROCESS & DESIGN PARAMETERS
The process and projec t parameters for the UTAC Plant project are as follows:

There are three treatment trains (Line 1 and Line s 2 A & B) consisting of an ESP, a Dry Lime FGD recirculating r eactor and a Baghouse. The scope of supply includes the interconnecting ductwork, dam pers and expansion joints between Ducon equipment, but does not extend to prior ductwork up to the gas inlet flange to the ESP or any equipment and ductwork beyond the gas outlet flange s from the Baghouse. The hydrated lime storage slurry preparation tan k and delivery system to dedicated nozzle supply holding tanks, is common for all three treatment trains. Refer to appended drawing number DC12

- 5173

- 01 for an overview of the system.
Note that Zachry Engineering Corporation is tasked with the design of ne w ductwork to bypass all the existing wet scrubbers and to conduct flue gas from 2A fan, 2B fan, and Line 1fan to Ducon ESP s , separately

Assumed Proces s Parameters For Each Gas Stream :
Inlet Gas Flow 436, 000 acfm

Inlet Gas SO2 400 l b/hr
Inlet Gas Temp F

Inlet PM to ESP l b/hr

MWw lbs/p

- mol
Inlet Humidity v/v

Site Elevation above sea level 1,400 ft

Inlet Static Pressure to ESP w.g.

Assumed Design Parameters For Each ESP

Model: Ducon’s E7

- 207 Dry Dust removal efficiency : > 90 % No. of fields: 2 Width of the ESP: 15.3 m Height o f the ESP: 13.5 m Type of discharging electrode: RSB burry wire

### Ducon Technologies Inc.

For UTAC Proposal No DC12

- 5173 for a ESP, Dry FGD /Baghouse

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

### Page 7 of 13 

## Silicon T/R set: 0.8A

/72KV T/R sets/per ESP: 4 Power voltage /phase/frequency 460V/3P/60HZ Rapping type : Lateral rapping for both discharging and collecting Casing material: A36 thickness: 3/8”

Assumed Design Parameters For Each FGD Scrubber & Baghouse

Inlet SO 2 

## concentration 400 l b/hr SO 2 

## Removal efficiency > 90% Atomization Air Required @ 6 barg 400 scfm Air required for baghouse pulse jet @ 6 barg 66 scfm Total Water Requirement 450 lb/min Exit Gas Temp to stack 2 18 F Exit Gas Flow from Baghouse 402,696 acfm Solids from Baghouse to disposal 9 13 l bs/Hr Required Hydrated Lime 9.8 lbs/min Hydrated L ime usage based on 100% purity
Dust Concentration at Baghouse Outlet mg/NM 3 

## 30 System Pressure Drop at scope limits inch WC 11”

3.0 PRINCIPLES OF OPERATION For EACH GAS STREAM

3.1 The gas enters the ESP, where 90% of particulate is removed. The SO 2 

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

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

## absorption and controlled flue gas cooli ng to a designed specified outlet flue gas temperature. Compressed air @ 6 barg pressure
, is used to e nsure fine atomization of the liquid droplets.

Tremendous interaction between flue gas and the atomized liquid droplets results in drying of t he slurry droplets

. The SO2 in the gas reacts and forms dry powder consisting of CaSO 3 

## and CaSO 4


## . The concentration of particle s in the spray reactor is increased by recirculating a measured amount of by

- product (CaSO 4 

## , CaSO 3 

## , etc. ) from the out lets of the baghouse and the spray absorber. All the flow streams to the spray reactor are under automatic process control.

The f lue gas exiting the FGD absorber is sent to the baghouse with six (6) chambers, in parallel. When the pressure dro p across the bags in the baghouse

### Ducon Technologies Inc.

For UTAC Proposal No DC12

- 5173 for a ESP, Dry FGD /Baghouse

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

### Page 8 of 13 

## re aches a predetermined set point
, that module is taken off line, and the pulse jet cleaning sequence is initiated.

4.0 SCOPE OF SUPPLY
All equipment furnished by Ducon shall be adequately sized to meet the required o bjectives 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. DC 12

- 5173

- 01

- PFD DC 12

- 5173

- 02

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

4.1 Three sets of ESP s : Three (3) Dry ESPs from gas inlet nozzles to outlet nozzles and from top penthouses to bottom flanges of hop pers. Each ESP mainly includes:
a. Casing, roof and penthouse b. Electrodes, collecting plates, supporting insulators and rapping devices w/motors
c. Hoppers w/ baffles, electrical heaters, slide gates, RF level switch and double flap valves d. gas di stribution assembly
e. Purge system w/fan, heater and duct f. Access ladders and common platform w/supports g. Monorail hoist h. ESP’s support structure i. High voltage T/R w/grounding switch, HV bus bar and conduit j. 6 High voltage control cubicles w/mi croprocessor controllers and interface to PLC or DCS l. Erection tools, commissioning and Three (3) years typical spare parts
m. Drawings, O&M manuals and other necessary technical documents p. Instruments including: Temperature sensors (RTD) and indicat ors, RF level switches on hoppers;

4.2 H ydrated Lime Storage & Slurry preparation system
A) Common S torage Silo & Slurry Preparation T ank

One (1) storage silo for three gas stream s Type : Vert. , Cylindri cal, self standing, w/ 1 hopper

. Capacity (net) ~5 827 cubic feet

### Ducon Technologies Inc.

For UTAC Proposal No DC12

- 5173 for a ESP, Dry FGD /Baghouse

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

### Page 9 of 13



## Material : ASTM A36 Silo storage capacity : 5 day s 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 s et / each silo Type : Motorized rotary air lock valve Material / Thickness : Mild Steel
C) Mixing tanks & agitators

Quantity : 3 sets Type : Mild Steel
D) Slurry pumps with VFD

Quantity : 2 sets / each gas stream Material : Stainless

E ) Slurr y piping system to three absorbers

4.3 Three (3) Dry Lime FGD recirculating r eactors
, A) Absorber & rotary valves

The absorbers shown on drawing DC 12

- 5173

- 01 and DC 12

- 5173

- 02 will be provided . Absorber dimensions will be 19 ’ ID, 12 0’ 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 ” 

## AL6XN cladding. Recommended exte rnal insulat ion consists of 4 ” thick fiberwool and with 20 ga aluminized 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 Four (4)

- Three recycle silos

- One Disposal silo

### Ducon Technologies Inc.

For UTAC Proposal No DC12

- 5173 for a ESP, Dry FGD /Baghouse

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

### Page 10 of 13 

## 4.4 F abric Filter System : One complete fabric filter system, (consi sting of 3 x100% baghouse ) pulse jet type in modular configuration 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 filt er including cleaning operation as follows:
A) High ratio pulse jet type b aghouse fabric filters, Each Baghouse consists of Six (6) chambers arranged in one (1) row. Baghouse designs will include a penthouse. Casing and manifold are constructed of 1⁄4”. A

- 36 carbon steel plate, stiffened as necessary. The cas ing 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 maintenance. The enclo sure is made of 1⁄4” thick A

- 36 plate, with prime and finish painting by installation contractor after erection completion

. Hopper valley angle is 60°. Accessories include 150# ANSI drilling outlet flange, strike plates, and poke h oles. The hoppers’ bottom area surfaces will be electrically heat traced to 90 deg C. Each module is supported by structural steel legs to grade. Because of the size of the module, the module will be factory fabricated and shipped in maximum shippable sizes, knocked d own, match marked for field erection
a nd welding in the field. Each module contains an array of 22 rows x 17 rows of 10M long filter bags. Footprint: 11’

- 8” x 15’

- 0” x 66’

- 6”. The fo llowing baghouse equipment ( for three baghouses) is included:

. 6732 F ilter bags, 150 mm nominal diameter,10 M long, of 0.5 kg per square meter, PPS 6732 Bag cages

– 20 wire, 11 gage mild steel. and Pulse Jet Venturis 396 Pulse Jet Diaphragm Valves 396 Blow tubes 18 Inlet Butterfly dampers with electric actuator o perator for automatic isolation of module 18 Outlet Butterfly dampers with electric actuator for automatic isolation of module. 18 Rotary Air Lock s to discharge fly ash. One Lot of Platforms and Stairs as required.
B) Three (3) Sol id Recirculation Systems,
One (1) for each gas stream will be provided.

Each recirculation system will consist of:

### Ducon Technologies Inc.

For UTAC Proposal No DC12

- 5173 for a ESP, Dry FGD /Baghouse

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

### Page 11 of 13 

## 1) Two (2) Positive Displacement Blowers, Roots or equal; each with its own 7 KW drive motor, discharge check valve, pressure relie f valve, intake filter and silencer. 2) One (1) Ducon E jector made of silicon carbide for each baghouse hopper outlet.
3) One(1) Lot

– 4” conveying air pipe to conn ect from PD blower discharge to ejector, and from ejector to absorber port.

4.5. Two (2 ) Air Compressor/Filter/Dryer Packages for each gas stream
, one (1) operating and one (1) spare will be provided. The package will be rated for 466 SCFM @ 6 barg discharge pressure, 110 KW.

4.6 Three (3) lots of system ductwork, one (1) lot per gas stream will be provided as shown in drawings DC12

- 5173

- 01 and 02. This includes the ductwork connecting ESP s to the absorber s , and from the absorber s to ba ghouses

. All duct s will be fabricated with 1/4 ” thick carbon steel structurally reinf o rced, 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.

4.7 Three (3) Lots 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 Transmitter Inlet Temperature Transmitter Inlet SO 2 

## Analyzer/Transmitter ( by others ) Inlet O 2 

## Analyzer/Transmitter (by others) Absorber Outlet Temperature Transm itter Absorber Outlet Pressure Transmitter Level Transmitter in absorber cone Differential Pressure Transmitter 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 discharge)

### Ducon Technologies Inc.

For UTAC Proposal No DC12

- 5173 for a ESP, Dry FGD /Baghouse

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

### Page 12 of 13



## LIQUID SIDE Flow Transmitter to Nozzle (Magmeter) PressureTransmitter (PC Pump discharge) FlowTransmitter Water to Mix Tank (Magmeter) Transmitter 20% l ime slurry to MixTank (Magmeter)

4.8 Three (3) 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, automatic valves, manual valves requir ed for an automatic operating system within the scope of battery limits will be provided.

4.9 Following items are not included in Ducon’s budgetary price.

a. Ductwork from the common duct of each gas stream to the inlet of ESP
, and from the outlet of the b aghouse to the I.D. Fan, also not including structural supports, expansion joints, inlet dampers and duct insulation of these external ducts. b. Erection and assembly
c. Power and control cabling and cable laying accessories d. Control panels
e

. Civil design and c onstruction f

. A/C and ventilation system g

. Fire Detection and alarm device. h

. Insulation and insulation cladding

### Ducon Technologies Inc.

For UTAC Proposal No DC12

- 5173 for a ESP, Dry FGD /Baghouse

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

### Page 13 of 13 

## 5 .0 TERMS & MISCELLANEOUS ITEMS

5 .1 DESIGN

All materials shall be in accordance with ASTM Stand ar ds, be new, of the best quality an d suitable for long operating life. All dime n sions and sizes in this proposal are subject to 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 4

- 6 months after the issuance of purchase order. Individual equipment shipments shall arri ve at the job site in approx. 12

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

5 .3 PRICES

Total price indicated here is only for the above scope of supply of equipment for the Ducon FGD system as outl ined in this proposal. It does not include any price for erection.

USD: $ 38 ,0 00,000 [Budgetary]

Very truly yours, DUCON ENVIRONMENTAL SYSTEMS

# Budget Quotation for Air Pollution Control Equipment

Cliffs, Natural Resources Inc. , Utac line 1 GSA for Pelletizing

9-15-2012 FLS Airtech No. 12-47587 rev. A1Our ref. Date Page

Project No: 12-47587A1

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. Dear Sir/Madam, 200 Public Square, Suite 3300 Cleveland OH 44114-2315, USA

Attn. Jason Adams Cliffs, Natural Resources Inc.

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 1 Gas Suspension Absorber ( GSA) and 1 Fabric Filter ( FF) for SO2 removal for the Pelletizing plant line 1 off-gas cleaning systems at the Cliffs Utac pl ant facility ,Eveleth, Mi nnesota. We have provided budget pricing for the GSA and FF based upon your operation information. Plant: Utac line 1 9-15-2012 JAS FLSmidth Airtech Inc.

12-47587A1; Utac 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.

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 Tower and the FF unit hoppers and penthouse area are provided with structural steel for installation of Purlins & Girts (by others). Insulation, Siding/Cladding are not included in our proposal.Our ref. Date Page 9-15-2012 JAS FLSmidth Airtech Inc.

12-47587A1; Utac 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.

For FLS scope of supply please also see the attached Flow sheet No. D1504692 and D1504693 which also indicate the limits of FLS supply.

Direct telephone number:
jeppe.sorensen@flsmidth.com
- in case Je pp e Albert S ø rensen is not available
, p lease contact Jacob S ø nder g aard: +1 (610) 264 6462

E-mail address: 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

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. We have sized the GSA's for a SO2 emission of 5 ppmv.

Attachments:
Preliminary flow sheet . E-mail address: Contact person:

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

jacob.sondergaard@flsmidth.com Position:

We look forward to working with you on this project.

Manager of Sales Product Specialist Yours sincerely, FLSmidth Airtech Inc. Direct telephone number: Jacob Søndergaard pp ø , p ø g

Jacob Søndergaard Jeppe Albert SørensenOur ref. Date Page 9-15-2012 JAS FLSmidth Airtech Inc.

12-47587A1; Utac 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.

Item Qty. Gross weight

mTon

1 1 137.8

2 1 706.0 [Items marked FLS-AT in our Technical Specification]

GSA , FLS-AT type: 

## Pricing
Pelletizer off gas line, GSA

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

2,523,900 GSA , FLS-AT type: 1 off GSA/R 6.2/2C7.1 

### Our proposal includes the following:

Description

1,775,900 1 off GSA/R 6.2/2C7.1

843.8 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).

4,299,800Our ref. Date Page 9-15-2012 JAS FLSmidth Airtech Inc.

12-47587A1; Utac 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.

Item Qty. Gross weight

mTon

3 1 90.0

4 1 324.2 735,000

[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). FC-TD / PJ /4080 / 8x127 / ((10x2)x17)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: 1,165,000 

### Our proposal includes the following:

414.2 [I tems mar k

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

]

1,900,000

6,199,800 Total Budget price for GSA and FF delivery FOB, according to Incoterms 2000, including packing. 1258.0 Total Budget price delivery FOB, according to Incoterms 2000, including packing.Our ref. Date Page 9-15-2012 JAS FLSmidth Airtech Inc.

12-47587A1; Utac 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.

2 months 6 months 7 months 10 months

9 months 

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

Drawings for local manufacture:



### Terms of delivery Time of delivery

GA & Load drawings:

Erection manuals: 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:

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

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 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 99% . 

### 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 ref. Date Page 9-15-2012 JAS FLSmidth Airtech Inc.

12-47587A1; Utac 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.

20%

80%

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



### Overdue payments 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.



### FLSmidth Airtech's right to Suspend Terms of payment

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.



### 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. 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.Our ref. Date Page 9-15-2012 JAS FLSmidth Airtech Inc.

12-47587A1; Utac 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.

1) 

### 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. 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).



### Countries of origin Effective date of contract 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.

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. 

### Bonds / Guarantees

2)

3)

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. 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.

Other conditions are in accordance with the attached ''Conditions covering the services of FLSmidth Airtech personnel.''Our ref. Date Page 9-15-2012 JAS FLSmidth Airtech Inc.

12-47587A1; Utac 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.

The prices and delivery times assume that Client does not make any changes to the project after the effective contract date. 

### Changes after contract

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.



### 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, 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

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. 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.Our ref. Date Page 9-15-2012 JAS FLSmidth Airtech Inc.

12-47587A1; Utac 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.

Equipment supply 

### Equipment Warranty
GSA Type: 1 off GSA/R 6.2/2C7.1

months 12 The following describes our performance and equipment guarantees :

SO2 emission Normal flow Max. flow

14
10 mg/Nm3 (dry) 10 Dust emission 

### Estimated Performance Estimated performances

GSA Type: 1 off GSA/R 6.2/2C7.1

The performance guarantees are based on the equipment being operated at the design operating conditions below: mg/Nm3

All emission testing to be performed after the Fabric Filter. 14

* 10,000 SO2 content Oxygen content 

### Operating Conditions of GSA ,

mg/Nm3, dry Atmospheric pressure Gas temperature Operating pressure

Dust content in flue gas mmWG

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

Normal flow Max. flow

751 530,000

-608

vol% O2 dry deg C 

### GSA Type: 1 off GSA/R 6.2/2C7.1

Gas flow each GSA

1,465.00 9.0 Nm3/h, wet

mmHg

mg/Nm3, dryOur ref. Date Page 9-15-2012 JAS FLSmidth Airtech Inc.

12-47587A1; Utac 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.

-20

Semi Off / On line cleaning DegC bar

Cleaning type



### Equipment Warranty 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 

### GSA Type: 1 off GSA/R 6.2/2C7.1 Quality of Compressed Air:

Particles, class 3 6

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

mg/Nm3 mg/Nm3



### 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.

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. 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.Our ref. Date Page 9-15-2012 JAS FLSmidth Airtech Inc.

12-47587A1; Utac 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.



# Guarantees

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. At the time of contract the method of gas ,heavy metal emission guarantee testing shall be selected and mutually agreed upon.

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.

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.

*

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

*

*

*

* 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.

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 to observe the guarantee test which must be performed by an experienced, impartial authority chosen jointly by Client and by FLSmidth Airtech. 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:

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.Our ref. Date Page 9-15-2012 JAS FLSmidth Airtech Inc.

12-47587A1; Utac 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.

*

*

*

*

*

* * Client or Utac line 1 must maintain daily records of the actual operation conditions for those items specified in the design conditions 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 Utac line 1 has the recommended spare parts available. 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 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

the design conditions

.Our ref. Date Page 9-15-2012 JAS FLSmidth Airtech Inc.

12-47587A1; Utac 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.

*

*

*

*

*

*

*

*

*

*

*

*

*

* 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. 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. 

# Exemptions

Please note that our offer does not include :

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

Erection consumables of any kind. Finish painting on site. Scada control system.

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

*

*

*

*

*

*

*

* General Site Earthing system for connection to the filter. Lightning protection.



## Provisions

Applications, approvals or any other type of authority orientation or contact in the country of the plant are handled by Client. The 2 GSA's and 2 Fabric Filters Utac line 2 are ordered as one package togther with Utac line 1 GSA and FF.

Engineering, documentation, etc. are offered according to FLS Airtech Standard. Please note that our offer is made with the following provisions : Flight warning lights. Permanent lighting for the installation. Fire control or fire alarm systems.Our ref. Date Page 9-15-2012 JAS FLSmidth Airtech Inc.

12-47587A1; Utac 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.

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

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. 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. 

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

## Services of FLSmidth Airtech Personnel

Accommodation obtain an entry visa supported by Client.

According to our Commercial terms. 

### 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. 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.Our ref. Date Page 9-15-2012 JAS FLSmidth Airtech Inc.

12-47587A1; Utac 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.

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.



### 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

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

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. 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 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

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.

# Budget Quotation for Air Pollution Control Equipment

Cliffs, Natural Resources Inc. , Utac line 2 GSA for Pelletizing

9-14-2012 FLS Airtech No. 12-47588 rev. A1Our ref. Date Page

Project No: 12-47588A1

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. Dear Sir/Madam, 200 Public Square, Suite 3300 Cleveland OH 44114-2315, USA

Attn. Jason Adams Cliffs, Natural Resources Inc.

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 Utac pl ant facility ,Eveleth, Mi nnesota. We have provided budget pricing for the GSA's and FF's based upon your operation information. Plant: Utac line 2 9-14-2012 JAS FLSmidth Airtech Inc.

12-47588A1; Utac line 2 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.

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 . 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. 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.Our ref. Date Page 9-14-2012 JAS FLSmidth Airtech Inc.

12-47588A1; Utac line 2 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.

For FLS scope of supply please also see the attached Flow sheet No. D1504688 & D1504687 and D1504686 which also indicate the limits of FLS supply.

Direct telephone number:
jeppe.sorensen@flsmidth.com
- in case Je pp e Albert S ø rensen is not available
, p lease contact Jacob S ø nder g aard: +1 (610) 264 6462

E-mail address: 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

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. We have sized the GSA's for a SO2 emission of 5 ppmv.

Typical project time schedule Attachments: GSA Drawings , typical Preliminary flow sheet . E-mail address: Contact person:

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

jacob.sondergaard@flsmidth.com Position:

We look forward to working with you on this project.

Manager of Sales Product Specialist Yours sincerely, FLSmidth Airtech Inc. Direct telephone number: Jacob Søndergaard pp ø , p ø g

Jacob Søndergaard Jeppe Albert SørensenOur ref. Date Page 9-14-2012 JAS FLSmidth Airtech Inc.

12-47588A1; Utac line 2 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.

Item Qty. Gross weight

mTon

1 2 256.8

2 2 1195.3 [Items marked FLS-AT in our Technical Specification]

GSA , FLS-AT type: 

## Pricing
Pelletizer off gas line, GSA

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

4,088,800 GSA , FLS-AT type: 2 off GSA/R 6.2/2C7.1 

### Our proposal includes the following:

Description

3,011,600 2 off GSA/R 6.2/2C7.1

1452.1 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).

7,100,400Our ref. Date Page 9-14-2012 JAS FLSmidth Airtech Inc.

12-47588A1; Utac line 2 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.

Item Qty. Gross weight

mTon

3 2 180.0

4 2 648.4 1,470,000

[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). FC-TD / PJ /4080 / 8x127 / ((10x2)x17)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: 2,330,000 

### Our proposal includes the following:

828.4 [I tems mar k

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

]

3,800,000 Total Budget price delivery FOB, according to Incoterms 2000, including packing.

10,900,400 Total Budget price for GSA's and FF's delivery FOB, according to Incoterms 2000, including packing. 2280.5Our ref. Date Page 9-14-2012 JAS FLSmidth Airtech Inc.

12-47588A1; Utac line 2 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.

2 months 6 months 7 months 10 months

9 months 

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

Drawings for local manufacture:



### Terms of delivery Time of delivery

GA & Load drawings:

Erection manuals: 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:

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

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 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% . 

### 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 ref. Date Page 9-14-2012 JAS FLSmidth Airtech Inc.

12-47588A1; Utac line 2 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.

20%

80%

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

FLSmidth Airtech's right to Suspend Terms of payment

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.



### 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. 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.Our ref. Date Page 9-14-2012 JAS FLSmidth Airtech Inc.

12-47588A1; Utac line 2 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.

1) 

### 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. 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).



### Countries of origin Effective date of contract 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.

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. 

### Bonds / Guarantees

2)

3)

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. 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.

Other conditions are in accordance with the attached ''Conditions covering the services of FLSmidth Airtech personnel.''Our ref. Date Page 9-14-2012 JAS FLSmidth Airtech Inc.

12-47588A1; Utac line 2 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.

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

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.



### 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, 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

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. 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.Our ref. Date Page 9-14-2012 JAS FLSmidth Airtech Inc.

12-47588A1; Utac line 2 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.

Equipment supply 

### Equipment Warranty
GSA Type: 2 off GSA/R 6.2/2C7.1

months 12 The following describes our performance and equipment guarantees :

SO2 emission Normal flow Max. flow

14 14
mg/Nm3 (dry) 10 Dust emission 10 

### Estimated Performance Estimated performances

GSA Type: 2 off GSA/R 6.2/2C7.1

The performance guarantees are based on the equipment being operated at the design operating conditions below: mg/Nm3

All emission testing to be performed after the Fabric Filter.

* 10,000 SO2 content Oxygen content 

### Operating Conditions of GSA ,

mg/Nm3, dry Dust content in flue gas Gas temperature Operating pressure mmWG

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). Water content 14 vol% H2O

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

Normal flow Max. flow
1,060,000

-608

vol% O2 dry deg C 

### GSA Type: 2 off GSA/R 6.2/2C7.1

Gas flow each GSA

1,465.00 9.0 Nm3/h, wet

mg/Nm3, dryOur ref. Date Page 9-14-2012 JAS FLSmidth Airtech Inc.

12-47588A1; Utac line 2 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.

Compressed air pressure required -20

Semi Off / On line cleaning DegC bar

Cleaning type



### Equipment Warranty 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 

### Quality of Compressed Air:

Dew point 

### GSA Type: 2 off GSA/R 6.2/2C7.1

Particles, class 3 6

Oil, class 3 max 1 max 5 mg/Nm3 mg/Nm3



### 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.

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. 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.Our ref. Date Page 9-14-2012 JAS FLSmidth Airtech Inc.

12-47588A1; Utac line 2 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.



# Guarantees

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. At the time of contract the method of gas ,heavy metal emission guarantee testing shall be selected and mutually agreed upon.

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.

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.

*

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

*

*

*

* 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.

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 to observe the guarantee test which must be performed by an experienced, impartial authority chosen jointly by Client and by FLSmidth Airtech. 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:

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.Our ref. Date Page 9-14-2012 JAS FLSmidth Airtech Inc.

12-47588A1; Utac line 2 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.

*

*

*

*

*

* * Client or Utac line 2 must maintain daily records of the actual operation conditions for those items specified in the design conditions 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 Utac line 2 has the recommended spare parts available. 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 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

the design conditions

.Our ref. Date Page 9-14-2012 JAS FLSmidth Airtech Inc.

12-47588A1; Utac line 2 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.

*

*

*

*

*

*

*

*

*

*

*

*

*

* 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. 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. 

# Exemptions

Please note that our offer does not include :

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

Erection consumables of any kind. Finish painting on site. Scada control system.

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

*

*

*

*

*

*

*

* General Site Earthing system for connection to the filter. Lightning protection.



## Provisions

Applications, approvals or any other type of authority orientation or contact in the country of the plant are handled by Client. The 2 GSA's and 2 Fabric Filters are ordered as one package.

Engineering, documentation, etc. are offered according to FLS Airtech Standard. Please note that our offer is made with the following provisions : Flight warning lights. Permanent lighting for the installation. Fire control or fire alarm systems.Our ref. Date Page 9-14-2012 JAS FLSmidth Airtech Inc.

12-47588A1; Utac line 2 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.

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

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. 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. 

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

## Services of FLSmidth Airtech Personnel

Accommodation obtain an entry visa supported by Client.

According to our Commercial terms. 

### 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. 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.Our ref. Date Page 9-14-2012 JAS FLSmidth Airtech Inc.

12-47588A1; Utac line 2 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.

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.



### 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

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

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. 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 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

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.

# Electrostatic Precipitator for Pelletizer Budget Quotation for Air Pollution Control Equipment

Cliffs Natural Resources Inc., Utac

09-21-2012 FLS Airtech No. 12-47597 rev. A1Our ref. Date Page 12-47597A1; Utac Tel +1 (610) 264-6600 · Fax +1 (610) 264-6400 · info@flsairtech.com www.flsairtech-us.com · 3231 Schoenersville Road · 18017 · Bethlehem, Pennsylvania · USA

Project. JAS FLSmidth Airtech Inc.

09-21-2012



### Cliffs Natural Resources Inc. 4953 N. O'Connor Blvd Clreveland OH44114-2315, USA

Attn. Jason Adams

Plant: Utac Budget Offer fo r Electrostatic Precipi tator for Pelletizer

Project No: 12-47597A1 Dear Sir/Madam,

With reference to above-mentioned, we are pleased to submit our initial proposal covering the design and supply of one ESP for particulate removal from one Gas Suspension Absorbers (GSA) at the Cliffs , Utac plant facility, Eveleth Minnesota USA We have provided Budget pr icing for the ESP based upon your information

The ESP Penthouse and hopper areas are provided with structur al steel for installation of Purlins & Girts ( by others). Insulation /Cladding are not included in our proposal. Please refer to the summary and weight specification in our technical specification fo r a detailed view of equipment included in our proposal; items marked FL S-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.

We have sized the ESP for a particulate emission of 10mg/Nm3 dry as per EPA 17 method with all 4 fields in service. Eveleth
, Minnesota
, USA

. We have provided Budget pricing for the ESP based upon your information

.
We kindly ask you to review our detailed te chnical specification and preliminary layout draw ing to ensure that we have designed the equipment according to your requirements, and that the scope of supply meets your expectations.Our ref. Date Page 12-47597A1; Utac Tel +1 (610) 264-6600 · Fax +1 (610) 264-6400 · info@flsairtech.com www.flsairtech-us.com · 3231 Schoenersville Road · 18017 · Bethlehem, Pennsylvania · USA

Project. JAS FLSmidth Airtech Inc.

09-21-2012



### We trust that you will find our proposal of interest and should very much welcome the opportunity of working with you on this project.
Meanwhile, you are most welcome to contact us :

E-mail address: - in case Jeppe Albert Sørensen is not available, please cont act Jacob Søndergaard:

Position: Direct telephone number: Contact person: Jeppe Albert Sørensen Product Specialist

E-mail address: jeppe.sorensen@flsmidth.com

Jacob Søndergaard +1 (610) 264 6400

Direct fax number: +55 (15) 3416-7565 +55 (15) 3416-7599 Managing Director

jacob.sondergaard@flsmidth.com Position: Direct telephone number: +1 (610) 264 6462 Direct fax number: Contact person:

Jacob Søndergaard Yours sincerely, FLSmidth Airtech Inc.

Jeppe Albert Sørensen We look forward to working with you on this project.

Managing Director Product SpecialistOur ref. Date Page 12-47597A1; Utac Tel +1 (610) 264-6600 · Fax +1 (610) 264-6400 · info@flsairtech.com www.flsairtech-us.com · 3231 Schoenersville Road · 18017 · Bethlehem, Pennsylvania · USA

Project. JAS FLSmidth Airtech Inc.

09-21-2012



### Item Qty. Gross weight

mTon

1 1 171.4

2 1 400.9 

## Our proposal includes the following:

Description

851,100 1E400/H2P1/4x35-1x144130/1K/1K/2L/2D/2V Electrostatic Precipitator, FLS-AT type: Key-parts (mechanical and electrical) and engineering for fabrication parts (steel parts).

[Items marked FLS-AT in our Technic al Specif ication] Total USD

1,677,400 Electrostatic Precipitator, FLS-AT type: 

# Pricing

1E400/H2P1/4x35-1x144130/1K/1K/2L/2D/2V

572.3 2,528,500 [Items marked FAB in our Technical S pecification] Fabrication parts (steel par ts), excluding insulation and cladding materials (purchas e specification included).

Total Budget price delivered FOB, accord ing to Incoterms 2000, including packing.Our ref. Date Page 12-47597A1; Utac Tel +1 (610) 264-6600 · Fax +1 (610) 264-6400 · info@flsairtech.com www.flsairtech-us.com · 3231 Schoenersville Road · 18017 · Bethlehem, Pennsylvania · USA

Project. JAS FLSmidth Airtech Inc.

09-21-2012



### 2 months 7 months 10 months

9 months

Prices for delivery of equipment labeled FLS AT are quoted FOB European Port of Export delivery (liner terms) 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 Ai rtech 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: The scope of supply is according to our enclosed ''Supply & Weight Specification''.



## Terms of delivery Scope of supply

Validity Prices for delivery of equipment labeled FLS

- AT are quoted FOB European Port of Export
, delivery (liner terms) in accordance with Incoterms 2000. Seaw orthy packing is included when necessa ry. 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 C hinese Port of Export, delivery (liner terms) in accordance with Incoterms 2000. Seaw orthy packing is included when necessa ry. 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, c onditioned on negotiating mutually acceptable terms and conditions. However, we reserve th e right to adjust our price against variat ions 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 t his adjustment is 99% . 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 or der 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, 22nd October 2012.Our ref. Date Page 12-47597A1; Utac Tel +1 (610) 264-6600 · Fax +1 (610) 264-6400 · info@flsairtech.com www.flsairtech-us.com · 3231 Schoenersville Road · 18017 · Bethlehem, Pennsylvania · USA

Project. JAS FLSmidth Airtech Inc.

09-21-2012



### 20%

80% of the total price shall be paid in installment s corresponding to the scheduled shipments against the presentation of an invoice accom panied by shipping documents or a Certificate of Readiness, in the event shipments cannot take place for reasons not attributable to FLSmidth Airtech. 

## Terms of payment

Overdue payments of the total price shall be paid as a down payment dir ectly to our bank account. Payment must be made no later than thirty days from the date of order agains t 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 o f 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. The L/C will be subject to the “Uniform Customs and Practic e for Commercial Documentary Credits (1993 Revision), International Chamber of Commerce (Publication No. 500)”. Al l bank charges, stamp duties, confirmation charges or other dues, if any, must be paid by the client.

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


## FLSmidth Airtech's right to Suspend

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 C lient's delayed payments has lasted more than 90 days, or the work has been suspended more than 2 times FLSmidth A irtech has the right to Cancel the Contract and immediatly stop all work on the Contract inc lusive work under progr ess by the subsuppliers. 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 progres s 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.



## FLSmidth Airtech's right to Cancel

Client shall pay for equipment delivered, as well as any and all costs resulting from the cancelling of the order, including but not limited to profit. Equipment already deliv ered shall remain/become t he property of Client.Our ref. Date Page 12-47597A1; Utac Tel +1 (610) 264-6600 · Fax +1 (610) 264-6400 · info@flsairtech.com www.flsairtech-us.com · 3231 Schoenersville Road · 18017 · Bethlehem, Pennsylvania · USA

Project. JAS FLSmidth Airtech Inc.

09-21-2012



## Bonds / Guarantees 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 s ubstantiated and deemed justified by the Adjudicator or FLS Airtech gives writt en consent hereto .

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

## 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 Lette r of Credit in a form acceptable to FLSmidth Airtech has been opened (and confirmed).



## Countries of origin

For the purpose of local manufacture erection or commissioning we will dispatch our specialists on the following 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 adjustm ent of prices and delivery time as a result of the delay.



## Supervision services

1)

2)

3)

Other conditions are in acco rdance with the attached ''Conditions cove ring the services of FLSmidth Airtech personnel.''



## Taxes, duties and VAT Per Diem Rate for supervision USD 1350/man/day, which i s the net receivable to us, i.e. excl. local taxes. The basis of the calculation is to be from the date o f leaving home base to the date of returning to home base. The daily rate is based on the working hours and day s which are normally applicable to the Client's or the Enduser's employee's of similar rank . However, maximum of 8 hours o f work per day and on an average of 40 hours per calendar week. Overtime will be charged at USD 250/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.

Our quotation does not include any kind of tax, duty, VAT or other charges levied by authori ties outside country of origin. For the purpose of local manufacture
, erection or commissioning
, we will dispatch our specialists on the following conditions (valid 2009):

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, whic h is to be opened by Client before the FLSmidth Airtech personnel arrives at site.Our ref. Date Page 12-47597A1; Utac Tel +1 (610) 264-6600 · Fax +1 (610) 264-6400 · info@flsairtech.com www.flsairtech-us.com · 3231 Schoenersville Road · 18017 · Bethlehem, Pennsylvania · USA

Project. JAS FLSmidth Airtech Inc.

09-21-2012



### Unless settled amicably, any dispute o r difference which arises between FLSmidth Airtech and Client shall be referred by either party to adjudication in accordance wit h the ''Rules for Adjudication'' (the Rules). The adjudicator shall be any person agreed by the parties and shall not be nationals of OH44114-2315, USA or USA/Denmark. In the event of disagreement the adjudicator s hall be appointed in accordance with the Rules Should project changes be nec essary, then the scope of supply, the pr icing and the delivery schedule might have to be revised.

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, the Party may give notice of dissatisfaction within 28 days of receipt of the decision or the expiry of the time for the decision. If no notice of dissatisfaction is given wit hin the specified time, the decision shall be final and binding for the Parties. If notice of dissatisfaction is given wit hin the specified time, the decis ion shall be binding on the Parties

h h ll i ff t t it ith t d l l d til th d i i f th dj di t i i d b bit t The prices and delivery times assume t hat Client does not make any changes to the project after the effective contract date.



## Weights and units Changes after contract

Disputes The weights and units provided in our proposal (''Supply & W eight Specification''). are estimates and will be confirmed upon completion of the detailed engineering.

w h o s h a ll g i ve e ff ec t t o it w ith ou t d e l ay un l ess an d un til th e d ec i s i on o f th e a dj u di ca t or i s rev i se d b y an ar bit ra t or. Any dispute which has been the subject of a notice of dissa tisfaction shall be finally settled under ICC's Rules of Arbitration. Court of arbitration shall be set in neutra l country other than OH44114-2315, USA or USA/Denmark. The arbitrators shall not be nationals of neither OH44114-2315, USA, USA or Denmark.Our ref. Date Page 12-47597A1; Utac Tel +1 (610) 264-6600 · Fax +1 (610) 264-6400 · info@flsairtech.com www.flsairtech-us.com · 3231 Schoenersville Road · 18017 · Bethlehem, Pennsylvania · USA

Project. JAS FLSmidth Airtech Inc.

09-21-2012

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


## Operating Conditions of Filter 10 10 mg/Nm3 dry @ 9 vol% O2 dry 

## Precipitator type: 1E400/H2P1/4x35-1x144130/1K/1K/2L/2D/2V Guarantees

1 

## Estimated Performance

Equipment supply Dust emission Chambers in operation 

### The following describes our per formance and equipment guarantees :

1



## Precipitator type: 1E400/H2P1/4x35-1x144130/1K/1K/2L/2D/2V

months 12 

## Equipment Warranty

*

* 

## Precipitator type: 1E400/H2P1/4x35-1x144130/1K/1K/2L/2D/2V

73 211.9 211.9

HPa 1001

9.0 18.1% -651 deg C pcs m3/sec wet @ 9 vol% O2 dry

9.0 73

vol% O2 dry mmWG Gas flow Normal Design

CFR Promulgated Test Methods (TM) 10/17/00, Feb. 2000, Method 2 ‘Determination of Stack Gas Velocity and Volumetric Flow rate (Type S pitot tube). 18.1%

6.0 vol% H2O

ISO 3966:1977, ‘Measurement of fluid flow in closed conduits - Velocity area method using Pitot static tubes’. g/Nm3 dry @ 9 vol% O2 dry Inlet dust load Atmospheric pressure Gas temperature Operating pressure

Water content 1 Chambers in operation

Oxygen content
6.0

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 : 1001 -651 1Our ref. Date Page 12-47597A1; Utac Tel +1 (610) 264-6600 · Fax +1 (610) 264-6400 · info@flsairtech.com www.flsairtech-us.com · 3231 Schoenersville Road · 18017 · Bethlehem, Pennsylvania · USA

Project. JAS FLSmidth Airtech Inc.

09-21-2012



### 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 nor mal and proper use within the guarantee period - or any defects, which are due to faults in the design, the mater ials or the workmanship - provided that we are notified immediately after the defect is discovered, that such defec tive 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 suc h repaired part or replacement part shall be valid for 12 months from the date of re-delivery of such part. Notwit hstanding the aforementioned, all obligations of FLSmidth Airtech under this warranty will expire 30 months after the initial date of delivery. Moreover, the guarantees are given according to t he enclosed general conditions.

All liability on our part ceases when the warranty period term inates 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 conditions and does not extend to cons equential damages, either direct or indirect.

Our equipment warranty and guarantees ar e 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 liability 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 

## Equipment Warranty

General

FLSmidth Airtech's total liability shall under no circumstances exceed 10% of the contract sum. Client's remedy or remedies against FLS Airtech and/or FLS Airtech's liability relating to the performance of the warranties hereunder shall be solely and exclusively lim ited to those as provided herein. 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 12-47597A1; Utac Tel +1 (610) 264-6600 · Fax +1 (610) 264-6400 · info@flsairtech.com www.flsairtech-us.com · 3231 Schoenersville Road · 18017 · Bethlehem, Pennsylvania · USA

Project. JAS FLSmidth Airtech Inc.

09-21-2012



### Germany: VDI Richtlinie 2066, Okt. 1975: Staubmessungen in strömenden Gasen.
USA:

UK: BS 6069 Section 4.3 : 1992 Stationary source emissions At the time of contract the method of particulat e emission guarantee testing shall be selected and mutually agreed from one of the following standards: 

# Guarantees

The particulate emission shall be calc ulated as an average (arithmetic mean) of not less than three (3) valid individual measurements performed during a maxim um period of three (3) substantially cons ecutive days of operation. Each test should be longer than two (2) and less than eight (8) hour s 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 fi rst, for reasons not contributable to FLSmidth Airtech, the performance guarantees shall be deemed fulfilled. ASME Power Test Code PTC 27. The requirements of Environmental Protection Agency Method 17: Determination of Particulate Emissions from Stationary Sources (in stack method). Federal Register Volume 43, No. 37 - Feb. 23, 1978. 

## Performance guarantee test

Due to existing measurement tolerances the Performance Guarantee Test shall be deemed fulfilled even if the

*

*

* 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 Filter, after load or process mode changes. If the duct work is not part of our scope of supply, FLS midth Airtech must approve the lay-out of the inlet and outlet duct work to and from the Filter and the loc ation and design of the test ports to be used for performing the guarantee test. If, at the test, the filter does not fulfil the performance guarantee, FLSmidth Airtech shall be given sufficient time to investigate the reason and to make the necessary c hanges. Hereafter, one - or more if deemed essential by FLSmidth Airtech - repeated test(s) shall be carried out accor ding to the same procedure as with the first test.
Moreover, the guarant ee is subject to t he following provisions:

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. FLSmidth Airtech is allowed sufficient time to adjus t the gasdistribution screens with exhaust gas fan running with ambient air. Due to existing measurement tolerances
, the Performance Guarantee Test shall be deemed fulfilled even if the measured / calculated emission is within 5% of the guar anteed maximum emission. Client may at his own expense have the test conducted by an independent qualified company or government agency.

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.Our ref. Date Page 12-47597A1; Utac Tel +1 (610) 264-6600 · Fax +1 (610) 264-6400 · info@flsairtech.com www.flsairtech-us.com · 3231 Schoenersville Road · 18017 · Bethlehem, Pennsylvania · USA

Project. JAS FLSmidth Airtech Inc.

09-21-2012



### *

*

*

*

* All liability on our part ceases when the guarantee period term inates or in the event of misuse or failure to operate and maintain the equipment in accordance with our instr uctions. Our liability, in all cases, is limited to the aforementioned conditions and does not extend to consequential damages , either direc t or indirect.

FLSmidth Airtech has the Filter available for inspec tion during the annual maintenance stop for at least 5 consecutive days. The Filter installation is operated and maintained acco rding to the FLSmidth Airtech’s operation and maintenance manuals and to other written ins tructions given by FLSmidth Airtech. 

## General

Client informs FLSmidth Airtech of all maintenance or p roblems arising from the Filter without reasonable delay. Client or Utac has the recommended spare parts available. 

## Limitations

This guarantee is valid provided that the above mentioned and t he following provis ions are fulfilled:

Client or Utac must maintain daily records of the actual operation conditions for those items specified in the design conditions.Our ref. Date Page 12-47597A1; Utac Tel +1 (610) 264-6600 · Fax +1 (610) 264-6400 · info@flsairtech.com www.flsairtech-us.com · 3231 Schoenersville Road · 18017 · Bethlehem, Pennsylvania · USA

Project. JAS FLSmidth Airtech Inc.

09-21-2012



### *

*

*

*

*

*

*

*

*

*

*

* Scada control system.

Finish painting on site Erection consumables of any kind. Mechanical erection. Design, engineering, delivery or erection of ducts or ex pansion joints connected to the inlet or outlet flange of the Electrostatic Precipitator Delivery or erection of any kind af dus t transport equipment downstream the outlet flange of the Electrostatic Precipitator or the offe red dust transporting Equipment

MCC controlcenters or PLC for start or interlock ing of the ash transport machines in and outside the Electrostatic Precipitator 

# Exemptions

Please note that our offer does not include :

Adequate housing for loc al control panels. Our Budget proposal includes only the Items and Services s pecifically mentioned in our pricing sheet and the attached technical specifications.

Civil works of any kind.

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

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

*

*

*

*

*

*

*

*

*

* 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
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. Finish painting on site

.

Applications, approvals or any other type of authority orientation or c ontact in the country of the plant are handled by Client. General Site Earthing system for connection to the filter. Lightning protection.



# Provisions

Engineering, documentation, etc. are offe red according to FLS Airtech Standard.Our ref. Date Page 12-47597A1; Utac Tel +1 (610) 264-6600 · Fax +1 (610) 264-6400 · info@flsairtech.com www.flsairtech-us.com · 3231 Schoenersville Road · 18017 · Bethlehem, Pennsylvania · USA

Project. JAS FLSmidth Airtech Inc.

09-21-2012



### Local leave under special circums tances shall be agreed upon by C lient and FLSmidth Airtech The fee for the FLSmidth Airtech personnel includes salar y during accumulated annual leave. Such leave should be taken after completion of the work concerned, unless ot herwise agreed upon by the 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 applic able 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 necessa ry, it will be charged for or, alternatively, the FLSmidth Airtech personnel is to be granted time off corresponding to th e amount of overtime worked before departing from the plant.


## Leave Safety on site

Local leave under special circumstances shall be agreed upon by 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 f ully furnished house/flat to applicate E uropean standards, suitable for the accommodation of the FLSmidth Airtech employee and his family. According to our Commercial terms.


## Accommodation Client shall apply for and obtain a visa, residency and work permi t. If necessary, FLSmidth Airtech shall apply for and obtain an entry visa supported by Client. 

## Visa and work permitOur ref. Date Page 12-47597A1; Utac Tel +1 (610) 264-6600 · Fax +1 (610) 264-6400 · info@flsairtech.com www.flsairtech-us.com · 3231 Schoenersville Road · 18017 · Bethlehem, Pennsylvania · USA

Project. JAS FLSmidth Airtech Inc.

09-21-2012



## Rl t 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 numbe rs/reference numbers as well as name of airline.

If, owing to illness, the FLSmidth Airtech employee is abs ent from work, Client shall pay all costs as previously specified. In the event of such absenc e exceeding three weeks, FLSmidth Airtech will, if requested by Client, replace the FLSmidth Airtech employee concer ned and meet all travelling costs involved. 

## Illness Transport

Flight tickets shall be fare (non-restricted) tickets valid with an international airline on busine ss class or similar class. 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 (Miscellaneous Charge Order) covering excess luggage of kg for outward and return transport.

FLSmidth Airtech shall remain responsible for all cost s 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 Endus er, their servants or agents.

Client shall at all times be liable for damage to plant or pr operty 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. 

## R ep l acemen t

Client shall pay all costs in connection with the above requir ements and shall pay or reimburse all taxes levied on FLSmidth Airtech or the FLSmidth Airtech employee. 

## Damage to works Insurance and taxes

The FLSmidth Airtech employee shall at all times be under FLSm idth 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 em ployee which proves incorrect. Client shall arrange and pay for any social security contr ibutions, workmen’s compensation insurance, and the like, as required by applicable local laws. FLSmidth Airtech shall at all times have the right to r eplace a FLSmidth Airtech employee by another person equally suited for the job. Replacement costs shall be borne by FLSmidth Airtech.

Client shall indemnify FLSmidth Airtech and the FLSmidt h Airtech employee against any claims, costs, losses, charges, or proceedings whats oever arising out of the abov e liabilities. It is the obligation of Client to cover such risks by insurance.