Dofasco has entered into an agreement to acquire substantially all remaining interests in Quebec Cartier Mining Co. (QCM).

Under the agreement, Dofasco, which currently owns a third of the preferred shares of QCM, will acquire all of the shares of QCM owned by CAEMI of Brazil and Investissement Quebec for a total consideration of $306 million (Canadian). It is planned that immediately following the transaction’s closing, all of the preferred shares of QCM will be converted into common shares, which will result in Dofasco holding over 98.7% of the common shares. The purchase agreement, which is subject to obtaining relevant regulatory approvals, is expected to close early in the third quarter of this year.

Commenting on the transaction, Don Pether, Dofasco's President and CEO, observed, "Global iron ore markets have changed dramatically in the last two years, and with these changes QCM has emerged with a significantly enhanced ability to generate strong cash flows and income. This has been due to major structural changes on the supply side of the market, including global consolidation. In addition, there has been a major re-balancing of long-term global demand versus supply, in part a result of the sustained development of the Asian economy."

"Dofasco is currently reviewing its strategic options to unlock the significant value of its interest in QCM, including monetizing a significant portion of our investment through an offering of QCM securities in public markets as soon as is practicable," Mr. Pether continued. "Given the rapid change in global iron ore markets and the pricing outlook, it will be prudent for Dofasco to hold equity in QCM at a level sufficient to hedge our iron ore purchases. This will put Dofasco in a strong competitive position given that there are relatively few iron ore hedging opportunities available for North American steel producers."

He added, "This acquisition also represents an optimal outcome for the restructuring of QCM which was begun in 2003 in partnership with Investissement Quebec and CAEMI. This is a remarkable turnaround that would not have occurred without this unique partnership and the cooperation of all parties, including employees, suppliers, customers and particularly, the participation of Investissement Quebec. We also want to acknowledge the tremendous working relationship we have enjoyed with CAEMI throughout the process. QCM emerged from its restructuring in a position to benefit from the significant improvement in iron ore markets and is now able to generate value for all of its stakeholders. Given the outlook for robust iron ore pricing, strong demand and constrained global supply, QCM is expected to remain a major contributor to the economic life of the province of Quebec as one of North America's most significant iron ore producers."

QCM recently reached a 6-year agreement with its unions. "The settlement provides employees with a competitive package that shares the rewards of improved performance, while positioning the company to provide value to all of its stakeholders," Mr. Pether commented.

Following closing of the purchase agreement, Dofasco will fully consolidate QCM's results in its financial statements, pending any future restructuring that could result from the review of strategic options initiated by Dofasco. QCM's current management team is expected to remain in place.

Dofasco is a leading North American steel solutions provider. Product lines include hot rolled, cold rolled, galvanized, Extragal^(TM), Galvalume^(TM) and tinplate flat rolled steels, as well as tubular products, laser-welded blanks and Zyplex^(TM), a proprietary laminate. Dofasco's wide range of steel products is sold to customers in the automotive, construction, energy, manufacturing, pipe and tube, appliance, packaging and steel distribution industries.