Nov. 20, 2006 — Unable to agree on the terms necessary for construction of a reduced iron plant, the participants in Mesabi Nugget LLC have suspended their efforts to jointly develop the Mesabi Nugget Project at the Cliffs Erie site in Hoyt Lakes, Minn.

Originally, the Mesabi Nugget venture among Cleveland-Cliffs, Kobe Steel, Steel Dynamics, Ferrometrics and the State of Minnesota was to build the initial iron nugget plant at the Cliffs Erie site. The inability of the parties to reach agreeable economic and commercial terms for the deal, including completion of non-recourse financing for the project, was cited as the reason for suspension of the project.

Although the original partners will not go forward,, Cliffs and Kobe Steel announced that they intend to proceed with development of a commercial-scale reduced iron plant, which will convert taconite into nearly pure iron in nugget form utilizing Kobe's ITmk3 technology at Cliffs' Northshore Mining facility in Silver Bay, Minn.

"We are committed to working with Kobe in developing its iron nugget technology," Cleveland-Cliffs CEO Joseph Carrabba said. "This high-potential project will open new markets for taconite from the Mesabi Range, and will bring new jobs to the region and make a significant contribution to the local economy. Minnesota has been very supportive, including making a significant investment in this technology, and it is Cliffs' intention to build the reduced iron plant on the Range."

Kobe Steel's General Manager and Head of Iron Unit Division Shohei Manabe reinforced Carrabba's statement: "We are committed to the reduced iron business and believe that the iron nugget technology can significantly alter the raw material landscape for steel producers. While we are also disappointed by the delay created by this setback, we are nonetheless optimistic regarding the technology, as well as building the innovative operation in Minnesota. We look forward to working with Cleveland-Cliffs and the State of Minnesota to commercially deploy this technology."

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. Cleveland-Cliffs Inc 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.