Term Sheet for Second Amendment of Pellet Sale dated May 22, 2008



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 CONFIDENTIAL 
 Term Sheet 
 for Second Amendment of the 
 Pellet Sale and Purchase Agreement

 (“Term Sheet”) 
 May 22, 2008 
  

	 Parties: 
	The Cleveland-Cliffs Iron Company, Cliffs Mining Company, Northshore Mining Company, and Cliffs Sales Company (collectively, “Cliffs”) and Algoma Steel Inc. (“Algoma”).


  

	 Purpose: 
	Cliffs and Algoma wish to amend the terms of the Pellet Sale and Purchase Agreement of January 31, 2002, as amended (“Agreement”) with respect to the volume of iron ore pellets to be purchased
and sold thereunder for the years [*****], as well as the pricing of the iron ore pellets for the year [*****]. Cliffs and Algoma each acknowledge and agree that the Agreement shall be amended as set forth in this Term Sheet, and
further that, except as amended hereby, the Agreement is and shall remain in full force and effect. All capitalized terms not otherwise defined herein shall have the meaning(s) set forth in the Agreement. 

  

	 Volume: 
	For the year 2008, Cliffs shall supply to Algoma, and Algoma shall purchase from Cliffs, [*****] tons of Cliffs Pellets for use by Algoma in accordance with the terms of the Agreement. Notwithstanding
the foregoing, with respect to Algoma’s right to modify its 2008 Annual Requirements pursuant to Section 5(b) of the Agreement, such right of modification shall only be exercisable with respect to Algoma’s Annual Requirements up to
[*****] tons. 

 For the year 2009, Cliffs shall supply to Algoma, and Algoma shall purchase from Cliffs, [*****]
tons of Cliffs Pellets for use by Algoma in accordance with the terms of the Agreement. Notwithstanding the foregoing, with respect to Algoma’s right to modify its 2009 Annual Requirements pursuant to Section 5(b) of the Agreement, such
right of modification shall only be exercisable with respect to Algoma’s Annual Requirements up to [*****] tons. 
  

	 Price: 
	 For the year 2008, the price for Cliffs Pellets purchased by Algoma shall be as follows: (i) [*****] tons of Cliffs Pellets at an estimated price of: [*****] per ton (which at the
expected natural iron content of [*****] for Tilden Hem Flux Pellets is [*****] per iron unit and which at the expected natural iron content of [*****] for Tilden Mag Flux Pellets is [*****] per iron unit); and
(ii) [*****] tons of Cliffs Pellets at an estimated price of: [*****] per ton (which at the expected natural iron content of 










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[*****] for Tilden Hem Flux Pellets is [*****] per iron unit and which at the expected natural iron content of [*****] for Tilden Mag
Flux Pellets is [*****] per iron unit). The foregoing prices shall be applicable to all f.o.b. delivery points specified in Section 8(c) of the Agreement. The foregoing prices for the year 2008 are final and are not subject to
modification by any provision contained in Section 6 of the Agreement. 


 For the year 2009, the price for all Cliffs
Pellets purchased by Algoma shall be determined in accordance with the pricing provisions set forth in the Agreement. 
  

	 Payment Terms: 
	The payment terms in the Agreement shall remain unchanged except as follows: 

 For
the year 2008: (i) [*****] tons of Cliffs Pellets delivered to Algoma in [*****] shall be invoiced by Cliffs, and purchased by Algoma, at the price of [*****] per iron unit (Tilden Hem Flux Pellets) or [*****] per
iron unit (Tilden Mag Flux Pellets) as applicable, (ii) the first [*****] tons of Cliffs Pellets delivered to Algoma in each of the calendar months beginning [*****] shall be invoiced by Cliffs, and purchased by Algoma, at the
price of [*****] per iron unit (Tilden Hem Flux Pellets) or [*****] per iron unit (Tilden Mag Flux Pellets) as applicable, and (iii) all other Cliffs Pellets delivered to Algoma during 2008 shall be invoiced by Cliffs, and
purchased by Algoma, at the price of [*****] per iron unit (Tilden Hem Flux Pellets) or [*****] per iron unit (Tilden Mag Flux Pellets) as applicable. Further, in the event Algoma has not shipped its entire nominated tonnage for
[*****], then Algoma shall pay Cliffs for the balance of such tonnage via wire transfer on [*****]. Further, on or before [*****]. 
 For the year 2009: In the event Algoma has not shipped its entire nominated tonnage for [*****], then Algoma shall pay Cliffs for the balance of such tonnage via wire transfer [*****] and title to such
tonnage shall transfer to Algoma [*****]. Further, on or before [*****]. 







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	 Price Re-opener: 
	Algoma and Cliffs each acknowledge and agree that the terms and provisions of this Term Sheet were negotiated in settlement of Algoma’s January 3, 2008 request for a price renegotiation pursuant to
Section 13 of the Agreement (and Algoma’s related March 3, 2008 request for arbitration pursuant of Section 15 of the Agreement) and that neither party shall have any further right to request a price renegotiation except in
accordance with Section 13 of the Agreement. Further, upon execution of this Term Sheet, Algoma shall immediately withdraw its March 3, 2008 request for arbitration. Algoma and Cliffs further acknowledge and agree that the terms and
provisions of this Term Sheet, as negotiated in full and final settlement of Algoma’s January 3, 2008 request for a price renegotiation, which is settled hereby with prejudice but is without prejudice to either party’s right or
ability to request future price renegotiation at the times and in the manner specified in Section 13 of the Agreement. 

  

	 Definitive Contract: 
	Algoma and Cliffs each acknowledge and agree that once this Term Sheet is executed, the Agreement, as amended by this Term Sheet, shall govern the performance of the parties until such time as a separate
definitive written amendment to the Agreement, if any, is executed and delivered by the parties. 

  

									
	CLIFFS MINING COMPANY	 		 	ALGOMA STEEL INC.
					
	By:	 	/s/ W. Calfee	 		 	By:	 	/s/ V. Ciappetta
					
	Title:	 	Executive Vice President – Commercial	 		 	Title:	 	Vice President – Legal
					
	Date:	 	May 27, 2008	 		 	Date:	 	May 30, 2008
			
	NORTHSHORE MINING COMPANY	 		 	
					
	By:	 	/s/ W. Calfee	 		 		 	
					
	Title:	 	Executive Vice President – Commercial	 		 		 	
					
	Date:	 	May 27, 2008	 		 		 	

  
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	THE CLEVELAND-CLIFFS IRON COMPANY
		
	By:	 	/s/ D. B. Blake
		
	Title:	 	Vice President – Iron Ore
		
	Date:	 	5/23/08
	
	CLIFFS SALES COMPANY
		
	By:	 	/s/ W. Calfee
		
	Title:	 	Executive Vice President – Commercial
		
	Date:	 	May 27, 2008