Cleveland-Cliffs’ Board of Directors has approved the company’s investment in the Sonoma Coal Project in Queensland, Australia.

Cliffs announced that it has signed a non-binding term sheet with privately owned Australian coal company QCoal Pty Ltd to take a 45% interest in the Sonoma Project, which is located at the northern limit of Queensland's Bowen Basin coalfields.

When completed, the Sonoma Project is expected initially to produce two million tonnes of marketable coal annually, beginning in late 2007. Plans call for annual production of marketable coal to increase to between three and four million tonnes from 2008. The Sonoma Project has a current JORC Resource estimate of 97 million tonnes.

The Cliffs Asia-Pacific business unit, located in Perth, Australia, will oversee Cleveland-Cliffs' proposed interest in the project. Cliffs' investment in the project is expected to be approximately A$140 million.

Closing is anticipated to occur during the first quarter of 2007, subject to completion of due diligence, negotiation and execution of definitive documents, and approval from regulators.

“Our contemplated participation in the Sonoma Project marks Cliffs' initial seaborne coking coal endeavor,” said Cleveland-Cliffs CEO Joseph A. Carrabba. “The project, which will also produce thermal coal, is an ideal means for Cliffs to expand its presence in the Australian mining sector as well as further diversify its participation in the steelmaking materials industry.”

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. Cleveland-Cliffs operates a total of six iron ore mines located in Michigan, Minnesota and Eastern Canada. The company is majority owner of Portman Limited, the third-largest iron ore mining company in Australia, serving the Asian iron ore markets with direct-shipping fines and lump ore.