Cleveland-Cliffs Inc. commented on the recent settlement of iron ore price by Eastern Canadian producers.

According to published reports, the 2005 price for Eastern Canadian blast furnace pellets has increased approximately 86%. Companhia Vale do Rio Doce (CVRD) also recently negotiated an increase of approximately 86% for the price of its seaborne blast furnace pellets. The negotiated international price for blast furnace pellets is one of several price adjustment factors included in Cliffs' term sales contracts.

The estimated effect of the increase in international pellet pricing will result in an increase of $7.74 per ton in Cliffs' sales revenues relative to the average 2004 revenue realization of $44.19 per ton. Additionally, Cliffs will realize an increase of $1.59 per ton representing a combination of known contractual base price increases, lag year adjustments, and capped pricing on one contract.

The impact from additional price adjustment factors — namely changes in the producer price indices (PPI) and average hot rolled coil price realizations — is still unknown. Each one percent increase in the PPI-All Commodities index will result in an $0.18 per ton increase in sales pricing. Each $10 per ton increase above a $470 per ton average hot rolled price realization by customers represented in a number of Cliffs' contracts will result in a $0.27 per ton increase in sales pricing.

As in the past, the company's first quarter results will reflect seasonally lower-than-average sales levels due to shipping constraints. First quarter revenues will also include approximately 0.9 million tons sold in 2005 at 2004 pricing. First quarter sales are expected to be approximately 4.0 million tons, or 17% of estimated annual sales of 24 million tons.

Headquartered in Cleveland, Ohio, Cleveland-Cliffs Inc is the largest producer of iron ore pellets in North America, selling 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.