Technical Memorandum

From: Barr Engineering

Subject: United Taconite SO2 Control Cost Analysis

Date: September 28, 2012

Project: Multiple

1. Summary of SO2 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) SO2 controls for United Taconite 

Lines 1 and 2. US EPA claims that dry SO2 controls are economically feasible because they can be 

installed at United Taconite at a SO2 control cost effectiveness of $2,000 to $3,000 per ton of SO2

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 for BART cost effectiveness analyses:

“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 cost 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 controls on United Taconite Lines 

1 and 2 including:

 Space limitations on where the dry FGD SO2 emission control equipment can be installed

 Removal of the existing wet scrubbers and installing ESPs for iron ore recovery
From: Barr Engineering Company

Subject: United Taconite SO2 Control Cost Analysis

Date: September 28, 2012

Page: 2

Project: Multiple

 Limitations on where ductwork from Lines 1 and 2 to the new emission control systems can be 

located due to the presence of existing equipment

 Addition of new process waste gas blowers to operate the induration furnaces and induced draft 

blowers to operate the emission control equipment. 

 Installation of new stacks at the outlet of each of the dry FGD emission control trains. Given the 

high cost of the ductwork, installation of new stacks is less expensive than installing ducts back 

to the original stacks

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

report in order to document the overall cost of installing dry SO2 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 installation costs of SO2 controls on United Taconite Lines 1 

and 2

 A construction schedule which takes site specific factors into account

Dry FGD SO2 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 Appendix 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 total cost for ESPs at United Taconite is three time the amount listed in the 

proposal.
From: Barr Engineering Company 

Subject: United Taconite SO2 Control Cost Analysis 

Date: September 28, 2012 

Page: 3 

Project: Multiple

In addition, SO2 control costs were calculated using the installed equipment costs and operating costs 

from the prefeasibility study. This analysis resulted in SO2 control costs similar to the SO2 control costs 

using EPA methods. In all cases listed in Table 1 and 2, the SO2 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) permit1

 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 SO2 emission rates based on CEMS data. The SO2 emission control cost 

calculations use the performance specified by the proposed FIP limit of 5 ppm SO2 for CFBA scrubbers 

and the control equipment suppliers’ performance guarantee (> 90% removal) for SDA scrubbers to 

calculate the assumed controlled emissions. The resulting SO2 control costs of $12,970 to $26,420 per ton 

SO2 removed are significantly higher than the $2,000 to $3,000 per ton SO2 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 SO2 Cost Effectiveness with Site Specific Modifications Costs Included 

Dry FGD 

SO2 Control 

Technology 

Cost 

Estimating 

Procedure 

Total 

Installed 

Capital Cost 

for Dry FGD 

Annual 

Operating 

Cost for Dry 

FGD - $/yr 

Annual SO2 

Emission 

Reduction 

tons/yr 

SO2 Control 

Cost 

$/ton SO2

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 SO2 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 SO2 Cost Effectiveness with Site Specific Modifications Costs Included 

Dry FGD 

SO2

Control 

Technology 

Cost 

Estimating 

Procedure 

Total Installed 

Capital Cost for 

Dry FGD 

Annual Operating 

Cost for Dry FGD - 

$/yr 

Annual 

SO2 

Emission 

Reduction 

tons/yr 

SO2 Control 

Cost 

$/ton SO2

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 SO2 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 accurately consider the anticipated annual emissions1

 under the 

GPP. For CFBA at controlled SO2 concentration of 5 ppm, the calculated SO2 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% SO2 control efficiency, SO2 concentrations at the outlet of a dry FGD on United Taconite Lines 

1 and 2 would be below the CFBA supplier performance guarantee and the proposed FIP limit of 5 ppm. 

The SO2 emission reduction for SDA was calculated at a 90% control efficiency. The SDA equipment 

supplier proposed a performance guarantee of > 90% SO2 control. Based on this performance guarantee, 

it is uncertain whether or not the proposed FIP limit of 5 ppm SO2 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 subject to BART, you will estimate the anticipated annual emissions based upon 

actual emissions from a baseline period.” 40 CFR Part 51, App. Y D.4.d. 
From: Barr Engineering Company

Subject: United Taconite SO2 Control Cost Analysis

Date: September 28, 2012

Page: 5

Project: Multiple

2. EPA Pollution Control Cost Manual Approach to Estimating 

Pollution Control Cost Effectiveness

Pollution control cost effectiveness is the total annual cost (TAC) of the emission controls divided by the 

emission reduction achieved by the emission controls.

In the US EPA Pollution Control Cost Manual (Control Cost Manual), the total annual cost is the sum2of:

 Direct operating costs such as labor, chemical, 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 

rate3

Direct operating costs such as chemical use and utilities are based on the expected consumption rates. 

Suggested operator and maintenance labor hours are listed for each type of emission controls. The costs 

of maintenance materials are estimated using cost factors listed for each type of emission controls. 

Significant periodic maintenance costs such as 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 uses 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 summed to determine the total installed 

cost of emission controls. 

 

2 US EPA Office of Air Quality Planning and Standards, “EPA Air Pollution

Control Cost Manual”, January 2002, at 2-7. 

3

Ibid at 2-13.
From: Barr Engineering Company

Subject: United Taconite SO2 Control Cost Analysis

Date: September 28, 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 Estimate Classifications.

The results of a prefeasibility study are known as “an 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 Lines 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 the CFBA supplier. Costs for materials and equipment outside 

the dry FGD system (flange to flange control system inlet and outlet) and overall construction costs were 

provided by Zachry Engineering Company as part of the prefeasibility study. The prefeasibility study is 

titled “Dry Flue Gas Desulfurization Study”; it is included as Appendix C to this report.

4. Determination of Site Specific Modifications for Installation of Dry 

FGD SO2 Controls on United Taconite Lines 1 and 2

In order to prepare a cost estimate for installation of a dry FGD system on United 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
From: Barr Engineering Company 

Subject: United Taconite SO2 Control Cost Analysis 

Date: September 28, 2012 

Page: 7 

Project: Multiple

• Identify induration furnace operational 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 needed 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 Lines 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 needed 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 Taconite which could affect the dry FGD construction 

schedule 

Meetings between Cliffs Natural Resources, Ducon, Zachry Engineering and Barr Engineering were held 

at the United Taconite plant on September 4 and 5, 2012. 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 plant site and identify options for installing a dry FGD 

system equipment on Lines 1 and 2. The results of those 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 design 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 supplier are presented in Table 3 below. 
From: Barr Engineering Company

Subject: United Taconite SO2 Control Cost Analysis

Date: September 28, 2012

Page: 8

Project: Multiple

Table 3. Assumed Stream Characteristics for Each of Lines 1, 2A, and 2B

Parameter Value Units

Inlet Gas Flow 436,000 acfm

Inlet Gas SO2 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 System Conceptual Design

The dry FGD systems for Lines 1 and 2 proposed by Ducon and the 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 exhaust 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 SO2 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 SO2 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 
From: Barr Engineering Company

Subject: United Taconite SO2 Control Cost Analysis

Date: September 28, 2012

Page: 9

Project: Multiple

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 system 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 vessels to particulate drop out boxes and 

installation of new air headers and 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 scrubbers

 Installation of new process exhaust blowers which are 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 and the CFBA supplier each include 

three 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 water dew point and 

recommended that all three exhaust streams be combined to address this issue.

The parallel dry FGD trains are also needed to allow the facility operational flexibility needed to operate 

the dry FGD systems under the full range of air flow rates expected under the majority of operating 

conditions. Dry FGD systems have a limited turn down capacity and operation at less than 50% of the 
From: Barr Engineering Company

Subject: United Taconite SO2 Control Cost Analysis

Date: September 28, 2012

Page: 10

Project: Multiple

design air flow rate is not feasible because the reduced air velocity is insufficient to keep the SO2 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 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 system are maintained at the 

proper levels.

Baghouses would be used for sorbent recovery and control of spent sorbent particulate 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 required. 

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 specific pieces of equipment would be necessary for the 

implementation of this plan.

 Install duct burners for furnace start up and shutdown

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

 Remove the existing wet scrubbers; wet particulate control systems cannot be used upstream of 

dry SO2 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 induced draft blowers equipped with variable speed motors at the outlet of each of parallel 

dry FGD trains
From: Barr Engineering Company

Subject: United Taconite SO2 Control Cost Analysis

Date: September 28, 2012

Page: 11

Project: Multiple

 Install a new exhaust stack and ductwork from the induced draft blowers 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 rationale for ancillary equipment will be discussed in the plant modifications needed to accommodate 

installation of a dry FGD emission controls in sections 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 areas directly southwest 

(SW) and northeast (NE) of the induration furnaces are open. Land to the south and east is occupied by a 

buildings 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 Line 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 side, 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.
From: Barr Engineering Company

Subject: United Taconite SO2 Control Cost Analysis

Date: September 28, 2012

Page: 12

Project: Multiple

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 Engineering 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 the 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 basis for the SO2 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 direct 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 

structural 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” (see Figure 9, Figure 10, and Figure 11

taken in the building where the duct runs would 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 duct construction and the construction schedule is the lack of overhead 

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 
From: Barr Engineering Company

Subject: United Taconite SO2 Control Cost Analysis

Date: September 28, 2012

Page: 13

Project: Multiple

this area. Much of the steel work 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 install tie-ins and furnace modifications needed to install a dry FGD system. See 

the Zachry Engineering dry FGD construction schedule in Appendix C. The SO2 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 allowance 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. Given 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 new ductwork. The United Taconite plant is currently using 316 steel for induration furnace ducting.

4.6 Duct burners for furnace start up and shutdown

Duct burners are specified as ancillary equipment that would be used during furnace startups and 

shutdowns to prevent water condensation in the SDA/ CFBA systems during startups, shutdowns, and 

malfunction periods of the furnaces. The burners would be used during periods when furnace off-gas 
From: Barr Engineering Company

Subject: United Taconite SO2 Control Cost Analysis

Date: September 28, 2012

Page: 14

Project: Multiple

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 suspension 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 ESP. 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 function 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. Any 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 Install new process exhaust gas headers and ductwork from the Line 1 and 2 

furnaces to the dry FGD systems

Currently, 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, new 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 

inlet of the dry FGD systems.
From: Barr Engineering Company

Subject: United Taconite SO2 Control Cost Analysis

Date: September 28, 2012

Page: 15

Project: Multiple

4.10 Install new hot gas bypass lines 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 entering 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 

available for pellet drying and preheating.

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

The existing wet scrubbers are used to recover iron ore dust from the induration furnaces 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 ESPs, the particulate loading on the dry FGD systems would reach levels that could 

adversely affect 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 scrubbers 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 to 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 furnace 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 slurry 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 28, 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 would be associated with 

the downtime needed to modify and relocate the existing blowers. 

4.14 Install induced draft blowers 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 exhaust 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 need to be installed 
From: Barr Engineering Company

Subject: United Taconite SO2 Control Cost Analysis

Date: September 28, 2012

Page: 17

Project: Multiple

downstream of each of the two 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 the 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 FGD train as necessary during low flow periods. This 

would also allow one dry FGD train to remain in service should one of the variable speed blowers 

malfunction.

4.15 A new common exhaust stack and ductwork from the induced draft blowers 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 

blowers to the new stacks. The dry FGD site on the North side of the induration furnace is too far from 

the exiting Line 1 and 2 stacks to cost effectively run ductwork back to the existing stacks. Use of 

independent stacks allows operational flexibility to run each dry FGD system independently, so 

individual Lines can be shut down and Line 2 can be run on one process exhaust blower when needed.

The exhaust gas ductwork and new stacks are outside the scope of the emission control equipment 

supplier’s proposals and must be accounted for as ancillary equipment.

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 would 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 28, 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 total installed 

cost of a dry FGD system and the annual direct operating and maintenance costs. The following costs are 

reported for a SDA system installed on United Taconite Lines 1 and 2:

 Total Installed Cost - $149,350,000

 Annual Direct Operation and Maintenance Cost - .$25,000,000 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 install 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 28, 2012

Page: 19

Project: Multiple

6. Description of SO2 Control Cost Spreadsheet Tables and Control 

Cost Calculation Methods

The SO2 control cost and 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 SO2 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 Method 

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 28, 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 CFBA 

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 and ancillary equipment needed to 

operate the dry FGD system are based on the 2012 Dry Flue Gas Desulfurization Study prepared by 

Zachry Engineering Company and Barr Engineering Company; a copy of this report is located in 

Appendix C of this report.

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 include 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 also 

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 Table 1.9 is 2.19 

times the purchased equipment cost. One cost of a dry FGD system which is not accounted for in the 
From: Barr Engineering Company

Subject: United Taconite SO2 Control Cost Analysis

Date: September 28, 2012

Page: 21

Project: Multiple

baghouse control cost calculations is the cost of the sorbent used to capture the SO2 and other acid gases 

present in the exhaust stream. Both of the vendor proposals for dry FGD systems utilize hydrated lime for 

SO2 capture. Annual hydrated lime use was calculated based on a normal stoichiometric ratio of 1.3 (1.3 

moles of lime per mole of SO2) and the uncontrolled annual SO2 emission rate. Excess hydrated lime 

must be added to the dry FGD system to achieve the required level of SO2 control (95% or 5 ppm SO2). 

As noted in the introduction to this report, the United Taconite Lines 1 and 2 CEMS data were used as the

SO2 baseline emission rate in the SO2 control cost effectiveness calculation.

The control cost analysis in US EPA’s proposed FIP is based on Table 1.3 in the control cost manual 

Section 5 Chapter 1, Wet Scrubbers for Acid Gas. The total capital investment factor for wet scrubbers as 

presented in table 1.3 is 2.20 times the purchased equipment cost which is nearly identical to the 

baghouse cost factor. However, this section of the control cost manual does not include costs for periodic 

filter bag replacement. As a result, SO2 control cost calculations in the proposed FIP did not include filter 

bag replacement costs and SO2 control costs presented in the FIP underestimate the dry FGD operation 

The 2012 Dry Flue Gas Desulfurization Study report is a prefeasibility engineering report jointly prepared 

by Zachry Engineering Company and Barr Engineering Company. The estimated installed cost for 

installation of a spray dryer absorber system is presented in Tables 6 and 14 of the report and expected 

operating costs are also presented in Tables 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 and the operation and maintenance (O&M) costs from the 2012 Dry Flue Gas 

Desulfurization Study in the SO2 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, and 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 28, 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 - SO2 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 Rates
Cliffs 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

9/28/2012 Page 2 of 56

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

Utility Chem$ Data
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 Controls4

-639,933

Total Annual Cost (Annualized Capital Cost + Operating Cost) 10,189,987

Actual

Emission Control Cost Calculation Emissions

Max Emis Annual Cont Eff3 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 (SO2): 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

9/28/2012 Page 3 of 56

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

Line 1 CFBA EPA Method
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 multiplier5 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 Controls4-639,933

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

9/28/2012 Page 4 of 56

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

Line 1 CFBA EPA Method
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 Labor7 22,013

Supervisor 8 27,091

Maintenance

Maint Labor Baghouse10 32,468

Maint Mtls Baghouse10 32,468

ESP Maint Mtls and Lbr9 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

9/28/2012 Page 5 of 56

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

Line 1 CFBA EPA Method
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 Controls4

-639,933

Total Annual Cost (Annualized Capital Cost + Operating Cost) 10,707,400

Actual

Emission Control Cost Calculation Emissions

Max Emis Annual Cont Eff3 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 (SO2): 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

9/28/2012 Page 6 of 56

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

Line 1 CFBA EPA Method PL
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 multiplier5 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 Controls4-639,933

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

9/28/2012 Page 7 of 56

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

Line 1 CFBA EPA Method PL
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 Labor7 22,013

Supervisor 8 27,091

Maintenance

Maint Labor Baghouse10 32,468

Maint Mtls Baghouse10 32,468

ESP Maint Mtls and Lbr9 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

9/28/2012 Page 8 of 56

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

Line 1 CFBA EPA Method PL
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 Controls4

-639,933

Total Annual Cost (Annualized Capital Cost + Operating Cost) $7,920,111

Actual

Emission Control Cost Calculation Emissions

Max Emis Annual Cont Eff3 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 (SO2): 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

9/28/2012 Page 9 of 56

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

Line 1 CFBA Independent Review
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 Emiss

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 multiplier5 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 Controls4-639,933

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

9/28/2012 Page 10 of 56

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

Line 1 CFBA Independent Review
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

9/28/2012 Page 11 of 56

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

Line 1 CFBA Independent Review
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 Controls4

-639,933

Total Annual Cost (Annualized Capital Cost + Operating Cost) $8,437,524

Actual

Emission Control Cost Calculation Emissions

Max Emis Annual Cont Eff3 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 (SO2): 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

9/28/2012 Page 12 of 56

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

Line 1 CFBA Independent PL
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 multiplier5 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 Controls4-639,933

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

9/28/2012 Page 13 of 56

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

Line 1 CFBA Independent PL
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

9/28/2012 Page 14 of 56

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

Line 1 CFBA Independent PL
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 Controls4

-639,933

Total Annual Cost (Annualized Capital Cost + Operating Cost) 10,646,734

Actual

Emission Control Cost Calculation Emissions

Max Emis Annual Cont Eff3 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 (SO2): 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.

9/28/2012 Page 15 of 56

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

Line 1 SDA EPA Method
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 multiplier5 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 Controls4-639,933

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

9/28/2012 Page 16 of 56

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

Line 1 SDA EPA Method
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 Labor7 22013.33333

Supervisor 8 27,091

Maintenance

Maint Labor Baghouse10 32,468

Maint Mtls Baghouse10 32,468

ESP Maint Mtls and Lbr9 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

9/28/2012 Page 17 of 56

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

Line 1 SDA EPA Method
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 Controls4

-639,933

Total Annual Cost (Annualized Capital Cost + Operating Cost) 11,164,147

Actual

Emission Control Cost Calculation Emissions

Max Emis Annual Cont Eff3 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 (SO2): 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.

9/28/2012 Page 18 of 56

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

Line 1 SDA EPA Method PL
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 multiplier5 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 Controls4-639,933

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

9/28/2012 Page 19 of 56

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

Line 1 SDA EPA Method PL
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 Labor7 22013.33333

Supervisor 8 27,091

Maintenance

Maint Labor Baghouse10 32,468

Maint Mtls Baghouse10 32,468

ESP Maint Mtls and Lbr9 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

9/28/2012 Page 20 of 56

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

Line 1 SDA EPA Method PL
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 Controls4

-639,933

Total Annual Cost (Annualized Capital Cost + Operating Cost) $8,412,854

Actual

Emission Control Cost Calculation Emissions

Max Emis Annual Cont Eff3 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 (SO2): 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

9/28/2012 Page 21 of 56

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

Line 1 SDA Independent Review
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 Emissi

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 multiplier5 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 Controls4-639,933

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

9/28/2012 Page 22 of 56

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

Line 1 SDA Independent Review
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

9/28/2012 Page 23 of 56

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

Line 1 SDA Independent Review
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 Controls4

-639,933

Total Annual Cost (Annualized Capital Cost + Operating Cost) $8,930,267

Actual

Emission Control Cost Calculation Emissions

Max Emis Annual Cont Eff3 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 (SO2): 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.

9/28/2012 Page 24 of 56

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

Line 1 SDA Independent PL
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 Emiss

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 multiplier5 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 Controls4-639,933

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

9/28/2012 Page 25 of 56

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

Line 1 SDA Independent PL
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

9/28/2012 Page 26 of 56

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

Line 1 SDA Independent PL
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

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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

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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

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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 Costs
Cliffs 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 Controls4

-1,307,161

Total Annual Cost (Annualized Capital Cost + Operating Cost) 18,950,773

Actual

Emission Control Cost Calculation Emissions

Max Emis Annual Cont Eff3 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 (SO2): 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.

9/28/2012 Page 33 of 56

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

Line 2 CFBA EPA Method
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 multiplier5 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 Controls4-1,307,161

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

9/28/2012 Page 34 of 56

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

Line 2 CFBA EPA Method
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 Labor7 22013.33333

Supervisor 8 27,091

Maintenance

Maint Labor Baghouse10 32,468

Maint Mtls Baghouse10 32,468

ESP Maint Mtls and Lbr9 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

9/28/2012 Page 35 of 56

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

Line 2 CFBA EPA Method
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 Controls4

-1,307,161

Total Annual Cost (Annualized Capital Cost + Operating Cost) 19,985,599

Actual

Emission Control Cost Calculation Emissions

Max Emis Annual Cont Eff3 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 (SO2): 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.

9/28/2012 Page 36 of 56

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

Line 2 CFBA EPA Method PL
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 multiplier5 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 Controls4-1,307,161

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

9/28/2012 Page 37 of 56

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

Line 2 CFBA EPA Method PL
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 Labor7 22013.33333

Supervisor 8 27,091

Maintenance

Maint Labor Baghouse10 32,468

Maint Mtls Baghouse10 32,468

ESP Maint Mtls and Lbr9 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

9/28/2012 Page 38 of 56

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

Line 2 CFBA EPA Method PL
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 Controls4 1,307,161

Total Annual Cost (Annualized Capital Cost + Operating Cost) $18,371,813

Actual

Emission Control Cost Calculation Emissions

Max Emis Annual Cont Eff3 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 (SO2): 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

9/28/2012 Page 39 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 Emis

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 multiplier5 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 Controls4 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 Controls4 1,307,161

Total Annual Cost (Annualized Capital Cost + Operating Cost) $19,406,638

Actual

Emission Control Cost Calculation Emissions

Max Emis Annual Cont Eff3 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 (SO2): 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.

9/28/2012 Page 42 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 Emis

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 multiplier5 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 Controls4 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

9/28/2012 Page 44 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 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 Controls4

-1,307,161

Total Annual Cost (Annualized Capital Cost + Operating Cost) 20,069,948

Actual

Emission Control Cost Calculation Emissions

Max Emis Annual Cont Eff3 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 (SO2): 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.

9/28/2012 Page 45 of 56

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

Line 2 SDA EPA Method
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 multiplier5 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 Controls4-1,307,161

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

9/28/2012 Page 46 of 56

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

Line 2 SDA EPA Method
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 Labor7 22013.33333

Supervisor 8 27,091

Maintenance

Maint Labor Baghouse10 32,468

Maint Mtls Baghouse10 32,468

ESP Maint Mtls and Lbr9 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

9/28/2012 Page 47 of 56

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

Line 2 SDA EPA Method
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 Controls4

-1,307,161

Total Annual Cost (Annualized Capital Cost + Operating Cost) 21,104,774

Actual

Emission Control Cost Calculation Emissions

Max Emis Annual Cont Eff3 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 (SO2): 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.

9/28/2012 Page 48 of 56

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

Line 2 SDA EPA Method PL
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 multiplier5 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 Controls4-1,307,161

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

9/28/2012 Page 49 of 56

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

Line 2 SDA EPA Method PL
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 Labor7 22013.33333

Supervisor 8 27,091

Maintenance

Maint Labor Baghouse10 32,468

Maint Mtls Baghouse10 32,468

ESP Maint Mtls and Lbr9 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

9/28/2012 Page 50 of 56

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

Line 2 SDA EPA Method PL
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 Controls4 1,307,161

Total Annual Cost (Annualized Capital Cost + Operating Cost) $19,357,298

Actual

Emission Control Cost Calculation Emissions

Max Emis Annual Cont Eff3 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 (SO2): 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

9/28/2012 Page 51 of 56

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

Line 2 SDA Independent Review
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 Emiss

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 multiplier5 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 Controls4 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

9/28/2012 Page 52 of 56

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

Line 2 SDA Independent Review
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

9/28/2012 Page 53 of 56

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

Line 2 SDA Independent Review
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 Controls4 1,307,161

Total Annual Cost (Annualized Capital Cost + Operating Cost) $20,392,124

Actual

Emission Control Cost Calculation Emissions

Max Emis Annual Cont Eff3 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 (SO2): 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.

9/28/2012 Page 54 of 56

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

Line 2 SDA Independent PL
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 Emiss

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 multiplier5 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 Controls4 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

9/28/2012 Page 55 of 56

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

Line 2 SDA Independent PL
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

9/28/2012 Page 56 of 56

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

Line 2 SDA Independent PL
Appendix B – Explanation of Cost Estimate Classifications
Quantification of Engineer’s Opinion of Probable Cost

Estimate Process

The pollution abatement 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 

ductwork. 

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 equipment and erection of that equipment

2. Balance of plant systems estimated by Zachry

The cost estimate for the Vendor Supplied Equipment corresponds to a Class 2 estimate class. This 

estimate classification is characterized by a 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 developing a preliminary estimate as opposed to a screening or feasibility estimate with an accuracy 

range of +20% to -10% 

The cost estimate for the Balance of Plant Systems corresponds to a Class 4 estimate class (American 

Association of Cost Engineering International Recommended Practice No. 18R-97) for the process 

industries. This estimate classification is characterized by limited project definition and the use of 

comparable projects, scaling and industry experience to 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 the Vendor Supplied information. This allows the 

overall accuracy to be found by taking the arithmetic average of the Class 4 and the Class 2 estimate 

class. This leads to an accuracy of +35% to -17.5%. Zachry has independently assessed the 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 qualified professionals familiar with the project. This opinion is based on project-related 

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

concept-level design of the project. The opinion of construction cost 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 determining 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 assurance 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
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TABLE OF CONTENTS 

SECTION 1 – EXECUTIVE SUMMARY ..................................................................... 3

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

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

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

1.4 Drawings ............................................................................................................. 3

SECTION 2 – MAJOR EQUIPMENT LIST ................................................................. 5

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

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

SECTION 3 – OPINION OF PROBABLE COST......................................................... 8

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

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

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

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

SECTION 4 – MILESTONE SCHEDULE .................................................................. 18

SECTION 5 – DRAWINGS ........................................................................................... 22

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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 

(SO2) 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) 

and 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 SO2 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 

28 months for UTAC and 26 months for Tilden. 

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arrangement sketches were developed based on equipment and ductwork 

locations as discussed during site visits to the UTAC and Tilden facilities the 

week of September, 3, 2012. Zachry developed preliminary layouts and 

configurations for the ESPs, SDAs and baghouses as the quotations received from 

Ducon and the CFBA supplier included equipment layouts that exceed the 

footprint limitations discussed during the site visits. 

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SECTION 2 – MAJOR EQUIPMENT LIST 

The following equipment lists are based on SDA technology. A CFBA based system 

would consist 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 

Fan

3

Draws flue gas through ductwork and ESP. 

Maintains balance on furnace. Includes single 

speed motor.

Spray Dryer 

Absorber (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.

Stack 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 from 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.

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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. 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 ductwork 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

Includes 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 SO2 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.

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Ductwork N/A

Stainless steel ductwork 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 startup, 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

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SECTION 3 – OPINION OF PROBABLE COST 

Based on discussions with CliffsNR, Ducon and Barr during site visits to the UTAC and 

Tilden facilities the week of September, 3, 2012, the preliminary opinion of probable cost 

was developed. The opinion of probable cost for the ESPs, SDAs, baghouses, lime 

handling systems and associated equipment (materials only) are based on the Ducon 

proposal. 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 

SO2 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 range 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. 

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3.2 Site Layout, Scope Assumptions: 

 Equipment locations and tie-ins fo r ductwork and convey

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 information 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 tray and conduit. above ground cable 

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 added 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 SO2 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 interface with the existing building 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 remediation 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 conditions. Ductwork between the baghouses and 

stacks are carbon steel. The stacks are coated carbon steel. Labor estimates 

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for UTAC include limited access within the plant and manual installation of 

ductwork inside of the existing facility. 

Convert existing water knock out vessels at UTAC to initial particulate dropout device near new ductwork tie-point to furnace and remove existing venturi 

scrubbers. 

O&M estimates and inputs are based on information received from CliffsNR, 

Ducon and Barr during site visits to the UTAC and Tilden facilities the week 

of September, 3, 2012 in addition to Zachry experience with similar type 

projects. 

The O&M cost estimates (Tables 3.2 and 3.4) are based on the following 

assumptions: 

o SDA based system. 

o Electricity is for new equipment only and credit is not included for 

disconnected loads. Costs based on /kWh. 

o Baghouse replacement costs for bags (fiberglass) and cages based on 

bag replacement every 3 years and cage replacement every 6 years. 

o Solid waste disposal based on /ton. 

o Hydrated lime usage based on values provided in Ducon proposal and 

cost based on /ton. 

o Water usage based on values provided in Ducon proposal for lime 

slurry and cooling requirements. 

o Water costs based on / 1,000 gallons. 

o Water softener salt costs based on /lb. 

o SO2 removal efficiency is > 90%. 

o Additional assumptions listed on O&M cost estimate tables. 

3.4 Circulating Fluidized Bed Absorber (CFBA) Based System

For 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 CFBAs, baghouses, equipment only, 

no labor) 

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

systems for items, such as ductwork and spent reagent silos/handling systems. 

Additionally, 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. 

A014562-RPTS001 RB 11 of 28
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

A014562-RPTS001 RB 12 of 28
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

A014562-RPTS001 RB 13 of 28
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

A014562-RPTS001 RB 14 of 28
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

A014562-RPTS001 RB 15 of 28
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

A014562-RPTS001 RB 16 of 28
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

A014562-RPTS001 RB 17 of 28
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. 

A014562-RPTS001 RB 18 of 28
Activity Name Start Finish

Total 08-Apr-13 16-Nov-15

UTAC Lines 2A and 2B 08-Apr-13 16-Nov-15

Engineering 08-Apr-13 11-Jun-14

Engineering Package Bid/Award 08-Apr-13 01-Jul-13Studies, Permitting, Preliminary Engineering 08-Apr-13 16-Dec-13Detailed Design and Engineering 01-Jul-13 11-Jun-14Notice to Proceed (Engineering) 01-Jul-13

Equipment Procurement 01-Jul-13 01-Dec-14

Specs, Prep - FF/SDA/ESP 01-Jul-13 03-Sep-13Specification Preparation - BOP 01-Jul-13 26-Aug-13Vendor Engineering 01-Jul-13 29-Oct-13Bidding/Award 27-Aug-13 22-Oct-13Bidding/Award 04-Sep-13 29-Oct-13Manufacture and Deliver BOP 23-Oct-13 30-Apr-14Full Release to Manufacture 29-Oct-13Manufacture & Deliver FF/SDA/ESP 30-Oct-13 01-Dec-14

Engineering Bidding Construction Packages 02-Dec-13 11-Jun-14

Eng/Spec - Foundation Packages 02-Dec-13 29-Jan-14Engineering Specification Prep - Structural/Mechanical/Electrical 02-Dec-13 26-Mar-14Bid/Award Foundations 30-Jan-14 12-Mar-14Bidding/Award Structural/Mechanical/Electrical Packages 27-Mar-14 11-Jun-14

Construction Pre-Outage 13-Mar-14 10-Aug-15

Mobilize/Underground Utilities/Drive Piles 13-Mar-14 11-Jun-14Install Pile Caps/Slabs 24-Apr-14 23-Jul-14Mobilize - Structural/Mechanical/Electrical 12-Jun-14 09-Jul-14Install BOP 10-Jul-14 13-May-15Pre-Outage Existing Plant Demolition 10-Jul-14 01-Oct-14Install Ductwork in Existing Plant 02-Oct-14 21-Jan-15Install FF/SDA/ESP 02-Dec-14 10-Aug-15

Tie-In Outage 11-Aug-15 07-Sep-15

Outage Existing Plant Demolition 11-Aug-15 07-Sep-15Tie-In Outage 11-Aug-15 07-Sep-15Connect Ductwork to Furnace 11-Aug-15 07-Sep-15

Checkout/Startup Test/Completion 08-Sep-15 16-Nov-15

Startup/Commission AQCS 08-Sep-15 05-Oct-15

AQCS Tuning/Optimization 22-Sep-15 02-Nov-15

Compliance/CEMS Testing 20-Oct-15 16-Nov-15Startup Complete 16-Nov-15

M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A 

2013 2014 2015 

11-Jun-14, Engineering

Engineering Package Bid/Award

Studies, Permitting, Preliminary Engineering

Detailed Design and Engineering

Notice to Proceed (Engineering)

01-Dec-14, Equipmen

Specs, Prep - FF/SDA/ESP

Specification Preparation - BOP

Vendor Engineering

Bidding/Award

Bidding/Award

Manufacture and Deliver BOP

Full Release to Manufacture

Manufacture & Delive

11-Jun-14, Engineering Bidding Con

Eng/Spec - Foundation Packages

Engineering Specification Prep - Structural

Bid/Award Foundations

Bidding/Award Structural/MechanicaMobilize/Underground Utilities/Drive 

Install Pile Caps/Slabs

Mobilize - Structural/Mechanical/E

Install B

Pre-Outage Existing Plant 

Install Ductwork i

UTAC Lines 2A and 2B Proposal Schedule 

 Zachry Engineering Corporation Page 1 of 1
Activity Name Start Finish

Total 07-May-15 21-Mar-18

UTAC Line 1 07-May-15 21-Mar-18

Engineering 07-May-15 28-Jun-16

Engineering Package Bid/Award 07-May-15 29-Jul-15Studies, Permitting, Preliminary Engineering 07-May-15 06-Jan-16Detailed Design and Engineering 29-Jul-15 28-Jun-16Notice to Proceed (Engineering) 16-Nov-15

Equipment Procurement 16-Nov-15 05-Apr-17

Specs, Prep - FF/SDA/ESP 16-Nov-15 15-Jan-16Specification Preparation - BOP 16-Nov-15 08-Jan-16Vendor Engineering 16-Nov-15 11-Mar-16Bidding/Award 11-Jan-16 04-Mar-16Bidding/Award 18-Jan-16 11-Mar-16Manufacture and Deliver BOP 07-Mar-16 02-Sep-16Full Release to Manufacture 11-Mar-16Manufacture & Deliver FF/SDA/ESP 14-Mar-16 05-Apr-17

Engineering Bidding Construction Packages 11-Apr-16 14-Oct-16

Eng/Spec - Foundation Packages 11-Apr-16 03-Jun-16Engineering Specification Prep - Structural/Mechanical/Electrical 11-Apr-16 29-Jul-16Bid/Award Foundations 06-Jun-16 15-Jul-16Bidding/Award Structural/Mechanical/Electrical Packages 01-Aug-16 14-Oct-16

Construction Pre-Outage 18-Jul-16 13-Dec-17

Mobilize/Underground Utilities/Drive Piles 18-Jul-16 14-Oct-16Install Pile Caps/Slabs 29-Aug-16 25-Nov-16Mobilize - Structural/Mechanical/Electrical 17-Oct-16 11-Nov-16Install BOP 14-Nov-16 15-Sep-17Pre-Outage Existing Plant Demolition 14-Nov-16 03-Feb-17Install Ductwork in Existing Plant 06-Feb-17 26-May-17Install FF/SDA/ESP 06-Apr-17 13-Dec-17

Tie-In Outage 14-Dec-17 10-Jan-18

Outage Existing Plant Demolition 14-Dec-17 10-Jan-18Tie-In Outage 14-Dec-17 10-Jan-18Connect Ductwork to Furnace 14-Dec-17 10-Jan-18

Checkout/Startup Test/Completion 11-Jan-18 21-Mar-18

Startup/Commission AQCS 11-Jan-18 07-Feb-18

AQCS Tuning/Optimization 25-Jan-18 07-Mar-18

Compliance/CEMS Testing 22-Feb-18 21-Mar-18Startup Complete 21-Mar-18

A M J J A S ON D J F M A M J J A S ON D J F M A M J J A S ON D 

2015 2016 2017 

28-Jun-16, Engineering

Engineering Package Bid/Award

Studies, Permitting, Preliminary Engineering

Detailed Design and Engineering

Notice to Proceed (Engineering)

05-Apr-17, Equipm

Specs, Prep - FF/SDA/ESP

Specification Preparation - BOP

Vendor Engineering

Bidding/Award

Bidding/Award

Manufacture and Deliver BOP

Full Release to Manufacture

Manufacture & De

14-Oct-16, Engineering Bidding 

Eng/Spec - Foundation Packages

Engineering Specification Prep - Struc

Bid/Award Foundations

Bidding/Award Structural/MechaMobilize/Underground Utilities/D

Install Pile Caps/Slabs

Mobilize - Structural/Mechani

Insta

Pre-Outage Existing P

Install Ductwo

UTAC Line 1 Proposal Schedule 

 Zachry Engineering Corporation Page 1 of 1
Activity Name Start Finish

Total 08-Apr-13 01-Sep-15

Tilden Line 1 08-Apr-13 01-Sep-15

Engineering 08-Apr-13 11-Jun-14

Engineering Package Bid/Award 08-Apr-13 01-Jul-13Studies, Permitting, Preliminary Engineering 08-Apr-13 16-Dec-13Detailed Design and Engineering 01-Jul-13 11-Jun-14Notice to Proceed (Engineering) 01-Jul-13

Equipment Procurement 01-Jul-13 30-Sep-14

Specs, Prep - FF/SDA 01-Jul-13 03-Sep-13Specification Preparation - BOP 01-Jul-13 26-Aug-13Vendor Engineering 01-Jul-13 29-Oct-13Bidding/Award 27-Aug-13 22-Oct-13Bidding/Award 04-Sep-13 29-Oct-13Manufacture and Deliver BOP 23-Oct-13 30-Apr-14Full Release to Manufacture 29-Oct-13Manufacture & Deliver FF/SDA 30-Oct-13 30-Sep-14

Engineering Bidding Construction Packages 02-Dec-13 11-Jun-14

Eng/Spec - Foundation Packages 02-Dec-13 29-Jan-14Engineering Specification Prep - Structural/Mechanical/Electrical 02-Dec-13 26-Mar-14Bid/Award Foundations 30-Jan-14 12-Mar-14Bidding/Award Structural/Mechanical/Electrical Packages 27-Mar-14 11-Jun-14

Construction Pre-Outage 13-Mar-14 09-Jun-15

Mobilize/Underground Utilities 13-Mar-14 11-Jun-14Install Slabs 24-Apr-14 23-Jul-14Mobilize - Structural/Mechanical/Electrical 12-Jun-14 09-Jul-14Install BOP 10-Jul-14 13-May-15Pre-Outage Existing Plant Demolition 10-Jul-14 01-Oct-14Install FF/SDA 01-Oct-14 09-Jun-15Install Ductwork in Existing Plant 02-Oct-14 21-Jan-15

Tie-In Outage 10-Jun-15 23-Jun-15

Outage Existing Plant Demolition 10-Jun-15 23-Jun-15Tie-In Outage 10-Jun-15 23-Jun-15Connect Ductwork to Stacks 10-Jun-15 23-Jun-15

Checkout/Startup Test/Completion 24-Jun-15 01-Sep-15

Startup/Commission AQCS 24-Jun-15 21-Jul-15

AQCS Tuning/Optimization 08-Jul-15 18-Aug-15

Compliance/CEMS Testing 05-Aug-15 01-Sep-15Startup Complete 01-Sep-15

M A M J J A S O N D J F M A M J J A S O N D J F M A M J 

2013 2014 201

11-Jun-14, Engineering

Engineering Package Bid/Award

Studies, Permitting, Preliminary Engineering

Detailed Design and Engineering

Notice to Proceed (Engineering)

30-Sep-14, Equipment 

Specs, Prep - FF/SDA

Specification Preparation - BOP

Vendor Engineering

Bidding/Award

Bidding/Award

Manufacture and Deliver BOP

Full Release to Manufacture

Manufacture & Deliver F

11-Jun-14, Engineering Bidding C

Eng/Spec - Foundation Packages

Engineering Specification Prep - Structur

Bid/Award Foundations

Bidding/Award Structural/Mechan

0

Mobilize/Underground Utilities

Install Slabs

Mobilize - Structural/Mechanica

Ins

Pre-Outage Existing Pla

I

Install Ductwo

Tilden Line 1 Proposal Schedule 

 Zachry Engineering Corporation Page 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. 

A014562-RPTS001 RB 22 of 28
gn

A014562-RPTS001 RB 23 of 28
1

2

3

4

5

6

7

8

01.dgn

A014562-RPTS001 RB 24 of 28
A014562-RPTS001 RB 25 of 28
A014562-RPTS001 RB 26 of 28
C

A014562-RPTS001 RB ON27 of 28
A014562-RPTS001 RB 28 of 28
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 Location #1
Figure 10. - New Duct Location #2
Figure 11. - New Duct Location #3
Figure 12. - Area Between Furnace and Wet Scrubber
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) TREATMENT SYSTEMS CONSISTING OF A 

DRY ESP, DRY FGD AND BAGFILTER

FOR

United Taconite/CliffsNR, in Preparation to Respond to the

USEPA 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 this 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 submit its proposal 

for three treatment trains for the UTAC Iron mine processing facility in 

Forbes, Minnesota. Each train is to consist of a ESP, a Dry FGD 

recirculating reactor 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 haze. The proposed scope of supply is Ducon’s recommended

technology for use in complying with the USEPA Federal Implementation 

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 the UTAC site to use dry FGD technology as Best Achievable 

Retrofit Technology (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 SO2. 2. Dry reagent injection to 

ductwork, which has a low efficiency of SO2 removal (~50 to 70%). The 

Dry FGD reactors 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). 

Duct injection will 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 reactor, 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 H2SO4, 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 travelling grates, subject to changes in weather. Equipment sizing 

and the resulting budgetary price estimate therefore include a reasonable 

allowance for these extra pollutants in the gas stream. The final, formal

proposal will require actual data for these pollutant concentrations, 

conforming to measured 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 Forbes 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 this 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 for startup, commissioning and 

testing for the project. Per agreement with Barr Engineering and CliffsNR, 

the scope of Ducon’s proposal for equipment supply is flange-to-flange, and 

does not encompass external ducts, dampers, expansion joints, fans, stack, 

instruments, material handling and other necessary items for system 

integration. Systems for lime preparation and delivery serving the Dry FGD 

reactors are an agreed-to extension of Ducon’s scope and therefore

included in the budgetary price.

DUCON Environmental 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 utilities. 

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 pollution 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, enabling 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 

tremendous amount of repeat business. DUCON'S equipment is known for 

quality workmanship, rugged construction, long service life and high 

efficiency.

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

Bed Scrubber, VENTURI Scrubber, Ventri-Rod Scrubber, Dynamic Wet 

Scrubber, Mist Eliminator, Packed Tower, Tray Tower, Spray Scrubber, Wet 

Electrostatic Precipitator, FCC Cyclone Collector, Pulse-Air Fabric Fitter, 

Activated Carbon Adsorber, VOC Control Scrubber, NOx Scrubber, Odor 

Control Scrubber, Flue Gas Desulfurization Scrubber, High Temperature 

Cyclone, Multiple-Hearth Incinerator and Rotary Kiln.

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 staff 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 this 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 70 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 Filter (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 Controlling 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 Determining 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 System

3,738,624 Gas Scrubber

3,785,119 Method & Apparatus for Removing Particulate & 

Oxide of Sulfur from Gas

3,795,486 Wet Scrubber

3,811,247 Foam Type Gas Scrubber

3,830,041 Foam Breaker

3,963,463 Foam Scrubber

439,810 Ducon & Design Trademark

707,186 Oriclone Trademark
Ducon Technologies Inc.

For UTAC

Proposal No DC12-5173 for a ESP, Dry FGD 

/Baghouse 

The confidential information contained on this 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 this 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 project parameters for the UTAC Plant project are as 

follows:

There are three treatment trains (Line 1 and Lines 2 A & B) consisting of an 

ESP, a Dry Lime FGD recirculating reactor and a Baghouse. The scope of 

supply includes the interconnecting ductwork, dampers 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 flanges from the Baghouse. The hydrated lime storage 

slurry preparation tank 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 new 

ductwork to bypass all the existing wet scrubbers and to conduct flue gas 

from 2A fan, 2B fan, and Line 1fan to Ducon ESPs, separately

Assumed Process Parameters For Each Gas Stream:

Inlet Gas Flow 436,000 acfm 

Inlet Gas SO2 400 lb/hr

Inlet Gas Temp F 

Inlet PM to ESP lb/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 of 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 this 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 SO2 concentration 400 lb/hr 

SO2 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 218 F

Exit Gas Flow from Baghouse 402,696 acfm

Solids from Baghouse to disposal 913 lbs/Hr

Required Hydrated Lime 9.8 lbs/min

Hydrated Lime usage based on 100% purity

Dust Concentration at Baghouse Outlet mg/NM3 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 SO2

laden flue gas at F is introduced into the spray dry reactor and is 

accelerated and spun into the absorber zone. At the same time, the 2-fluid 

nozzle introduces the measured and controlled amounts of lime slurry and water 

for efficient SO2 absorption and controlled flue gas cooling to a designed 

specified outlet flue gas temperature. Compressed air @ 6 barg pressure, is used 

to ensure fine atomization of the liquid droplets.

 

Tremendous interaction between flue gas and the atomized liquid droplets results 

in drying of the slurry droplets. The SO2 in the gas reacts and forms dry powder 

consisting of CaSO3 and CaSO4.

 

The concentration of particles in the spray reactor is increased by recirculating a 

measured amount of by-product (CaSO4, CaSO3, etc.) from the outlets of the 

baghouse and the spray absorber. All the flow streams to the spray reactor are 

under automatic process control.

 The flue gas exiting the FGD absorber is sent to the baghouse with six (6) 

chambers, in parallel. When the pressure drop 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 this 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

reaches 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 objectives and shall be suitable for outdoor installation. Equipment 

selection shall be done to minimize the wear and provide long operating life 

with least amount of maintenance and down time. 

The following drawings are being provided and are part of this proposal.

 DC12-5173-01 - PFD

 DC12-5173-02 - GA PLAN VIEW

Ducon's scope of supply shall be as outlined below.

4.1 Three sets of ESPs : 

Three (3) Dry ESPs from gas inlet nozzles to outlet nozzles and from top 

penthouses to bottom flanges of hoppers. 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 distribution 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/microprocessor 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 indicators, RF level 

switches on hoppers; 

4.2 Hydrated Lime Storage & Slurry preparation system 

A) Common Storage Silo & Slurry Preparation Tank

One (1) storage silo for three gas streams

Type: Vert., Cylindrical, self standing, w/ 1 hopper.

Capacity (net) ~5827 cubic feet 
Ducon Technologies Inc.

For UTAC

Proposal No DC12-5173 for a ESP, Dry FGD 

/Baghouse 

The confidential information contained on this 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 days usable hydrated lime

One common slurry preparation tank and one agitator

Two common slurry pumps – One working and one standby

B) Rotary Air Lock Feeder 

 Quantity: 1 set / each silo

Type: Motorized rotary air lock valve

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) Slurry piping system to three absorbers

4.3 Three (3) Dry Lime FGD recirculating reactors, 

A) Absorber & rotary valves

The absorbers shown on drawing DC12-5173-01 and DC12-5173-02 will be 

provided. Absorber dimensions will be 19’ ID, 120’ high, with 60 deg cone hopper 

at the bottom. Ducon whirl vanes will be provided at the vessel’s straight side to 

cone junction to spin the gas to the design spin velocity. Material of construction 

will be 1⁄4” thick carbon steel with 1/16” AL6XN cladding. Recommended external

insulation 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 this 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 Fabric Filter System: 

One complete fabric filter system, (consisting 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 filter including cleaning operation 

as follows:

A) High ratio pulse jet type baghouse 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 casing 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 

enclosure 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 

holes. 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 down, match marked for field erection 

and 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 following baghouse 

equipment (for three baghouses) is included:

.

6732 Filter 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 operator for 

automatic isolation of module

18 Outlet Butterfly dampers with electric actuator for automatic 

isolation of module. 

18 Rotary Air Locks to discharge fly ash. 

One Lot of Platforms and Stairs as required. 

B) Three (3) Solid 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 this 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 relief valve, intake filter and 

silencer. 

 2) One (1) Ducon Ejector made of silicon carbide for each baghouse hopper 

outlet.

3) One(1) Lot – 4” conveying air pipe to connect 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 ESPs to the absorbers, and from the absorbers to baghouses. All 

ducts will be fabricated with 1/4” thick carbon steel structurally reinforced, as 

required. Each duct system shall also include fabric type expansion joints, as 

required, and as determined by engineering. Structural supports and all 

access requirements are included.

4.7Three (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 SO2 Analyzer/Transmitter ( by others ) 

Inlet O2 Analyzer/Transmitter (by others) 

Absorber Outlet Temperature Transmitter 

Absorber Outlet Pressure Transmitter 

Level Transmitter in absorber cone 

 Differential Pressure 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 this 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% lime slurry to MixTank (Magmeter)

4.8Three (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 required 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 baghouse 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 construction

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 this 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 Standards, be new, of 

the best quality and suitable for long operating life. All dimensions 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 

arrive at the job site in approx. 12 - 14 months after start date. This 

estimate is contingent upon no delays in purchaser scope of work and 

no unforeseen site problems. Ducon shall not be responsible for delays 

caused by reasons 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 outlined in this proposal. It 

does not include any price for erection. 

 

USD: $38,000,000 [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. A1
Our 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 plant facility ,Eveleth, Minnesota. We have provided budget pricing for the GSA and

FF based upon your operation information.

Plant: Utac line 1

JAS 9-15-2012

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 Schoenersville Road · 18017 · Bethlehem, Pennsylvania · USA

Project.

Please refer to the summary and weight specification in our technical specification for a detailed view of equipment

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

JAS 9-15-2012

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 Schoenersville Road · 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 Jeppe Albert Sørensen is not available, please contact Jacob Søndergaard:

+1 (610) 264 6462

E-mail address:

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 :

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 Sørensen
Our ref. Date Page

JAS 9-15-2012

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 Schoenersville Road · 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

GSA , FLS-AT type: 2,523,900 

 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).

 4,299,800 
Our ref. Date Page

JAS 9-15-2012

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 Schoenersville Road · 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

[Items marked FAB in our Technical Specification]

 1,900,000 

Total Budget price for GSA and FF delivery FOB, 6,199,800 

according to Incoterms 2000, including packing.

1258.0

Total Budget price delivery FOB, according to Incoterms 

2000, including packing.
Our ref. Date Page

JAS 9-15-2012

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 Schoenersville Road · 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

JAS 9-15-2012

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 Schoenersville Road · 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 from the cancelling 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

JAS 9-15-2012

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 Schoenersville Road · 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

JAS 9-15-2012

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 Schoenersville Road · 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 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 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

JAS 9-15-2012

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 Schoenersville Road · 18017 · Bethlehem, Pennsylvania · USA

Project.

Equipment supply

Equipment Warranty

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

12 months

The following describes our performance and equipment guarantees:

SO2 emission

Normal flow Max. flow

14

Dust emission 10 mg/Nm3 (dry) 10

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 ‘Determination 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, dry
Our ref. Date Page

JAS 9-15-2012

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 Schoenersville Road · 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 FLSmidth Airtech under this warranty will expire 36 months after the initial date of delivery.

Moreover, the guarantees are given according to the enclosed general conditions.

All liability on our part ceases when the warranty 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 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 contract.

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 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

JAS 9-15-2012

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 Schoenersville Road · 18017 · Bethlehem, Pennsylvania · USA

Project.

Guarantees

Performance guarantee test

Due to existing measurement tolerances, the Performance 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

JAS 9-15-2012

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 Schoenersville Road · 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 the guarantee 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

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 that the above mentioned and the following provisions 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

JAS 9-15-2012

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 Schoenersville Road · 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

JAS 9-15-2012

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 Schoenersville Road · 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

JAS 9-15-2012

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 Schoenersville Road · 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 (Miscellaneous 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 weeks, FLSmidth Airtech will, if requested by Client, replace

the FLSmidth Airtech 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. A1
Our 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 plant facility ,Eveleth, Minnesota. We have provided budget pricing for the GSA's

and FF's based upon your operation information.

Plant: Utac line 2

JAS 9-14-2012

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 Schoenersville Road · 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.

Please refer to the summary and weight specification in our technical specification for a detailed view of equipment

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

JAS 9-14-2012

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 Schoenersville Road · 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 Jeppe Albert Sørensen is not available, please contact Jacob Søndergaard:

+1 (610) 264 6462

E-mail address:

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 :

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 Sørensen
Our ref. Date Page

JAS 9-14-2012

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 Schoenersville Road · 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

GSA , FLS-AT type: 4,088,800 

 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).

 7,100,400 
Our ref. Date Page

JAS 9-14-2012

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 Schoenersville Road · 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

[Items marked FAB in our Technical Specification]

Total Budget price delivery FOB, according to Incoterms 3,800,000 

2000, including packing.

Total Budget price for GSA's and FF's delivery 10,900,400 

FOB, according to Incoterms 2000, including 

packing.

2280.5
Our ref. Date Page

JAS 9-14-2012

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 Schoenersville Road · 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

JAS 9-14-2012

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 Schoenersville Road · 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 from the cancelling 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

JAS 9-14-2012

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 Schoenersville Road · 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

JAS 9-14-2012

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 Schoenersville Road · 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 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 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

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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 Schoenersville Road · 18017 · Bethlehem, Pennsylvania · USA

Project.

Equipment supply

Equipment Warranty

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

12 months

The following describes our performance and equipment guarantees:

SO2 emission

Normal flow Max. flow

14 14

Dust emission 10 10 mg/Nm3 (dry)

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 ‘Determination 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, dry
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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.

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 FLSmidth Airtech under this warranty will expire 36 months after the initial date of delivery.

Moreover, the guarantees are given according to the enclosed general conditions.

All liability on our part ceases when the warranty 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 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 contract.

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 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.
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12-47588A1; Utac line 2

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.

Guarantees

Performance guarantee test

Due to existing measurement tolerances, the Performance 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.
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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 Schoenersville Road · 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 the guarantee 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

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 that the above mentioned and the following provisions 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.
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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 Schoenersville Road · 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.
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JAS 9-14-2012

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 Schoenersville Road · 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.
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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 Schoenersville Road · 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 (Miscellaneous 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 weeks, FLSmidth Airtech will, if requested by Client, replace

the FLSmidth Airtech 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. A1
Our ref. Date Page

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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 for Electrostatic Precipitator 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 pricing for the ESP based upon your information

The ESP Penthouse and hopper areas are provided with structural 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 for a detailed view of equipment

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.

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 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.
Our ref. Date Page

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Tel +1 (610) 264-6600 · Fax +1 (610) 264-6400 · info@flsairtech.com

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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 contact 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 Specialist
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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 Technical Specification]

Total 

USD

Electrostatic Precipitator, FLS-AT type: 1,677,400 

Pricing

1E400/H2P1/4x35-1x144130/1K/1K/2L/2D/2V

572.3 2,528,500 

[Items marked FAB in our Technical Specification]

Fabrication parts (steel parts), excluding insulation and 

cladding materials (purchase specification included).

Total Budget price delivered FOB, according to Incoterms 

2000, including packing.
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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 Airtech when needed, and that arrangement drawings are 

approved within one (1) week of submission:

FOB delivery of equipment:

Time of delivery

GA & Load drawings:

Erection manuals:

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. 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 Chinese Port of Export, delivery (liner terms) in

accordance with Incoterms 2000. Seaworthy packing is included when necessary. Stowage in containers in the case

of container-line shipment, SOC, and port storage charges (if any) are excluded. 

Our proposal is fixed and firm as indicated above, conditioned on negotiating mutually acceptable terms and

conditions. However, we reserve the right to adjust our price against variations in the ratio of exchanging USD for

EUR in the spot currency markets in excess of 1.32 USD for 1.00 EUR. The applicable percentage of our total

equipment price subject to this adjustment is 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 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, 22nd October 2012.
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Project.

JAS

FLSmidth Airtech Inc.

09-21-2012

20%

80% 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.

Terms of payment

Overdue payments

of the total price shall be paid as a down payment directly to our bank account. Payment must be made no

later than thirty days from the date of order against our advance payment bank or insurance company

guarantee. The advance payment guarantee is to be valid until delivery of equipment.

The second installment is covered by an irrevocable letter of credit issued by a first class bank, confirmed by and

made payable in a bank nominated by FLSmidth Airtech. It must be opened within thirty days from the date of order,

and be valid until all payments have been effected in full.

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.

Interest on overdue payments will be calculated as the official 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 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.

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 from the cancelling of the order,

including but not limited to profit. Equipment already delivered shall remain/become the property of Client.
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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 substantiated and deemed justified by the Adjudicator or FLS

Airtech gives written consent hereto .

Expected countries of origin (but not limited to): EU, Eastern Europe, 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 Letter 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 adjustment of prices and delivery time as a result of the delay.

Supervision services

1) 

2)

3) 

Other conditions are in accordance with the attached ''Conditions covering the services of FLSmidth Airtech 

personnel.''

Taxes, duties and VAT

Per Diem Rate for supervision USD 1350/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.

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 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 authorities 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, which is to be opened by Client before the FLSmidth Airtech

personnel arrives at site.
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Project.

JAS

FLSmidth Airtech Inc.

09-21-2012

Unless settled amicably, any dispute or difference which arises between FLSmidth Airtech and Client shall be

referred by either party to adjudication in accordance with the ''Rules for Adjudication'' (the Rules). The adjudicator

shall be any person agreed by the parties and shall not be nationals of OH44114-2315, USA or USA/Denmark. In the

event of disagreement the adjudicator shall be appointed in accordance with the Rules

Should project changes be necessary, then the scope of supply, the pricing 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 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

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 that 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 & Weight Specification''). are estimates and will be

confirmed upon completion of the detailed engineering.

who shall give effect to it without delay unless and until the decision of the adjudicator is revised by an arbitrator.

Any dispute which has been the subject of a notice of dissatisfaction shall be finally settled under ICC's Rules of

Arbitration. Court of arbitration shall be set in neutral country other than OH44114-2315, USA or USA/Denmark. The

arbitrators shall not be nationals of neither OH44114-2315, USA, USA or Denmark.
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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 mg/Nm3 dry @ 9 vol% O2 dry 10

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 performance and equipment guarantees:

1

Precipitator type: 1E400/H2P1/4x35-1x144130/1K/1K/2L/2D/2V

12 months

Equipment Warranty

*

*

Precipitator type: 1E400/H2P1/4x35-1x144130/1K/1K/2L/2D/2V

73

211.9 211.9

1001 HPa

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’.

Inlet dust load g/Nm3 dry @ 9 vol% O2 dry

Atmospheric pressure

Gas temperature

Operating pressure

Water content

Chambers in operation 1

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

1
Our ref. Date Page

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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 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 FLSmidth Airtech under this warranty will expire 30 months after the initial date of delivery.

Moreover, the guarantees are given according to the enclosed general conditions.

All liability on our part ceases when the warranty 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

conditions and does not extend to consequential damages, either direct or indirect.

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 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 limited 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

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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 particulate emission guarantee testing shall be selected and mutually agreed 

from one of the following standards:

Guarantees

The particulate 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.

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, FLSmidth Airtech must approve the lay-out of the inlet

and outlet duct work to and from the Filter and the location 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 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.

Moreover, the guarantee is subject to the 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 adjust 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 guaranteed 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 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 conditions and does not extend to consequential damages, either direct or indirect.

FLSmidth Airtech has the Filter available for inspection during the annual maintenance stop for at least 5

consecutive days.

The Filter installation is operated and maintained according to the FLSmidth Airtech’s operation and

maintenance manuals and to other written instructions given by FLSmidth Airtech.

General

Client informs FLSmidth Airtech of all maintenance or problems arising from the Filter without reasonable

delay.

Client or Utac has the recommended spare parts available.

Limitations

This guarantee is valid provided that the above mentioned and the following provisions 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 expansion joints connected to the inlet or outlet flange

of the Electrostatic Precipitator

Delivery or erection of any kind af dust transport equipment downstream the outlet flange of the Electrostatic

Precipitator or the offered dust transporting Equipment

MCC controlcenters or PLC for start or interlocking of the ash transport machines in and outside the

Electrostatic Precipitator

Exemptions

Please note that our offer does not include:

Adequate housing for local control panels.

Our Budget proposal includes only the Items and Services specifically mentioned in our pricing sheet and the

attached technical specifications.

Civil works of any kind.

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

Electrical erection inclusive of delivery of cables, cable trays, cable glands, local start/stop switches,

emergency stop etc.

Process control equipment of any kind

*

*

*

*

*

*

*

*

*

*

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 contact 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 offered 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 circumstances shall be agreed upon by Client and FLSmidth Airtech

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

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

Services of FLSmidth Airtech Personnel

Working hours are to be the same as those normally applicable to Client’s or Enduser's staff at the plant but, on

average, not exceed 8 hours per day and 40 hours per calendar week.

Overtime is normally to be avoided. If over-time is necessary, it will be charged for or, alternatively, the FLSmidth

Airtech personnel is to be granted time off corresponding to the amount of overtime worked before departing from the

plant.

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 fully furnished house/flat to applicate European standards, suitable for the

accommodation of the FLSmidth Airtech employee and his family.

According to our Commercial terms.

Accommodation

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

obtain an entry visa supported by Client.

Visa and work permit
Our ref. Date Page

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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 numbers/reference numbers as well as name of airline.

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 weeks, FLSmidth Airtech will, if requested by Client, replace

the FLSmidth Airtech employee concerned and meet all travelling costs involved.

Illness

Transport

Flight tickets shall be fare (non-restricted) tickets valid with an international airline on business 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 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.

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.

Replacement

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.

Client shall arrange and pay for any social security contributions, workmen’s compensation insurance, and the like, as

required by applicable local laws.

FLSmidth Airtech shall at all times have the right to replace 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 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.