Cleveland-Cliffs Inc. has entered into an amendment to its major Pellet Sale and Purchase Agreement with International Steel Group Inc., for pellet deliveries to ISG Cleveland and ISG Indiana Harbor through 2016.

Cliffs has been working with ISG for several months to amend the pellet contract to mitigate Cliffs' exposure to future steel price volatility. The amendment significantly raises the base price for pellets to better reflect current market rates, and moderates the steel price sharing provision accordingly.

Beginning in 2005, the base pellet price will be equal to the price under the original agreement as if certain ISG hot band steel prices equaled $400 per ton. In addition, the hot band steel price threshold at which Cliffs' pellet price will escalate has been increased to $400 per ton. Cliffs will receive approximately 75% of the benefit of steel pricing above $400 under the amendment as compared to the original agreement.

Commenting on the amendment, John S. Brinzo, Chairman and CEO, said, "We are very pleased to have reached this mutually beneficial agreement with ISG. Since entering into the long-term sales agreement with ISG in 2002, the industry's landscape was changed dramatically. This amendment essentially updates the pricing mechanisms to better reflect the current environment. We have successfully decreased our exposure to potential decreases in hot band steel prices and maintained potential upside."

Headquartered in Cleveland, Ohio, Cleveland-Cliffs Inc. is the largest producer of iron ore pellets in North America and sells the majority of its pellets to integrated steel companies in the United States and Canada. The company operates six iron ore mines located in Michigan, Minnesota and Eastern Canada.