Pellet Sale and Purchase Agreement - Cleveland-Cliffs Iron Co., Cliffs Mining Co., Northshore Mining Co. and Algoma Steel Inc.
PELLET SALE AND PURCHASE AGREEMENT
THIS AGREEMENT (this "AGREEMENT") is entered into, dated and effective
as of January 31, 2002, by and among THE CLEVELAND-CLIFFS IRON COMPANY, an Ohio
corporation ("CCIC"), CLIFFS MINING COMPANY, a Delaware corporation ("CMC")
NORTHSHORE MINING COMPANY, a Delaware corporation ("NORTHSHORE"; CCIC, CMC and
Northshore, collectively, "CLIFFS") and ALGOMA STEEL INC., an Ontario
corporation ("ALGOMA"). Capitalized terms used herein and not defined in context
have the respective meanings given to them or cross-referenced in Section 1.
RECITALS
WHEREAS, concurrently with the execution and delivery of this
Agreement, Algoma, Cannelton Iron Ore Company ("CANNELTON"), CCIC and Cliffs
TIOP, Inc. ("TIOP") are entering into that Purchase and Sale Agreement ("PSA")
pursuant to which TIOP is to acquire Cannelton's 45% membership interest in
Tilden Mining Company L.C. ("TILDEN") (the date such acquisition occurs, the
"CLOSING DATE"); and
WHEREAS, Algoma desires to purchase from Cliffs, and Cliffs desires to
sell to Algoma, a tonnage of Cliffs Pellets equal to Algoma's Annual
Requirements from and after the Closing Date;
AGREEMENTS
NOW, THEREFORE, in consideration of the premises, their mutual
covenants and other good and valuable consideration the receipt and sufficiency
of which are hereby acknowledged, the parties agree as follows:
1. DEFINITIONS.
(a) "BUSINESS DAY" means any day on which banks in Cleveland, Ohio or
Toronto, Ontario are not permitted or required by law to be closed for business.
(b) "COMPOSITE INDEX" means, for any year, the sum of:
(i) [* * * *] multiplied by a fraction, the numerator of which is
the [* * * *] for such year, and the denominator of which is
the [* * * *]; plus
(ii) [* * * *] multiplied by a fraction, the numerator of which is
the [* * * *] for such year, and the denominator of which is
the [* * * *]; plus
(iii) [* * * *] multiplied by a fraction, the numerator of which is
the [* * * *] for such year, and the denominator of which is
the [* * * *].
For each year beginning in 2004, the Composite Index, (w) shall be initially
determined based on Cliffs' good faith reasonable estimate (which shall take
into account all data that is final for the year in determination) given to
Algoma not later than December 15 of the prior year, (x) shall be
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CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
updated based on Cliffs' good faith estimate (which shall take into account all
data that is final for the year in determination) given to Algoma not later than
June 15 of such year, (y) shall be updated again based on Cliffs' good faith
estimate (which shall take into account all data that is final for the year in
determination) given to Algoma not later than January 15 of the following year,
and (z) shall be finally determined and certified by Cliffs on June 15 of the
following year. Should Algoma disagree with Cliffs' estimate or final
determination, Algoma may require that such estimate or final determination be
determined by arbitration pursuant to Section 15.
(c) "[* * * *]" means, for any year, [* * * *] for such year.
(d) "EXPECTED IRON CONTENT" means at [* * * *] (i) for Tilden Mag Flux
Pellets, [* * * *], (ii) for Tilden Hem Flux Pellets, [* * * *], (iii) for
Empire Royal Pellets, [* * * *], and (iv) for any kind of Other Cliffs Pellets
(x) in the first year they are provided by Cliffs, the percentage specified by
Cliffs in good faith, and (y) in all other years, the actual iron percentage for
such kind of Other Cliffs Pellets for the prior year.
(e) The words "IRON UNIT", as used herein, shall mean one percent (1%)
of contained iron, and all prices per iron unit shall be expressed on an iron
unit per ton basis.
(f) The word "PELLETS", as used herein, shall mean iron-bearing
products obtained by the pelletizing of iron ore or iron ore concentrates,
suitable for making iron in blast furnaces.
(g) The word "PERSON", as used herein, means any natural person, or any
corporation, limited liability company, limited or general partnership, trust,
association or other legal entity.
(h) The word "TON", as used herein, shall mean a gross ton of 2,240
pounds avoirdupois natural weight.
(i) "[* * * *]" means, at any time, a price per iron unit equal to the
sum of:
(i) [* * * *] multiplied by the [* * * *]; plus -
(ii) [* * * *] multiplied by the [* * * *].
Schedule 1(i) illustrates calculation of the [* * * *] Price for 2001, which is
[* * * *] per iron unit.
(j) The word "YEAR", as used herein, shall mean a calendar year
commencing on January 1 and ending December 31.
(k) If any of the information required to calculate the Composite
Index, the [* * * *] or the [* * * *] (either because a particular product
ceases to be available, or because information is no longer [* * * *] the
parties will negotiate in good faith to revise the definition of such term to
one based on then-published information, and any dispute will be resolved
pursuant to Section 15.
(l) The following terms are defined on the pages cross-referenced
below:
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CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
ADJUSTED EXPECTED PRICE PER IRON UNIT.............................................................................9
AGREEMENT.........................................................................................................1
ALGOMA............................................................................................................1
ANNUAL REQUIREMENTS...............................................................................................4
BASE PRICE PER IRON UNIT..........................................................................................8
BASIC CLIFFS PELLETS..............................................................................................4
[* * * *]........................................................................................................15
BUSINESS DAY......................................................................................................1
CANNELTON.........................................................................................................1
CCIC..............................................................................................................1
CLIFFS............................................................................................................1
CLIFFS PELLETS....................................................................................................5
CLOSING DATE......................................................................................................1
CMC...............................................................................................................1
COMMISSION.......................................................................................................18
COMPOSITE INDEX...................................................................................................1
CONFIDENTIAL INFORMATION.........................................................................................18
[* * * *].................................................................................................[* * * *]
EMPIRE PLANT......................................................................................................4
EMPIRE ROYAL PELLETS..............................................................................................4
EXPECTED IRON CONTENT.............................................................................................2
HIBBING PELLETS...................................................................................................5
HIBBING PLANT.....................................................................................................5
IRON UNIT.........................................................................................................2
NORTHSHORE........................................................................................................1
NORTHSHORE PELLETS................................................................................................5
NORTHSHORE PLANT..................................................................................................5
OTHER CLIFFS PELLETS..............................................................................................5
PELLETS...........................................................................................................2
PERSON............................................................................................................2
PSA...............................................................................................................1
SAULT STE. MARIE PLANT............................................................................................4
SOURCE REQUIREMENTS...............................................................................................6
TILDEN............................................................................................................1
TILDEN HEM FLUX PELLETS...........................................................................................4
TILDEN MAG FLUX PELLETS...........................................................................................4
TILDEN PELLETS....................................................................................................4
TILDEN PLANT......................................................................................................4
TIOP..............................................................................................................1
TON...............................................................................................................2
WCS..............................................................................................................12
[* * * *].................................................................................................[* * * *]
YEAR..............................................................................................................3
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CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
2. SALE AND PURCHASE/VOLUME.
(a) Subject to the other provisions of this Section 2, for each of the
15 years 2002 through 2016 inclusive, Cliffs shall sell and deliver to Algoma,
and Algoma shall purchase and receive from Cliffs and pay Cliffs for, a tonnage
of Cliffs Pellets equal to 100% of Algoma's total pellet tonnage requirements,
adjusted for inventory positions, ("ANNUAL REQUIREMENTS") for such year required
for use at its facility at Sault Ste. Marie, Ontario (the "SAULT STE. MARIE
PLANT"); provided, however, that in no year shall Algoma purchase and receive
from Cliffs, and pay Cliffs for, [* * * *] tons of Cliffs Pellets.
(b) If Algoma's Annual Requirements, as initially fixed pursuant to
Section 5(a) or as adjusted pursuant to Section 5(b), in any year exceeds [* * *
*] tons, Cliffs shall have the right, but not the obligation, to sell and
deliver any pellets in excess of [* * * *] tons. Such right may be exercised as
provided in Section 5.
(c) Because the Closing Date will occur after January 1, 2002, (i) Algoma shall
not be required to purchase any Cliffs Pellets hereunder unless and until the
Closing Date occurs, (ii) Cliffs shall not be required to sell any Cliffs
Pellets hereunder unless and until the Closing Date occurs, and (iii) in the
year 2002 Cliffs shall sell and deliver to Algoma, and Algoma shall purchase and
receive from Cliffs and pay Cliffs for, a tonnage of pellets equal to Algoma's
Annual Requirements, less Algoma's share of pellets delivered pursuant to the
membership interest of Cannelton in Tilden between January 1, 2002 and the
Closing Date.
3. SOURCING.
(a) Cliffs shall initially supply Algoma with pellets produced at the
Tilden iron ore pellet plant ("TILDEN MAG FLUX PELLETS" and "TILDEN HEM FLUX
PELLETS", as the case may be; collectively "TILDEN PELLETS") in National Mine,
Michigan (the "TILDEN PLANT") and/or pellets produced at the Empire Iron Mining
Partnership iron ore pellet plant ("EMPIRE ROYAL PELLETS;" collectively with the
Tilden Pellets, "BASIC CLIFFS PELLETS") located in Palmer, Michigan (the "EMPIRE
PLANT").
(b) Cliffs may change pellet sourcing from Basic Cliffs Pellets to
pellets from other sources ("OTHER CLIFFS PELLETS"), including, without
limitation, those produced at the Hibbing Taconite Company Joint Venture iron
ore pellet plant ("HIBBING PELLETS") in Hibbing, Minnesota (the "HIBBING PLANT")
and those produced at the Northshore iron ore pellet plant ("NORTHSHORE
PELLETS") in Silver Bay, Minnesota (the "NORTHSHORE PLANT;" Other Cliffs Pellets
together with Basic Cliffs Pellets, are defined as "CLIFFS Pellets"). If Cliffs
desires to provide Algoma with Other Cliffs Pellets, Cliffs shall give Algoma
not less than three months prior notice, and then may make such change provided
that (i) Algoma's cost of handling pellets, including the movement of pellets to
the stock house, is not increased, or, if Algoma's costs of handling are
increased, Cliffs shall adjust the price of Other Cliffs Pellets so that the
additional handling costs are mitigated so as to fully offset the increased
handling costs, and (ii) Algoma has had a reasonable opportunity to purge its
stockpile of conflicting grades of iron ore.
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CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
4. QUALITY.
(a) As measured pursuant to Section 4(c), if solely Basic Cliffs
Pellets are supplied to Algoma hereunder, they will conform in all material
respects with the AIM pellet specifications and requirements as set forth in
EXHIBIT A-1. As measured pursuant to Section 4(c), if any Other Cliffs Pellets
are supplied to Algoma hereunder, then all Cliffs Pellets supplied to Algoma
hereunder, will conform in all material respects with the AIM pellet
specifications and requirements as set forth in EXHIBIT A-2.
(b) As measured pursuant to Section 4(c), if solely Basic Cliffs
Pellets are supplied hereunder they will not [* * * *], in either case as
specified on EXHIBIT A-1. As measured pursuant to Section 4(c), if any Other
Cliffs Pellets are supplied hereunder, then all Cliffs Pellets supplied
hereunder shall not [* * * *], in either case as specified on EXHIBIT A-2.
(c) In each case, consistency with the AIM specifications, [* * * *]
will be determined on a quarterly basis (1/1 - 3/31; 4/1 - 6/30; 7/1 - 9/30;
10/1 - 12/31) based on the AIM specifications, [* * * *] of the kinds of Cliffs
Pellets shipped for such quarter, weighted according to the percentage of each
kind of Cliffs Pellets to be consumed in such quarter pursuant to Algoma's blast
furnace plan.
(d) Cliffs will report the characteristics of Cliffs Pellets to Algoma
on the following basis:
(i) On the volume of Cliffs Pellets in a vessel or train load for
direct rail shipments, as soon as practicably available and,
in particular, for direct rail shipments, within 24 hours of
shipment from the mine:
CHEMICAL: Fe, SiO(2), Al2O(3), CaO, MgO, Mn, P, CaO/SiO(2);
and
PHYSICAL: % + 1/2", % - 1/2" x + 3/8", % - 1/4 %, % - 28 mesh.
MOISTURE
(ii) On the volume of Cliffs Pellets actually shipped to Algoma in
a calendar month: Compression (LBS).
(iii) On the volume of Cliffs Pellets actually shipped to Algoma in
a calendar quarter (1/1 - 3/31; 4/1 - 6/30; 7/1 - 9/30; 10/1 -
12/31):
CHEMICAL: S, TiO(2), Na(2)O, K(2)O;
METALLURGICAL: Reducibility (R40), LTB (% + 1/4"), Swelling,
Softening Temperature.
(e) For each source of Cliffs Pellets, the parties shall agree upon a
defined set of characteristics or specifications for Cliffs Pellets from that
source ("SOURCE REQUIREMENTS"). Cliffs shall ensure that the characteristics of
each train load or vessel conforms to its applicable
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CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
Source Requirements. Attached as EXHIBIT A-3 are the Source Requirements for the
types of Cliffs Pellets set out in Section 3.
(f) [* * * *]. If an agreement is not reached within 60 days, then
Cliffs may (i) agree to continue to supply Algoma the Cliffs Pellets at the
current contract price [* * * *], or (ii) terminate this agreement 300 days
after the expiry of the 60-day period. In the event Cliffs notifies Algoma of
Cliffs' option to terminate this agreement, Cliffs shall retain the right during
the 300 day period to supply Algoma's future Annual Requirements at the revised
[* * * *] at a price that would be [* * * *] (on a delivered cost basis) the [*
* * *] which Algoma receives during such 300 day period (provided that following
receipt of Algoma's notice to Cliffs of the [* * * *], Cliffs shall notify
Algoma within 45 days as to Cliffs' option to exercise its right to supply
Algoma's future Annual Requirements); and if Cliffs exercises such right, then
this Agreement shall not terminate. In the event that new prices are determined
as a result of [* * * *], then the Base Prices per Iron Unit shall be adjusted
so that, after taking into account Section 6(b), Section 6 can be used to set
prices in future years. Any dispute arising out of this Section 4(f) shall be
resolved by arbitration as provided in Section 15.
5. NOTIFICATION AND NOMINATION.
(a) Annually on or before November 1, Algoma shall notify Cliffs of
Algoma's good faith estimate of its preliminary Annual Requirements for the
upcoming year. SCHEDULE 5(a) sets forth such information for the year 2002.
(b) Algoma shall have the right to modify, based upon Algoma's good
faith estimate, its Annual Requirements for any year:
(i) by notice to Cliffs sent not later than January 10 of such
year, Algoma may decrease or, subject to Section 5(c),
increase its Annual Requirements by up to 10% of the original
Annual Requirements for such year; and/or
(ii) by notice to Cliffs sent not later than July 10 of such year,
Algoma may decrease or, subject to Section 5(c), increase its
Annual Requirements (as previously adjusted pursuant to
Section 5(b)(i), if applicable) by up to 5%; and/or
(iii) in unforeseen circumstances where Algoma's need for pellets
unexpectedly increases, Algoma may, on 30 days notice to
Cliffs, amend its Annual Requirements to increase them beyond
the parameters provided for in (i) and (ii) above.
(c) If (i) Algoma's Annual Requirements (as forecast pursuant to
Section 5(a) or as amended pursuant to Section 5(b)) is for an amount in excess
of [* * * *] tons or (ii) Algoma amends its Annual Requirements pursuant to
Section 5(b)(ii) and (iii) to increase such requirement above the tonnage
previously specified for such year, Cliffs shall within 30 days of receipt of
the initial specification or amendment, as the case may be, notify Algoma
whether Cliffs will commit to provide all, a portion or no portion of such
excess or increased tonnage. If Cliffs commits to sell and deliver all or any
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CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
portion of such excess or increased tonnage, Cliffs shall be obligated to
supply such additional tonnage as herein set forth. Cliffs shall have no
obligation to supply any portion of such excess or additional tonnage that it
does not commit to supply. If Cliffs does not commit to provide all of such
excess or increased tonnage, then Algoma may purchase from another party any
such tonnage that Cliffs has not committed to provide.
6. PRICE AND ADJUSTMENTS.
(a) In each year the price paid for the Cliffs Pellets purchased and
sold hereunder shall be determined as follows:
(i) First, taking each kind of Basic Cliffs Pellets separately,
the Base Price per Iron Unit shall be determined, based on an
annual purchase of [* * * *] tons, as provided in Section
6(b).
(ii) Second, taking each kind of Basic Cliffs Pellets separately,
the Base Price per Iron Unit shall be adjusted based on the
amount of Cliffs Pellets purchased and sold, either up or
down, as provided in Section 6(c), to determine the Adjusted
Expected Price per Iron Unit.
(iii) Third, the Adjusted Expected Price per Iron Unit for any
kind(s) of Other Cliffs Pellets shall be determined as
provided in Section 6(d).
(b) (i) Basic Cliffs Pellets shall have the following "BASE PRICE PER
IRON UNIT" for the year 2002:
BASE PRICE
PELLET F.O.B. PER IRON UNIT
------ ------ -------------
Tilden Mag Flux Railcar at Partridge [* * * *]
Tilden Mag Flux Vessel at Port Marquette [* * * *]
Tilden Hem Flux Railcar at Partridge [* * * *]
Tilden Hem Flux Vessel at Port Marquette [* * * *]
Empire Royal Railcar at Empire [* * * *]
Empire Royal Vessel at Port Marquette [* * * *]
(ii) Basic Cliffs Pellets shall have the following Base Price per
Iron Unit for the year 2003:
BASE PRICE
PELLET F.O.B. PER IRON UNIT
------ ------ -------------
Tilden Mag Flux Railcar at Partridge [* * * *]
Tilden Mag Flux Vessel at Port Marquette [* * * *]
Tilden Hem Flux Railcar at Partridge [* * * *]
Tilden Hem Flux Vessel at Port Marquette [* * * *]
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CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
Empire Royal Railcar at Empire [* * * *]
Empire Royal Vessel at Port Marquette [* * * *]
(iii) The Base Price per Iron Unit for each of the Basic Cliffs
Pellets, f.o.b railcar or vessel, shall be determined as
follows for the years 2004 through 2016, inclusive:
(A) First, the 2002 Base Price per Iron Unit for such
Basic Cliffs Pellets shall be multiplied by the
estimated Composite Index for the year in
determination.
(B) Second, if the Base Price per Iron Unit for the year
in determination (calculated as provided in Section
6(b)(iii)(A)) is [* * * *] for the prior year, [* * *
*] for the prior year. If the Base Price per Iron
Unit for the year in determination (calculated as
provided in Section 6(b)(iii)(A)) is [* * * *] for
the prior year, [* * * *] for the prior year.
(C) Third, if the Base Price per Iron Unit for the year
in determination (as adjusted pursuant to Section
6(b)(iii)(B)) is [* * * *]. If the Base Price per
Iron Unit for the year in determination (as adjusted
pursuant to Section 6(b)(iii)(B)) is [* * * *].
(c) For each year, the Base Price per Iron Unit (as defined in Section
6(b)) for each kind of Basic Cliffs Pellets shall be [* * * *] per iron unit for
each [* * * *] tons by which the Annual Requirement is [* * * *] for each [* * *
*] tons by which the Annual Requirement exceeds [* * * *] tons, in order to
determine the price per iron unit to be paid for such year (the "ADJUSTED
EXPECTED PRICE PER IRON UNIT") for each kind of Cliffs Pellet.
(d) If in any year Cliffs supplies any Other Cliffs Pellets to Algoma,
the Adjusted Expected Price per Iron Unit for such kind(s) of Other Cliffs
Pellets shall be that price per iron unit that, after taking into account the
difference, if any, in transportation costs, results in the same average cost
per iron unit delivered to the Sault Ste. Marie Plant as the average cost per
iron unit delivered to the Sault Ste. Marie Plant would be if the entire Annual
Requirements were provided from the Tilden Plant.
(e) Attached as EXHIBIT B-2 is an example of the application of the
provisions of this Section 6.
7. PAYMENTS AND ADJUSTMENTS.
(a) Subject to adjustment as provided in Sections 7(b) and 7(c):
(i) During the [* * * *] inclusive, Algoma shall pay Cliffs [* * *
*] of each month (or if such day is not a Business Day, the
Business Day immediately thereafter) an amount equal to [* * *
*] the total cost of all of the tons of the various kinds
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CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
of Cliffs Pellets [* * * *], to be determined in each case by
multiplying such [* * * *] by the Expected Iron Content and
the Adjusted Expected Price per Iron Unit. [* * * *]. For any
year from [* * * *] inclusive Algoma may, on 60 days' notice
prior to the commencement of such year, require that Cliffs
[* * * *].
(ii) For the [* * * *] inclusive, Algoma shall pay Cliffs, [* * *
*], an amount calculated as follows:
(A) The number of tons of each kind of pellets delivered
by Cliffs to Algoma during [* * * *] immediately
preceding the date of such payment, multiplied in
each case by the applicable Expected Iron Content and
Adjusted Expected Price per Iron Unit; plus
(B) The number of tons of each kind of pellets estimated
by Algoma to be delivered by Cliffs to Algoma [* * *
*] immediately preceding the date of such payment,
multiplied in each case by the applicable Expected
Iron Content and Adjusted Expected Price per Iron
Unit; plus or minus, as the case may be;
(C) The variance, if any, between the number of tons of
each kind of pellets estimated to be delivered [* * *
*] immediately prior to the date of the preceding
payment, and the number of tons actually delivered
during such [* * * *], multiplied in each case by the
applicable Expected Iron Content and Adjusted
Expected Price per Iron Unit.
In case of any payment scheduled to be made on a Monday that
is not a Business Day, such payment shall be made on the next
occurring Business Day, but all calculations shall be made as
if the payment were made on the Monday.
(b) The payments provided for in Section 7(a) shall be adjusted as
follows:
(i) Since the Closing Date will be after January 1, 2002, the 2002
payments shall be adjusted so that (x) a partial payment is
made on the day following the Closing Date for the period
between the Closing Date and [* * * *], and (y) [* * * *].
(ii) In the event of any adjustment to the Annual Requirements
pursuant to Section 5(b), any payments to be made pursuant to
Section 7(a)(i) after such adjustment shall be increased or
decreased so that such payments will be (x) equal in amount,
and (y) the minimum amount such that at no time during the
year, based on then-existing month-by-month forecasts, will
Algoma have taken delivery of a greater amount of pellets than
it has paid for.
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(iii) Beginning in 2004, not later than June 15 of each year, Cliffs
shall prepare and certify to Algoma (x) Cliffs' revised good
faith estimate of the Composite Index for such year, (y)
Cliffs' recalculation of the Adjusted Expected Price per Iron
Unit for each kind of Cliffs Pellets, based thereon, and (z)
the amount of the difference between the amount previously
paid for Cliffs Pellets during the year and the amount that
would have been paid had such adjusted Composite Index been in
effect from the beginning of the year. All subsequent payments
to be made under Section 7(a) shall be adjusted to reflect the
revised Adjusted Expected Price per Iron Unit, and the next
such payment shall be adjusted by the amount specified in
clause (z) above.
(c) In addition to the adjustments to be made pursuant to Section 7(b),
the following lump sum adjustments shall be made:
(i) Not later than January 15 of each year, Cliffs shall prepare
and certify to Algoma: (w) Cliffs' revised good faith estimate
of the Composite Index for the prior year (beginning in 2004),
(x) Cliffs' calculation of the actual tonnage of each kind of
Cliffs Pellets and any variance from tonnage forecast to be
delivered to satisfy Algoma's Annual Requirements, in each
case for the prior year, (y) the actual iron units in each
kind of Cliffs Pellets, and any variance from the Expected
Iron Content expected therefore, in each case for the prior
year, and (z) the amount due from Cliffs to Algoma, or vice
versa, to adjust to correct for all of the variances in
clauses (w) through (y), for the prior year. The payment due
pursuant to Section 7(a) next occurring after January 15 shall
be adjusted by the amount specified in clause (z).
(ii) Beginning in 2005, in addition to the adjustment provided for
in Section 7(b)(iii), not later than June 15 of each year,
Cliffs shall calculate and certify to Algoma (x) the final
Composite Index for the prior year, (y) Cliffs' calculation of
the adjustment to the Adjusted Expected Price per Iron Unit
for each kind of Cliffs Pellets, and (z) the total amount
required to be paid by Cliffs to Algoma, or vice versa, to
correct the total amount paid by Algoma to Cliffs for the
prior year (as previously adjusted) for the actual Adjusted
Expected Price per Iron Unit derived for the actual Composite
Index. The payment due pursuant to Section 7(a) next occurring
after June 15 shall be adjusted by the amount specified in
clause (z).
(d) All payments shall be made by wire transfer of immediately
available funds according to such instructions as Cliffs may from time to time
provide, and shall be made in U.S. dollars.
(e) In the event Algoma shall fail to make payment when due of any
amounts, Cliffs, in addition to all other remedies available to Cliffs in law or
in equity, shall have the right, but
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CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
not the obligation, to withhold further performance by Cliffs under this
Agreement until all claims Cliffs may have against Algoma under this Agreement
are fully satisfied.
(f) EXHIBIT C illustrates the operation of the provisions of this
Section 7.
8. SHIPMENTS AND DELIVERY.
(a) Cliffs and Algoma will agree on a mutually acceptable delivery
schedule for each year prior to November 1 of the preceding year. Such schedule
must be established to match both Algoma's furnace requirements and Cliffs'
pellet availability. Cliffs and Algoma will balance the delivery schedule by
pellet source and type so that monthly shipments will be relatively equal,
considering winter shipping restrictions and production schedules. Cliffs and
Algoma recognize that changes in schedule will occur as provided in Section 5,
and will use commercially reasonable efforts to accommodate such changes.
(b) During 2002, Cliffs will use commercially reasonable efforts (which
shall not require incurring additional operating or capital costs) to load an
average of 70 railcars per day for direct delivery by the Wisconsin Central
System, or its successor ("WCS"), to the Sault Ste. Marie Plant. The number of
railcars shipped daily from the various locations shall be agreed upon by Cliffs
and Algoma, but the total shall not exceed 70. Thereafter, Cliffs will use
commercially reasonable efforts (which shall not require incurring additional
operating or capital costs) to increase the tonnage of shipments to the Sault
Ste. Marie Plant by direct rail with the objective of being able to (i) ship a
minimum of [* * * *] of Algoma's annual pellet requirements by direct rail, and
(ii) cause a minimum of [* * * *] of the railcars loaded out of the Tilden Plant
or the Empire Plant not to exceed their capacities, and not to have a gross
weight over rail in excess of [* * * *] pounds. Cliffs and Algoma acknowledge
that neither of them owns any railcars and as such they must obtain the
cooperation of WCS. To this end, Algoma will pursue with WCS a more
appropriately sized rail car fleet (I.E., smaller rail cars) to be used for
shipments by WCS. Algoma will cause WCS to adjust the weight of any railcar that
is loaded in excess of its designed carrying capacity.
(c) Deliveries shall be made as follows:
(i) Tilden Mag Flux Pellets and Tilden Hem Flux Pellets shall be
delivered by Cliffs to Algoma f.o.b. loaded vessel at Port
Marquette, Michigan or f.o.b. loaded railcar at Partridge,
Michigan, as the case may be, and in either case title and all
risk of loss, damage or destruction shall pass to Algoma at
the time of discharge of the pellets from the loading device
to the vessel or at the time of transfer of rail cars to WCS.
(ii) Empire Royal Pellets shall be delivered by Cliffs to Algoma
f.o.b. loaded vessel at Port Marquette, Michigan, or loaded
rail car at the Empire Plant, as the case may be, and in
either case title and all risk of loss, damage or destruction
shall pass to Algoma at the time of discharge of the pellets
from the loading device to the vessel or railcar.
11
<PAGE>
(iii) Other Cliffs Pellets shall be delivered by Cliffs to Algoma
f.o.b. loaded vessel at Allouez, Wisconsin or Silver Bay,
Minnesota or loaded railcar at the Hibbing Plant, or other
mutually agreed location (by vessel or rail), as the case may
be, and in any case title and all risk of loss, damage or
destruction shall pass to Algoma at the time of discharge of
the pellets from the loading device to the vessel or railcar.
9. WEIGHTS.
Railcar bill of lading weight determined by railroad scale weights, bin
scale weights or belt scale weights in accordance with the procedures in effect
at each of the plants, and vessel bill of lading weight determined by railroad
scale weights or belt scale weights in accordance with the procedures in effect
from time to time at each of the loading ports, shall be accepted by the parties
as finally determining the amount of Cliffs Pellets delivered to Algoma pursuant
to this Agreement. Cliffs shall ensure that all weighing devices are regularly
tested, verified and maintained.
10. EMPLOYMENT OF VESSELS AND RAILCARS.
Algoma assumes the obligation for arranging and providing appropriate
vessels and railcars for the transportation of the Cliffs Pellets delivered by
Cliffs to Algoma hereunder. Algoma shall arrange and provide (a) for all rail
shipments, railcars capable of loading at the Tilden Plant, Empire Plant,
Hibbing Plant or Northshore Plant, as the case may be, and (b) for all vessel
shipments, ore carrier or bulk carrier type vessels suitable in all respects to
enter, berth at and leave the loading ports and suitable for the loading and
mooring facilities at the loading ports. If Cliffs supplies any Other Cliffs
Pellets hereunder, Algoma shall (i) use all commercially reasonable efforts to
obtain the best possible price and other terms for transportation of such Other
Cliffs Pellets, and (ii) certify the use of such efforts, and the prices
obtained for such transportation, to Cliffs at the end of each year.
11. SAMPLING PROCEDURES.
All pellet sampling procedures and analytical tests conducted on Cliffs
Pellets sold to Algoma to demonstrate compliance with typical and average
analysis characteristics specified in Section 4 shall be performed by Cliffs at
the loading point on each pellet vessel shipment or train shipment, as the case
may be. Test methods to be used shall be the appropriate ASTM or ISO standard
methods published at the time of testing or the customary procedures and
practices previously furnished by Cliffs to Algoma, or any other procedures and
practices that may be mutually agreed to by Cliffs and Algoma. The final values
of all characteristics are those determined by Cliffs at the loading point.
Algoma may, at any time and from time to time through one or more authorized
representatives, be present during production, loading, or to observe sampling
and analysis of pellets being processed for shipment to Algoma. At Algoma's
option and at its own expense, Algoma may from time to time require independent
sampling.
12
<PAGE>
CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
12. WARRANTIES.
(a) EXCEPT AS SET FORTH IN SECTION 4(b), CLIFFS MAKES NO, AND HEREBY
DISCLAIMS AND EXCLUDES ANY, EXPRESS OR IMPLIED WARRANTIES INCLUDING, WITHOUT
LIMITATION, ANY IMPLIED WARRANTY OF MERCHANTABILITY, OF FITNESS, OR OF FITNESS
FOR A PARTICULAR PURPOSE, WITH RESPECT TO ALL CLIFFS PELLETS; PROVIDED, HOWEVER,
THAT NOTHING IN THIS SECTION 12(a) SHALL LIMIT CLIFFS' OBLIGATION TO USE ITS
BEST EFFORTS TO COMPLY WITH SECTION 4(a).
(b) All notices of material variance of any Cliffs Pellets from the [*
* * *] described on EXHIBIT A-1, EXHIBIT A-2, EXHIBIT A-3.1, EXHIBIT A-3.2,
EXHIBIT A-3.3, EXHIBIT A-3.4, EXHIBIT A-3.5 or EXHIBIT A-3.6, as the case may
be, over the average volumes specified in Section 4(c) shall be delivered to
Cliffs prior to such Cliffs Pellets being charged in the Sault Ste. Marie
Plant's blast furnace, or any claim arising from any such material variance
shall be waived by Algoma. Each party shall afford the other party prompt and
reasonable opportunity to inspect the Cliffs Pellets as to which any notice is
given as above stated. The Cliffs Pellets shall not be returned to Cliffs
without prior consent of Cliffs, which consent, in the case of direct rail
shipments, shall not be unreasonably withheld. IN NO EVENT SHALL CLIFFS BE
LIABLE FOR ANY DAMAGE TO ALGOMA'S PROPERTY OR LOST PROFITS, INJURY TO GOOD WILL
OR ANY OTHER SPECIAL OR CONSEQUENTIAL DAMAGES UNLESS IT IS PROVED THAT CLIFFS
HAS ENGAGED IN WILLFUL MISCONDUCT.
13. [* * * *]
14. COVENANTS.
(a) During the term of this Agreement, Algoma shall continue to [* * *
*].
(b) [* * * *].
(c) During the term of this Agreement, Algoma shall not: (i) sell,
transfer or otherwise permit any other Person to use any pellets purchased
hereunder, other than as security for a bona fide extension of credit in the
ordinary course of business; (ii) use any pellets purchased hereunder in any
facility other than the Sault Ste. Marie Plant; or (iii) sell, lease or
otherwise transfer title or the right to use the Sault Ste. Marie Plant
(including without limitation its blast furnaces), or any material portion
thereof, to any Person, or merge, consolidate or reorganize with any Person
unless that Person assumes in writing this Agreement and all of Algoma's
obligations hereunder.
15. ARBITRATION.
Any matter related hereto that is required to be resolved by
arbitration or pursuant to Section 15 hereof shall be resolved in Cleveland,
Ohio by application of the rules of The American Arbitration Association
applicable to commercial disputes, modified as follows:
(a) there shall be three arbitrators, all of whom shall have
expertise relevant to the matter to be determined, and none of
whom shall be
13
<PAGE>
an employee, officer, director or consultant of, or of a
direct competitor of, Algoma or Cliffs;
(b) in connection with any arbitration arising out of Section 13,
each of Cliffs and Algoma shall have the right to submit
information to the arbitrators to be held in confidence by
them and not disclosed to the other party (or any other
person), provided that (i) the party providing such
information shall certify its accuracy to the best of its
actual knowledge; and (ii) such information shall be made
available to counsel for the other party upon delivery by such
counsel of its undertaking to hold the information (either in
the form provided or in any other form) in confidence and not
to disclose it to its client, or any other person (other than
the arbitrators);
(c) before making their determination in any matter, the
arbitrators must request from each of the parties a complete
statement of its proposed resolution of such matter, and the
arbitrators shall select between the two proposed resolutions,
without making any alteration to either of them (or if either
party does not submit a proposed resolution, or submits one
that is materially incomplete, shall select the proposed
resolution of the other party); and
(d) the costs of the arbitrators shall be borne entirely by the
party that did not prevail.
The judgment of the arbitrators shall be final and binding on the parties, and
may be entered and enforced by any court of the United States, any state
thereof, Canada or any province thereof.
16. FORCE MAJEURE.
No party hereto shall be liable for damages resulting from failure to
deliver or accept and pay for all or any of the Cliffs Pellets as described
herein, if and to the extent that such delivery or acceptance would be contrary
to or would constitute a violation of any regulation, order or requirement of a
recognized governmental body or agency, or if such failure, including (a)
failure of the mines supplying the Cliffs Pellets to be delivered under this
Agreement to produce the Cliffs Pellets, or (b) failure of Algoma's facilities
to produce steel, is caused by or results directly or indirectly from acts of
God, war, insurrections, interference by foreign powers, acts of terrorism,
strikes, hindrances, labor disputes, labor shortages, fires, flood, embargoes,
accidents or delays at the mines, on the railroads or docks or in transit,
shortage of transportation facilities, disasters of navigation, or other causes,
similar or dissimilar, if such other causes are beyond the control of the party
charged with a failure to deliver or to accept and pay for the Cliffs Pellets.
To the extent a force majeure is claimed hereunder by a party hereto, such shall
relieve the other party from fulfilling its corresponding agreement hereunder to
the party claiming such force majeure, but only for the period and to the extent
of the claimed force majeure, unless otherwise mutually agreed to by the
parties.
14
<PAGE>
17. NOTICES.
All notices, consents, reports and other documents authorized and
required to be given pursuant to this Agreement shall be given in writing and
either personally served on an officer of the party hereto to whom it is given,
or sent by recognized overnight delivery service, mailed by registered or
certified mail, postage prepaid, or by facsimile, addressed as follows:
If to CCIC, CMC or Northshore:
1100 Superior Avenue - 18th Floor
Cleveland, Ohio 44114-2589
Attention: Secretary
cc: Vice President-Sales
If to Algoma:
105 West Street
Sault Ste. Marie, Ontario P6A 7B4
Attention: Corporate Secretary
Fax: (705) 945-2203
provided, however, that any party may change the address to which notices or
other communications to it shall be sent by giving to the other party written
notice of such change, in which case notices and other communications to the
party giving the notice of the change of address shall not be deemed to have
been sufficiently given or delivered unless addressed to it at the new address
as stated in said notice.
18. TERM.
The term of this Agreement shall commence as of 12:01 a.m. on the day
following the Closing Date and continue through December 31, 2016; provided,
however, that if the Closing Date has not occurred prior to February 28, 2002,
then either party shall have the right to terminate this Agreement at any time
prior to the Closing Date, by notice to the other party. This Agreement shall
remain valid and fully enforceable for the fulfillment of obligations incurred
prior to termination.
19. AMENDMENT.
This Agreement may not be modified or amended except by an instrument
in writing signed by all parties hereto.
20. WAIVER.
No waiver of any of the terms of this Agreement shall be valid unless
in writing and signed by all parties hereto. No waiver or any breach of any
provision hereof or default under
15
<PAGE>
any provisions hereof shall be deemed a waiver of any subsequent breach or
default of any kind whatsoever.
21. CONFIDENTIALITY.
(a) Cliffs and Algoma acknowledge that this Agreement contains certain
volume pricing, adjustment and term provisions which are confidential,
proprietary or of a sensitive commercial nature and which would put Cliffs or
Algoma at a competitive disadvantage if disclosed to the public, specifically,
Sections 1, 2, 6, 7, 13 and 14, and all of the Schedules and Exhibits hereto
("CONFIDENTIAL INFORMATION"). Cliffs and Algoma further agree that all
provisions of this Agreement shall be kept confidential and, without the prior
consent of the other party, shall not be disclosed to any party not a party to
this Agreement except as required by law or governmental or judicial order and
except that disclosure of the existence of this Agreement shall not be precluded
by this Section 21.
(b) If either party is required by law or governmental or judicial
order or receives legal process or a court or agency directive requesting or
requiring disclosure of any of the Confidential Information contained in this
Agreement, such party will promptly notify the other party prior to disclosure
to permit such party to seek a protective order or take other appropriate action
to preserve the confidentiality of such Confidential Information. If either
party determines to file this Agreement with the Securities and Exchange
Commission ("COMMISSION") or any other federal, state, provincial or local
governmental or regulatory authority, or with any stock exchange or similar
body, such determining party will use its best efforts to obtain confidential
treatment of such Confidential Information pursuant to any applicable rule,
regulation or procedure of the Commission and any applicable rule, regulation or
procedure relating to confidential filings made with any such other authority or
exchange. If the Commission (or any such other authority or exchange) denies
such party's request for confidential treatment of such Confidential
Information, such party will use its best efforts to obtain confidential
treatment of the portions thereof that the other party designates. Each party
will allow the other party to participate in seeking to obtain such confidential
treatment for Confidential Information.
22. GOVERNING LAW.
This Agreement shall in all respects, including matters of
construction, validity and performance, be governed by and be construed in
accordance with the laws of the State of Ohio.
23. ASSIGNMENT.
(a) For purposes of this Agreement, the term "Algoma" includes and
means not only Algoma, but also any successor by merger or consolidation of
Algoma and any permitted assigns of Algoma.
(b) In case Algoma shall consolidate with or merge into another
corporation or shall transfer to another person, partnership, corporation or
entity, all or substantially all of its iron and steel business, this Agreement
shall be assigned by Algoma to, and shall be binding upon, the corporation
resulting from such consolidation or merger or the person, partnership,
corporation
16
<PAGE>
or entity to which such transfer is made; otherwise no assignment of this
Agreement by Algoma shall be valid unless Cliffs shall consent in writing
thereto.
(c) In case CCIC, CMC or Northshore, or any permitted assign of any of
them, shall consolidate with or merge into another corporation or shall transfer
to another person, partnership, corporation or entity, all or substantially all
of its business, this Agreement shall be assigned by CCIC, CMC or Northshore, as
the case may be, to, and shall be binding upon, the corporation resulting from
such consolidation or merger or the person, partnership, corporation or entity
to which such transfer is made; otherwise, no assignment of this Agreement by
CCIC, CMC or Northshore, shall be valid unless Algoma shall consent thereto in
writing.
17
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective authorized officers.
THE CLEVELAND-CLIFFS IRON ALGOMA STEEL INC.
COMPANY
By: /s/ Donald J. Gallagher By: /s/ Glen Manchester
---------------------------------------- -------------------------------
Name: Donald J. Gallagher Name: Glen Manchester
-------------------------------------- -----------------------------
Title: Vice President Title: Vice President - Finance and
------------------------------------- ----------------------------
Administration
--------------
CLIFFS MINING COMPANY NORTHSHORE MINING COMPANY
By: /s/ Donald J. Gallagher By: /s/ Donald J. Gallagher
---------------------------------------- ----------------------------------------
Name: Donald J. Gallagher Name: Donald J. Gallagher
-------------------------------------- --------------------------------------
Title: Vice President Title: Vice President
------------------------------------- --------------
18
<PAGE>
CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
SCHEDULE 1(i)
[* * * *]
<PAGE>
CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
SCHEDULE 5(a)
ALGOMA STEEL INC.
EDWARD M. BUMBACCO 105 West Street
Manager Corporate Logistics, Sault Ste. Marie, Ontario, Canada
Purchasing and Stores P6A 7B4
Telephone: (705) 945-2472
Facsimile: (705) 945-3112
e-mail: ebumbacco@algoma.com
November 7, 2001
VIA FAX 216-694-5385
Mr. Don Gallagher
Cleveland Cliffs Inc.
1100 Superior Avenue
Cleveland, OH 44114-2589
Dear Don:
PELLET NOMINATION FOR 2002
As per our recent agreement, our November pellet nomination for 2002 will be [*
* * *].
Our monthly shipment expectations are as follows:
January: [* * * *] July: [* * * *]
February: [* * * *] August: [* * * *]
March: [* * * *] September: [* * * *]
April: [* * * *] October: [* * * *]
May: [* * * *] November: [* * * *]
June: [* * * *] December: [* * * *]
Algoma Steel would like to meet with Cliffs, at your convenience, to discuss our
detailed monthly requirements and routing expectations. For your information,
the volumes for the year reflect a slightly higher rail movement than previously
discussed.
[* * * *]
Yours truly,
ALGOMA STEEL INC.
/s/ Ed /s/
Ed Bumbacco
Manager Corporate Logistics, Purchasing and Stores
Cc A. Stevens
<PAGE>
CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
EXHIBIT A-1
IRON ORE FLUXED PELLETS
AVERAGE COMPOSITE SPECIFICATION FOR ALL FLUXED PELLET BLENDS
[* * * *]
AIM FREQUENCY
A. % DRY CHEMICAL ANALYSIS
Fe S
SiO(2) S
Al(2)O(3) S
CaO S
MgO S
Mn S
P S
S Q
TiO(2) Q
Na(2)O Q
K(2)O Q
[* * * *]
CaO/ SiO(2)
B/A
MgO/ SiO(2)
B. PHYSICAL
% +1/2" S
% -1/2" x +3/8" S
% -1/4" S
% - 28 Mesh S
C. REDUCIBILITY (R40) Q
D. LTB (% +1/4") Q
E. COMPRESSION (LBS) M
F. SWELLING Q
G. SOFTENING TEMP ([degrees]C) Q
H. MOISTURE AS LOADED S
Additional Requirements:
1. Specifications to be based on a weighted pellet quality specification
as charged to the blast furnace.
2. Individual pellet specifications to be provided on a train lot or
vessel cargo basis. Physical and moisture limits apply on a shipment by
shipment basis. Moisture shall also be limited to a maximum of [* * *
*] on a monthly average basis.
3. Changes to pellet sourcing must result in a specification substantially
equivalent to the above, and shall be reviewed by Algoma and Cliffs
prior to shipments.
4. [* * * *]
Frequency of reporting: S = Shipment, M = Monthly average, Q = Quarterly
average.
<PAGE>
CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
EXHIBIT A-2
IRON ORE BLENDED PELLETS
AVERAGE COMPOSITE SPECIFICATION [* * * *]
[* * * *]
AIM FREQUENCY
A. % DRY CHEMICAL ANALYSIS
Fe S
SiO(2) S
Al(2)O(3) S
CaO S
MgO S
Mn S
P S
S Q
TiO(2) Q
Na(2)O Q
K(2)O Q
CaO/ SiO(2) [* * * *]
B/A
MgO/ SiO(2)
B. PHYSICAL
% +1/2" S
% -1/2" x +3/8" S
% -1/4" S
% - 28 Mesh S
C. REDUCIBILITY (R40) Q
D. LTB (% +1/4") Q
E. COMPRESSION (LBS) M
F. SWELLING Q
G. SOFTENING TEMP ([degrees]C) Q
H. MOISTURE AS LOADED S
Additional Requirements:
1. Specifications to be based on a weighted pellet quality specification
as charged to the blast furnace.
2. Individual pellet specifications to be provided on a train lot or
vessel cargo basis. Physical and moisture limits apply on a shipment by
shipment basis. Moisture shall also be limited to a maximum of [* * *
*] on a monthly average basis.
3. Changes to pellet sourcing must result in a specification substantially
equivalent to the above, and shall be reviewed by Algoma and Cliffs
prior to shipments.
4. [* * * *]
Frequency of reporting: S = Shipment, M = Monthly average, Q = Quarterly
average.
<PAGE>
CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
EXHIBIT A-3.1
THE CLEVELAND-CLIFFS IRON COMPANY
EMPIRE IRON MINING PARTNERSHIP
EMPIRE ROYAL FLUX PELLET
[* * * *]
AIM
A. % DRY CHEMICAL ANALYSIS
Fe
SiO2
Al2O3
CaO
MgO
Mn
P
S
TiO2
Na2O
K2O
[* * * *]
CaO / SiO2 (L/S)
MgO / SiO2
B. SIZING (BT)
% + 1/2"
% -1/2" x + 3/8"
% -3/8" x + 1/4"
% - 1/4"
C. POROSITY, % VOIDS
D. REDUCIBILITY (R40)
E. LTB (% + 1/4")
F. COMPRESSION (LBS)
G. HIGH TEMP UNDER LOAD (% RED.)
H. SWELLING (% VOLUME CHANGE)
I. SOFTENING TEMP ([degrees]C)
J. BULK DENSITY (LBS/CU FT)
K. MOISTURE AS LOADED
ANALYSIS ARE LOADED AT MINE
Comments:
[* * * *]
<PAGE>
CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
EXHIBIT A-3.2
THE CLEVELAND-CLIFFS IRON COMPANY
TILDEN MINING COMPANY L.C.
TILDEN MAGNETITE FLUX PELLET
[* * * *]
AIM
A. % DRY CHEMICAL ANALYSIS
Fe
SiO2
Al2O3
CaO
MgO
Mn
P
S
TiO2
Na2O
K2O
[* * * *]
CaO / SiO2 (L/S)
B/A
MgO / SiO2
B. PHYSICAL
% + 1/2"
% -1/2" x + 3/8"
% - 1/4"
% - 28 Mesh
C. POROSITY, % VOIDS
D. REDUCIBILITY (R40)
E. LTB (% + 1/4")
F. COMPRESSION (LBS)
G. HIGH TEMP UNDER LOAD (% RED.)
H. SWELLING (% VOLUME CHANGE)
I. SOFTENING TEMP ([degrees]C)
J. BULK DENSITY (LBS/CU FT)
K. MOISTURE AS LOADED
ANALYSIS ARE LOADED AT MINE
Comments:
[* * * *]
19
<PAGE>
EXHIBIT A-3.3
THE CLEVELAND-CLIFFS IRON COMPANY
TILDEN MINING COMPANY L.C.
TILDEN HEMATITE FLUX PELLET
[* * * *]
AIM
A. % DRY CHEMICAL ANALYSIS
Fe
SiO2
Al2O3
CaO
MgO
Mn
P
S
TiO2
Na2O
K2O
[* * * *]
CaO / SiO2 (L/S)
B/A
MgO / SiO2
B. SIZING (BT)
% + 1/2"
% -1/2" x + 3/8"
% - 1/4"
% - 28 Mesh
C. POROSITY, % VOIDS
D. REDUCIBILITY (R40)
E. LTB (% + 1/4")
F. COMPRESSION (LBS)
G. HIGH TEMP UNDER LOAD (% RED.)
H. SWELLING (% VOLUME CHANGE)
I. SOFTENING TEMP ([degrees]C)
J. BULK DENSITY (LBS/CU FT)
K. MOISTURE AS LOADED
ANALYSIS ARE LOADED AT MINE
Comments:
[* * * *]
<PAGE>
CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
EXHIBIT A-3.4
CLIFFS MINING COMPANY
HIBBING TACONITE COMPANY JOINT VENTURE
HIBTAC STANDARD PELLET
[* * * *]
AIM
A. % DRY CHEMICAL ANALYSIS
Fe
SiO2
Al2O3
CaO
MgO
Mn
P
S
TiO2
Na2O
K2O
[* * * *]
CaO / SiO2 (L/S)
B/A
MgO / SiO2
B. SIZING (BT)
% + 1/2"
% -1/2" x + 3/8"
% - 1/4"
% - 28 Mesh
C. POROSITY, % VOIDS
D. REDUCIBILITY (R40)
E. LTB (% + 1/4")
F. COMPRESSION (LBS)
G. HIGH TEMP UNDER LOAD (% RED.)
H. SWELLING (% VOLUME CHANGE)
I. SOFTENING TEMP ([degrees]C)
J. BULK DENSITY (LBS/CU FT)
K. MOISTURE AS LOADED
ANALYSIS ARE LOADED AT MINE
Comments:
[* * * *]
<PAGE>
CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
EXHIBIT A-3.5
NORTHSHORE MINING COMPANY
NORTHSHORE STANDARD (ACID)
[* * * *]
AIM
A. % DRY CHEMICAL ANALYSIS
Fe
SiO2
Al2O3
CaO
MgO
Mn
P
S
TiO2
Na2O
K2O
[* * * *]
CaO / SiO2 (L/S)
B/A
MgO / SiO2
B. SIZING (BT)
% + 1/2"
% -1/2" x + 3/8"
% - 1/4"
% - 28 Mesh
C. POROSITY, % VOIDS
D. REDUCIBILITY (R40)
E. LTB (% + 1/4")
F. COMPRESSION (LBS)
G. HIGH TEMP UNDER LOAD (% RED.)
H. SWELLING (% VOLUME CHANGE)
I. SOFTENING TEMP ([degrees]C)
J. BULK DENSITY (LBS/CU FT)
K. MOISTURE AS LOADED
ANALYSIS ARE LOADED AT MINE
Comments:
[* * * *]
<PAGE>
CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
EXHIBIT A-3.6
NORTHSHORE MINING COMPANY
NORTHSHORE FLUX
[* * * *]
AIM
A. % DRY CHEMICAL ANALYSIS
Fe
SiO2
Al2O3
CaO
MgO
Mn
P
S
TiO2
Na2O
K2O
[* * * *]
CaO / SiO2 (L/S)
B/A
MgO / SiO2
B. SIZING (BT)
% + 1/2"
% -1/2" x + 3/8"
% - 1/4"
% - 28 Mesh
C. POROSITY, % VOIDS
D. REDUCIBILITY (R40)
E. LTB (% + 1/4")
F. COMPRESSION (LBS)
G. HIGH TEMP UNDER LOAD (% RED.)
H. SWELLING (% VOLUME CHANGE)
I. SOFTENING TEMP ([degrees]C)
J. BULK DENSITY (LBS/CU FT)
K. MOISTURE AS LOADED
ANALYSIS ARE LOADED AT MINE
Comments:
[* * * *]
<PAGE>
CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
EXHIBIT B-1
PELLET SALE AND PURCHASE AGREEMENT
COMPOSITE INDEX FORMULA FOR YEARS 2004-2016
CONTRACT YEAR'S COMPOSITE INDEX CALCULATION
[* * * *]
CONTRACT YEAR'S COMPOSITE INDEX = (A+B+C)
<PAGE>
CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
EXHIBIT B-2
PELLET SALE AND PURCHASE AGREEMENT
EXAMPLE OF CALCULATION OF CURRENT YEAR'S PELLET PRICE
CONTRACT YEAR 2004
(1) Multiply 2002 Base Price per iron unit by the Composite Index
2002 BASE ADJUSTED BASE
PRICE PER COMPOSITE PRICE PER
PELLET F.O.B. PER IRON UNIT INDEX PER IRON UNIT
Tilden Mag Flux Railcar at Partridge [* * * *] [* * * *] [* * * *]
[* * * *]
<PAGE>
CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
EXHIBIT C
PELLET SALE AND PURCHASE AGREEMENT
EXAMPLE OF ONE YEAR'S CYCLE OF RECALCULATION OF ADJUSTED EXPECTED PRICE PER IRON
UNIT CONTRACT YEAR 2004
(1) No later than December 15 of year prior to Contract Year, Cliffs will
provide a good faith estimate of the Composite Index for the Contract Year
DECEMBER 15 OF YEAR PRIOR TO 2002 BASE ADJUSTED BASE
CONTRACT YEAR ESTIMATED PRICE PER PRICE PER
PELLET F.O.B. COMPOSITE INDEX IRON UNIT IRON UNIT
---------------------------------------------------------------------------------------------------------------------------
Tilden Mag Flux Railcar at [* * * *] [* * * *] [* * * *]
Partridge
[* * * *]
(3) No later than June 15 of Contract Year, Cliffs will provide a revised good
faith estimate of the Composite Index for the Contract Year
DECEMBER 15 OF YEAR PRIOR TO JUNE 15 OF CONTRACT YEAR 2002 BASE ADJUSTED BASE
CONTRACT YEAR ESTIMATED REVISED CALCULATED PRICE PER PRICE PER
PELLET F.O.B. COMPOSITE INDEX COMPOSITE INDEX IRON UNIT IRON UNIT
---------------------------------------------------------------------------------------------------------------------------------
Tilden Mag Flux Railcar at [* * * *] [* * * *] [* * * *] [* * * *]
Partridge
[* * * *]
(5) No later than January 15 of year following the Contract Year, Cliffs will
provide a second revised good faith estimate of the Composite Index for the
prior year's Contract Year
JANUARY 15 OF YEAR
JUNE 15 OF CONTRACT FOLLOWING CONTRACT YEAR 2002 BASE ADJUSTED BASE
YEAR ESTIMATED REVISED CALCULATED PRICE PER PRICE PER
PELLET F.O.B. COMPOSITE INDEX COMPOSITE INDEX IRON UNIT IRON UNIT
---------------------------------------------------------------------------------------------------------------------------------
Tilden Mag Flux Railcar at [* * * *] [* * * *] [* * * *] [* * * *]
Partridge
[* * * *]
(7) No later than June 15 of year following the Contract Year, Cliffs will
provide a final revised Composite Index for the prior year's Contract Year
JUNE 15 OF YEAR
JANUARY 15 OF YEAR FOLLOWING FOLLOWING CONTRACT YEAR 2002 BASE ADJUSTED BASE
CONTRACT YEAR ESTIMATED FINAL CALCULATED PRICE PER PRICE PER
PELLET F.O.B. COMPOSITE INDEX COMPOSITE INDEX IRON UNIT IRON UNIT
--------------------------------------------------------------------------------------------------------------------------------
Tilden Mag Flux Railcar at [* * * *] [* * * *] [* * * *] [* * * *]
Partridge
[* * * *]