Skillings Mining Review January 2010

JANUARY 2010 • VOL. 99 NO. 1

MORE IRON ORE: RIO/BHP JV UNDER TOUGH SCRUTINY

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We provide comprehensive news of and affecting the global iron mining industry through a monthly magazine, a continually updated website, electronic news alerts and newsletters and a mining directory.

January 2010 VOL. 99 No. 1

Table of Contents

JANUARY 2010 • VOL. 99 NO. 1

MORE IRON ORE: RIO/BHP JV UNDER TOUGH SCRUTINY

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More Iron Ore: Rio/BHP JV Under Tough Scrutiny . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 ADVERTISERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 IRON ORE Cyclone .Puts .Western .Australian .Iron .Miners .on .Alert . . . . . . . . . . . . . . . . . . . . . . . . 9 Kumba .Wants .More .Control .of .Sishen-Saldanha .Operations . . . . . . . . . . . . . . . . . . 12 China .Finds .1 .Billion-Ton .Iron .Ore .Deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Higher .Iron .Ore .Demand .Predicted, .from .China, .Japan .and .the .EU . . . . . . . . . . . . 13 Labrador .Iron .Mines .Acquires .Significant .DSO .in .Quebec . . . . . . . . . . . . . . . . . . . . 13 Vale .and .Dongkuk .Steel .Constructing .Steel .Plant .in .NE .Brazil . . . . . . . . . . . . . . . . . 14 Fortescue .Continues .to .Hope .for .Rio .Rail .Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Xstrata .Funding .Congo .Exploration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Rio .Tinto .Appoints .New .Iron .Ore .Negotiator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Cliffs .Pursues .New .WA .Iron .Ore .Project .Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Canada’s .September .Iron .Ore .Exports .Up .46% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 STEEL Wuhan .to .Up .2010 .Output .by .24% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 ArcelorMittal .to .Cut .10,000 .Steel .Jobs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 IRR .Provides .Essar .and .Keetac .With .Welcomed .Boosts . . . . . . . . . . . . . . . . . . . . . . . 21 FINANCE Rio .Tinto .Sells .Iron .Ore .to .India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 China .May .Push .for .Early .Price .Settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Iron .Ore .Holdings .in .Talks .with .Rio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 .

Australian .Media .Discusses .Iron .Ore .Pricing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Terex .to .Sell .Mining .Business .to .Bucyrus .in .$1 .3 .Billion .Deal . . . . . . . . . . . . . . . . . 10 Cliffs .Natural .Resources .Diversifying .into .Chromite . . . . . . . . . . . . . . . . . . . . . . . . . 15 MMX .to .Spend .$1 .2 .Billion .to .Triple .Output .in .Brazil . . . . . . . . . . . . . . . . . . . . . . . . 23 SHIPPING November .Great .Lakes .Iron .Ore .Shipments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 NUGGETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 PEOPLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 STATISTICS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-17

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The .big .iron .ore .story .in .recent .weeks .has . been .the .approval .process .for .a .proposed .Rio .

Tinto/BHP .iron .ore .JV . . .Western .Australia’s .vast .

Pilbara .iron .ore .district .is .the .site .of .the .JV’s . focus, .and .is .the .source .of .great .revenue .and . employment .for .Australia-so .much .so .that .it . merits .representation .on .postage .stamps .

What’s Ahead in 2010?

The China Mining Association reported that a survey of 11 of the world’s leading commodities analysts predicted a 20% increase in the price of iron ore in 2010.

China, the world’s largest iron ore importer and consumer, saw its demand for seaborne iron ore increase nearly 40% to 612 million metric tons in 2009, even as demand in the rest of the world tumbled 30%. The analysts predicted China’s demand for iron ore should grow to 654 million tons next year, with global demand increasing 12.5% to 1.01 billion tons.

With China’s steel industry already signaling a hard line in annual contract negotiations, 2010 will be an interesting year to report on the news of the global iron mining industry.

Ed Koch Publisher ed.koch@skillings.net

MORE IRON ORE: RIO/BHP JV UNDER TOUGH SCRUTINY by .Gail .Rosenquist

Rio Tinto and BHP Billiton have just signed binding agreements to establish an iron ore production and shipping joint venture (JV) in the Pilbara region of Western Australia. The companies have told regulatory institutions that the deal would not cause further monopoly in the industry or lead to higher iron ore prices. They say it would merely bring more iron ore into the world market, at a lower cost.

In their announcement, Rio and BHP said that the JV encompasses all current and future Western Australian iron ore assets and liabilities and will be owned 50/50 by the two companies. It will deliver substantial synergies, they said. BHP Billiton and Rio Tinto placed the current net value of the production and development synergies at more than US$10 billion (100% basis).

The JV

The . synergies . are . expected . to . come . from: . combining . adjacent . mines . into . single . operations; .reducing .costs .through .shorter .rail .hauls . and . more . efficient . allocations . of . port . capacity; blending opportunities that will maximize product . recovery . and . provide . further . operating . efficiencies; . optimizing . future . growth . opportunities . through . the . development . of . consolidated, .larger .and .more .capital .efficient . expansion projects, and combining management, . procurement . and . general . overhead . activities .into .a .single .entity .

The .JV .plan .originally .was .announced .June .

5 .in .the .form .of .a .nonbinding .agreement; .on .

October 15, the marketing aspect of the proposal .was .eliminated . .This .elimination .was .the . only .material .change .to .the .binding .agreement, . which .was .announced .on .December .5 .

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Under . the . agreement, . up . to . 15% . of . production . was . proposed . to . be . sold . by . the . joint . venture, . independent . of . Rio . Tinto . and . BHP .

Billiton .

After . discussing . it . further, . the . two . decided . not .to .proceed .with .the .joint .venture .marketing . . As . a . result, . all . production . from . the . proposed .joint .venture .would .be .marketed .separately .by .Rio .Tinto .and .BHP .Billiton .

The . two . companies . said . that . the . change . should .clarify .the .nature .of .the .JV .for .customers .and .emphasize .its .focus .on .realizing .significant .production .and .development .synergies .

The . companies . have .filed . submissions . with . the . European . Commission . and . the . Australian .Competition .and .Consumer .Commission .

(ACCC) . .They .expect .to .submit .filings .in .other . relevant .jurisdictions .shortly .

The .ACCC .said .it .hoped .to .announce .a .deci-

JANUARY 2010

sion .on .the .deal .on .Feb . .24, .2010; . .submissions . can .be .made .until .Jan . . 15 . . In .2008, .the .ACCC . approved .the .unfriendly .takeover .of .Rio .Tinto . by .BHP, .making .it .unlikely .that .the .body .will . rule .against .the .new .JV, .said .Warren .Edney, .a . resource .analyst .with .RBS .Morgans, .an .Australian .stockbroker .

In .February .2008, .BHP .Billiton .had .launched . an .all-out, .hostile .bid .for .Rio .Tinto, .which .rejected .the .$147 .billion .offer .from .BHP .because . it . was .“significantly” . below . value . . BHP . finally . abandoned .its .bid, .saying .turmoil .in .financial . markets, .uncertainty .about .the .global .economic .outlook .and .regulatory .concerns .in .Europe . meant .the .deal .was .no .longer .in .its .shareholders’ .best .interest . .BHP .had .to .wait .12 .months .to . make .another .offer . .

Tough worldwide opposition

Development (UNCTAD) report said that last whole world should oppose it as one,” acyear, Vale, based in Rio de Janeiro, Brazil, and cording to Creamer Media’s Mining Weekly.

Although it is speculated that ACCC approvthe world’s largest iron ore producer, shipped China Daily News said that the move was conal is likely, the JV faces significant opposition 32.8% of the world’s iron ore; Rio Tinto veying “severe price pressure to domestic iron from steelmakers the European Union (EU), shipped 18.6%, while BHP Billiton’s share was ore and steel companies” and plans were being China, Japan, and South Korea, which fear the 17.1%, giving the thee major producers conmade to respond.

JV would give the second- and third-largest trol of 68.5% of the world market. Worldsteel, “Chinese companies have to concentrate and iron ore producers too much market power. . formerly known as the International Iron and strengthen the bargaining power in price negoEurofer, the main lobby group for European Steel Institute, said the combination of BHP tiations by integrating numerous small compasteelmakers, said the JV would pose a pricing and Rio essentially would result in two pronies into several big strong players,” the news threat, according to Exec Digital. Gordon Mofducers controlling nearly 70% of the global agency said. “Chinese industry has been confat, director general of Eurofer, said, “The JV market, bypassing Vale as the leading iron ore sidering the integrations, but must speed up.” will unavoidably lead to market concentration producer, ad making an and an increase in pricing already uncompetitive power of the combined Chinese Delegation to Brazil company, which is unacChina’s steel industry sent a high-level del“The recently signed binding situation even more difficult for iron ore cusceptable in competition egation to Brazil to gather support for a camagreement between Rio Tinto tomers. terms. paign to oppose the JV. The Financial Review According to The Wall “The joint venture newspaper said officials from CISA flew to and BHP Billiton is not materially Street Journal, steelmakwhich has been agreed Brazil seeking closer ties to Vale. “They have a different from the proposal ers say that if the EU common concern about the competition beupon... will combine their regulatory body fails to production and infratween Australia and Brazil,” an unnamed Chiissued earlier this year...

It stop the proposal, they structure facilities and nese steel official was quoted by Capital Busistill carries a great danger of will try to halt it, using ness as saying. “For Vale, the big market now is will unavoidably lead to German and Austrian market concentration China because of what’s happened in Europe,” restricting competition, thus regulatory bodies. and an increase in pricing he added, referring to the impact of the global The China Iron and power of the combined financial crisis. Vale is concerned that the JV reducing consumers’ choice...

Steel Association (CISA) company, which is unaccorner the market.

The proposed joint venture added its voice, say- would ceptable in competition China and Vale were said to be discussing that every country terms,” Moffat said. ways to lobby the European Commission comwould simply turn an oligopoly ing should unite in opposiThe European Commispetition regulators. of three players into a duopoly.” tion to the “monopolission will review the JV tic” production joint venunder EU antitrust rules, Vale shoring up its customer base ture. “China, the world’s which prohibit compaAccording to Reuters, Vale is making efforts largest iron ore consumer and the world’s largnies from fixing prices and sharing markets. . to improve its market share in China. It is planest steelmaker, will, therefore, be left... between With this new proposal, Marius Kloppers, ning to set up a regional distribution center in a rock and a hard place for benchmark iron ore BHP’s CEO, has stated publicly that the JV China and will cut costs further by building 16 price talks in the future,” a CISA official said, is structured with antitrust issues in mind dedicated ore carriers, China Daily said. It also is according to American Metal Market. and intimated confidence about approval. . in talks to establish long-term supply contracts The association said, in an announceThe two companies say that a JV is far different with smaller Chinese steelmakers, China’s 21st ment published in the official China Metalfrom a merger because it involves only iron ore.

Century Business Herald was quoted as saying. lurgical News, that the planned JV would The companies are busy divesting operations . harm competition and drive up global iron and making the deal as palatable as possible More Iron Ore continued on page 9 ore prices and that “customers across the for regulators.

But Ian Christmas, director general of the World Steel Association, had this to say about the JV: “The recently signed binding agreement between Rio Tinto and BHP Shares of Seaborne Iron Ore Market 2008 % Billiton is not materially different from the proposal issued earlier this year... It still carries a great danger of restricting competition, thus reducing consumers’ choice... The Vale Rio Tinto proposed joint venture would simply turn 32.8% 18.6% an oligopoly of three players into a duopoly. .

Rio Tinto + BHP “Competition makes a market strong and 35.7% brings efficiency. Competition between steel Other BHP companies has made the global steel market 31.5% 17.1% healthier and brought benefits for steel customers. As a result, this has promoted growth Source: Raw Materials Group quoted in in steel use, which serves society as a whole,” UNCTAD Trust Fund on Iron Ore Information Christmas said. “We view this revised proposed “Iron Ore Market 2008-2010”, Geneva June 2009 joint venture as extremely harmful to the market, and we call for a very careful review...”

A United Nations Conference on Trade and

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FINANCE

Rio Tinto Sells Iron Ore to India Rio .Tinto, .the .world’s .second-largest .iron .ore . miner, .has .made .its .first-ever .iron .ore .sale .to .

India, .in .what .it .called .a .“ground-breaking” .development, .according .to .Dow Jones Newswires.

Sam .Walsh, .the .company’s .iron .ore .chief, .said .

Rio .had .sold .a .160,000 .metric-ton .shipment .to .

Indian .steelmaker .Essar .for .export .in .late .December .

“To . me, . this . is . a . ground-breaking . sale, . and .

I .think .it .is .a .good .signal .for .us .and .Western .

Australia . -- . it . is . strategic . for . us,” . Walsh . told .

Dow Jones Newswires . . “This . is . only . one . shipment .at .this .stage .but .this .is .very .significant .in . terms .of .forging .a .relationship .with .Essar, .and . potentially .opening .doors .”

“We .have .long .believed .that .India .is .a .longterm . market . of . great . potential, . and . this . development .should .be .seen .in .that .context ,” .he . added .

Walsh . said . the . sale, . made . at . international . spot . rates, . was . also . significant . for . Rio’s . plans . to . launch . iron . ore . operations . in . Orissa . state, . where .it .has .a .51% .stake .in .a .joint .venture .with . state-owned .Orissa .Mining .Corp .

“It . is . also . potentially . significant . given . our . iron .ore .project .in .Orissa, .which .we .expect .will .

also .be .a .source .to .supply .the .growing .Indian . market,” .Walsh .said .

He .did .not .confirm .reports .that .the .shipment . was .part .of .a .request .from .Essar .for .up .to .three . million .tons .of .iron .ore .

China .is .Rio’s .chief .export .market, .but .India, . as .it .emerges .as .an .industrialized .nation, .also . is .expected .to .underpin .a .boom .in .demand .for . resources .

Australian .officials .have .forecast .a .“decades-

long” .return .to .stellar .growth .fueled .by .demand . for .commodities .from .developing .nations .

BHP . Billiton, . which . agreed . this . month . to . combine .its .Western .Australia .iron .ore .operations .with .Rio, .has .said .it .expects .global .steel . demand .to .double .in .15 .years .

India .would .partly .drive .a .250% .increase .in . seaborne . iron . ore . demand . by . 2025 . and . was . also . expected . to . consume . energy . and . coking . coal .in .significant .amounts, .BHP .said .

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FINANCE

China May Push for Early Price Settlement Falling .iron .ore .spot .prices .and .shipments . into .China .could .signal .a .push .by .China .to . position .itself .for .an .early .settlement .to .2010 . contract .talks.

But .with .the .spot .market .still .some .30% .above .

2009 .contracts .on .a .freight-adjusted .basis .and . the .global .economy .on .the .mend, .miners .are .in . a .strong .position .in .advance .of .what .are .often . acrimonious .and .drawn-out .contract .talks, .

Reuters reported .in .mid-December .

Delays . in . settling . 2009 . term . contracts, . which .are .still .under .formal .discussion .but . in .practice .are .the .same .as .the .33% .cut .won . by .South .Korean .and .Japanese .steelmakers, . have .cost .China .Iron .and .Steel .Association .

(CISA), .the .chief .negotiator .for .steelmakers, . bargaining .power .as .demand .revived .and .the . country’s .growth .remained .strong .

“Everyone .thought .CISA .was .being .cleverer . than .they .actually .were,” .a .Sydney-based .iron .ore . trading .source .said . .“ They .should .have .settled . early .last .year .before .things .recovered . .And .I . think .they .will .have .learned .from .that .lesson .”

The .seaborne .iron .ore .trade .is .a .high .stakes . business .worth .more .than .$80 .billion .annually .

three-month .highs .struck .i n .l ate .November, . but . forecasts . are . still . for . miners . to . win . hefty .price .hikes .of .between .10% .and .30% . next . year . as . steel . demand . recovers . with . economic .growth .

“A . give-back . in . the . spot . market . is . not . surprising, .but .these .prices .still .represent . a . 30% . rise . on . a . freight-equalized . basis . .

Chinese .port .stocks .are .declining .and .that . may .have .created .some .softness,” .said .ANZ’s . senior .commodities .analyst .Mark .Pervan .

“I .think .CISA .may .want .to .strike .e arly .and . that .a lso .m ight .b e .a .reason .w hy .t he .m arket . is .softening; .the .Chinese .may .be .trying .to . put .pressure .on .prices .now .to .win .a .more . favorable .settlement,” .he .said .

China’s .steelmakers .c ould .b e .s caling .b ack . spot .purchases .and .relying .instead .on .stockpiles .as .part .of .a .scheme .to .bolster .China’s . bargaining .position .

“It . certainly . looks . like . we . are . seeing . a . reduction .in .China’s .spot .orders . . It .makes . sense . that . they . might . try . to . push . down . prices .as .we .get .closer .to .talks,” .an .iron .ore . specialist .in .Hong .Kong .said .

Shipments slow, prices fall

Spot .i ron .ore .prices .have .f allen .6 .5% .f rom .

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Iron Ore Holdings in Talks with Rio Iron .Ore .Holdings .has .entered .a .trading .halt . pending .the .release .of .an .announcement .about . negotiations .with .Rio .Tinto .

Iron .Ore .Holdings .recently .recorded .further . exploration . success . at . its . Iron . Valley . deposit . in .the .central .Pilbara .district, .with .latest .drill . results .indicating .that .the .mineralization .runs . deeper .than .first .thought .

The .company’s .Joint .Ore .Reserves .Committee . Code . (JORC) . classification . had . indicated . that .the .resource .at .Iron .Valley .was .191 .meters . down .to .a .depth .of .200 .meters . . The .more .recent . drilling . results . suggest . that . the . resource . extends . to . 300 . meters, . possibly . providing . scope .for .another .resource .upgrade . .Iron .Ore .Holdings .has .been .finalizing .a .deal . that .would .give .Rio .exclusive .rights .to .negotiate .the .possible .purchase .of .Iron .Valley .

Iron .Ore .Holdings .and .Rio .also .are .in .negotiations .over .a .formal .mine .gate .sales .agreement . for .up .to .1 .5 .million .metric .ton .per .year .from . the .junior’s .Phil’s .Creek .deposit, .beginning .in . late .2010 .

More Iron Ore continued from page 5

IRON ORE

A Reuters India .article .viewed .outcomes .from . a .different .angle . .It .noted .that .the .merger .could . open .rail .networks .to .smaller .miners, .opening . access . to . millions . more . tons . of . iron . ore . into . the .world’s .supply .

Rio .and .BHP .have .been .fighting .such .access, . saying .they .lack .spare .capacity . . To .in .win .support .for .the .JV, .they .may .have .to .appear .competition-friendly, .the .Reuters .article .said .

“With .access .to .a .rail .line, .these .guys .have .viable .mines,” .James .Wilson .a .JD .Carmichael .& .

Co . .analyst .said . .

Rail .access .would .justify .developing .the .junior’s .own .stagnant .deposits .spread .over .half .a . million .square .kilometers .of .Australia’s .Pilbara . iron .ore .district . .Many .are .drilled .and .ready .to . go .and .could .yield .50 .million .metric .tons .(Mt) . a . year . by . 2013 . .“The . Pilbara . is . incredibly . endowed .with .iron .ore, .so .much .of .it .not .yet .exploited, .said .Graeme .Rowley, .executive .director . of .Fortescue .Metals, .Australia’s .No . . 3 .iron .ore . miner .

“By .unlocking .the .rails .to .everyone, .the .balance .of .world .supply .would .move .much .more . in .favor .of .Australia,” .Rowley .said .

“If . Rio . and . BHP . really . want . to . show . regulators .they .are .serious .about .competition .and . not . pursuing . a . monopoly, . the . best . way . to . do . this . is . by . providing . rail . access . to . the . junior . miners,” .Carmichael’s .Wilson .said .

Cyclone Puts Western Australian Iron Miners on Alert Bloomberg reported .Dec . .21 .that .tropical .cyclone . Laurence, . which . caused . evacuations . of . oil .and .gas .rigs, .was .moving .into .Western .Australia’s .iron .ore-rich .Pilbara .area, .causing .BHP .

Billiton .Ltd . .to .suspend .iron .ore .shipments .

BHP . halted . iron . ore . shipments . after . Port .

Hedland .was .closed .on .Dec . . 21, .spokeswoman .

Samantha .Evans .said . .

“We . expect . there . may . be . some . production . interruptions . at . some . operations . because . of . heavy .rainfall,” .Evans .said .in .a .statement . .“Otherwise .we .are .mainly .just .keeping .a .watch .on . the .cyclone’s .path .”

Cyclone . Laurence . is . the . first . of . the . season . in .Northwestern .Australia, .which .accounts .for .

73% . of . the . nation’s . natural . gas . exports . and .

62% . of . its . mining . production . . The . area . may . experience .as .many .as .six .cyclones .this .season, . which . runs . from . November . until . April, . ac-

cording .to .an .October .forecast .by .the .Bureau . of .Meteorology .

A .red .alert .is .in .place .for .some .areas .of .Western . Australia, . the . state’s . Fire . and . Emergency .

Services .Authority .said .in .a .statement . .

Rio . Tinto, . Dampier . Port’s . main . customer, . said .the .cyclone .is .unlikely .to .affect .the .company’s .iron-ore .production .and .shipments . .Rio . was .“keeping .a .close .eye” .on .the .cyclone’s .path, . which . was . expected . to . pass . well . to . the . east . of . the . company’s . mines . in . the . region, . Perthbased .spokesman .Gervase .Greene .said .

Laurence .last .week .affected .the .sparsely .populated . Kimberley . coastal . region’s . energy . and . mining . projects . . Mt . . Gibson . Iron . Ltd . . evacuated .220 .employees .from .its .Koolan .Island .facility . .HWE .Mining .Pty .Ltd . .evacuated .workers . off .Cockatoo .Island, .where .it .mines .iron .ore .in . partnership .with .Cleveland- .based .Cliffs .Natural .Resources .Inc .

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JANUARY 2010

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SKILLINGS MINING REVIEW

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FINANCE

Australian Media Discusses Iron Ore Pricing In .part .of .a .series .on .outlooks .for .the .global . metals . markets . in . 2010, . Australian . media . sources .Mining Daily .and .IBISWorld, .said .that .

Australia’s .production .and .exports .of .iron .ore . are .expected .to .continue .into .the .year .2015 .

By . 2014-15, . Australia’s . iron . ore . production . and . exports . are . expected . to . be . 540 . million . metric .tons .(Mt) .and .510 .Mt, .respectively .

After . falling . sharply . in . 2009-10, . growth . in . real .industry .revenue .is .expected .to .edge .down . by .about .1 .3% .in .2010-11, .before .upturning .in . the .remaining .years .to .2014-15 .

As . a . result, . industry . revenue . is . expected . to . increase . at . an . average . annual . rate . of . 4 .8% . over .five .years .ending .in .2014-15, .with .a .corresponding .profit .increase .

The . iron . ore . industry’s . benchmark . pricing . system .is .likely .to .come .under .continued .pressure, .the .report .said .

The .benchmark .system .has .played .a .key .role . in . mine . development . by . providing . stability, . with .set .offtake .volumes .and .prices; .however, . its . value . is . being . questioned . by . miners . and . steelmakers .alike .in .the .context .of .a .more .substantial .spot .market .

Terex to Sell Mining Business to Bucyrus in $1.3 Billion Deal Terex .Corp . .has .announced .that .it .has .signed . a .definitive .agreement .to .sell .its .mining .business . to . Bucyrus . International . Inc ., . for . $1 .3 . billion . in . cash . . The . products . to . be . divested . by . Terex . in . the . transaction . include . hydraulic . mining . excavators, . electric . drive . mining . trucks, . track . and . rotary . blasthole . drills, . and . the .highwall .miner, .as .well .as .the .related .parts . and . aftermarket . service . businesses, . including . the .company-owned .distribution .locations . .

The .transaction, .which is .subject .to .customary .regulatory .approvals, .is .expected .to .close .in . the .first .quarter .of .2010 .

Ronald . DeFeo, . Terex . chairman . and . CEO, . said: . “This . transaction . accelerates . the . transformation . of . Terex . Corp . . as . we . move . from . a . construction .and .mining .equipment .company . to . a . machinery . and . industrial . products . business . .Going .forward, .we .will .focus .on .products . and .services .where .we .can .maintain .and .build . superior . customer . propositions . with . high . returns . on . capital . for . our . owners . . The . current . environment, .plus .this .transaction, .provide .an . excellent .opportunity .to .create .value . . We .plan . to . execute . the . changes . needed . to . make . this . happen .

“The .attractive .cash .offer .provides .us .excellent . financial . flexibility, . as . our . cash . balance . will . substantially . equal . our . outstanding . indebtedness,” .DeFeo .said . .“The .approximately . $1 . billion . of . after-tax . proceeds . will . allow .

Terex .to .invest .in .its .current, .high .return-oncapital .businesses, .or .to .look .to .add .new, .well . positioned . niche . manufacturers . with . strong . market .presence .to .the .company’s .portfolio .”

DeFeo .continued, .“Mining .is .a .highly .capital .intensive .business . . It .would .take .us .years . to . build . the . infrastructure . . . . where . Bucyrus . already .has .significant .presence .” .

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SKILLINGS MINING REVIEW

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IRON ORE

Kumba Wants More Control of Sishen-Saldanha Operations Miningmx.com . reports . that . South . Africa’s . largest . iron . ore . exporter, . Kumba . Iron . Ore .

(Kumba), .would .like .to .get .directly .involved .in . the .operation .of .Sishen-Saldanha .line, .according .to .Chris .Griffith, .CEO .

In . an . interview . at . Kumba’s . Sishen . South . mine . (now . renamed . the . Kolomela . mine), . which .is .under .construction, .Griffith .acknowledged .the .issue .was .a .sensitive .one, .noting, .“We . do .a .lot .of .tap-dancing .around .it .”

The .sensitivity .is .because, .although .Transnet .

Freight . Rail . (TFR) . maintains . it . is . running .

Sishen-Saldanha .to .international .best .practice, .

Griffith . believes . it . could . be . better . operated . with .private .sector .involvement .

Rio . Tinto . and . BHP . Billiton, . major . Kumba . competitors, . maintain . that . they . have . a . competitive .advantage .in .the .iron .ore .export .business .because .they .own .and .operate .their .own . railway .lines .and .port .handling .infrastructure . in . Western . Australia . . Griffith . said . he . agreed . with .that .assessment .

Chris . Wells, . acting . CEO . of . Transnet, . has . strongly .defended .TFR’s .running .of .the .SishenSaldanha . line . . He . told . Miningmx . that . he . was . aware .of .the .criticism, .but .said:, .“On .any .measure .you .care .to .apply, .we .are .running .the .Sishen-Saldanha .line .as .a .world .class .operation .”

The . eventual . outcome . of . this . debate . could . have . major . implications . for . the . proposed . increase . of . export . capacity . on . the . line . beyond . the . current . planned . expansion . to . 60 . million . metric .tons .(Mt) .per .year .

Griffith . said, .“Transnet . has . not . done . a . bad . job, .but .we .believe .the .line .can .be .run .better . .

If .there .was .an .opportunity .to .run .those .assets . in . collaboration . with . government, . we . would . jump .at .it . .

“But . there . are . some . things . you . can . change . and .others .you .can’t,” .he .acknowledged . . Transnet . just . completed . the . Phase . 1A . expansion . of . capacity . on . the . line . to . 41 . Mt . per . year . and . is . about . to . start . the . Phase . 1B . expansion . to . 47 . Mt . per . year . . A . go . ahead . with . the . next . Phase . 1C . expansion . to . 60 . Mt . per . year . has . been . approved . in . principle .

South . Africa’s . two . major . iron . ore . exporters, .

Kumba . and . Assmang, . previously . indicated . their .desire .to .push .exports .well .above .the .60 .

Mt .per .year .level .and .had .been .talking .about . going .to .95 .Mt .per .year .

The .first .indication .this .may .not .happen .was . given . in . late . October, . when . Wells . told . Miningmx: .“There .has .been .a .rethink .on .the .economics .of .further .expansion .to .the .95 .Mt .per . year .capacity . .After .assessing .the .capital .cost .of . getting .to .95 .Mt .per .year, .it’s .clear .that .a .prohibitive . tariff . would . have . to . be . charged . . The . result .is .that .iron .ore .exporters .are .still .keen .to . expand .their .capacity .above .60 .Mt .per .year, .but . not .to .95 . .Mt .per .year .”

That’s .not .quite .the .way .the .iron .ore .exporters .see .the .situation .

One .source .noted .that .“on .the .Transnet .figures, .there .is .not .going .to .be .any .expansion .of . the .Sishen-Saldanha .line .above .60 .Mt .per .year . .

The .cost .and .the .tariff .are .just .too .high .

“We . have . to . take . a . radically . different . approach .to .find .a .solution . .We .need .to .get .in .new . people .with .fresh .views .to .assess .the .situation . .

Maybe .we .need .to .get .the .work .done .by .Chinese .contractors .if .that .will .drastically .reduce . the .estimated .cost,” .the .source .said .

China Finds 1 Billion Ton Iron Ore Deposit China . has . discovered . an . iron . ore . deposit . with . reserves . of . more . than . 1 . billion . metric . tons . in . Luannan, . Tangshan . city, . Hebei . province, . northern . China, . the . local . government . said, .according .to .Bloomberg .

The . Macheng . orebody . has . an . iron . content . of .35% .on .average, .the .provincial .land .and .resources .department .said .in .a .recent .statement . .

Deposits . were . found . at . depths . between . 100 . meters .to .600 .meters, .it .said .

China . wants . to . increase . domestic . iron . ore . output . to . reduce . its . dependence . on . the . big . three . iron . ore . producers, . Vale . SA, . Rio . Tinto .

Group .and .BHP .Billiton .Ltd . .

The . Macheng . deposit . will . be . developed . by .

Hebei .Iron .& .Steel .Group, .China’s .second-largest .steelmaker, .the .Hebei .government .said .

In .June, .China .announced .another .iron .deposit, . Dataigou, . in . Liaoning . province, . which . the .local .government .said .contains .reserves .of . more .than .3 .billion .tons, .calling .it .Asia’s .biggest . iron .deposit . .The .Dataigou .orebody .has .an .iron . content .that .ranges .from .25% .to .62%, .situated .

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IRON ORE

Higher Iron Ore Demand Predicted from China, Japan and the EU Demand for iron ore and coal is expected to are expected. grow in 2010, reflecting higher steel producChina will remain the main driver of detion and pushing Australia’s output close to mand, but consumption also is forecast to incapacity, according to a recent article in The crease gradually in Organization for Economic Australian.

Cooperation and Development (OECD) econoThe Australian Bureau of Agricultural & Remies. source Economics (ABARE) said world trade In 2010, prices for most mineral and energy in iron ore would increase by 8% to 987 milcommodities are forecast to be higher in yearlion metric tons (Mt) in 2010, compared with average terms. an estimated rise of 2% in 2009.

“However, the increase in minerals and ener“The main contributors to increased import gy prices in 2010 is not expected to be large, esdemand are likely to be China, Japan and the pecially given the price gains that have already European Union,” a quarterly commodities reoccurred and the assumed gradual recovery in port said. “However, import volumes to most OECD economic growth,” ABARE said. countries, with the exception of China, are The total value of commodity exports in the forecast to remain well below those of 2008.” year to June 30, 2010, is now forecast at $162.56 ABARE said most of the import demand billion, up 2.7% over a September estimate, but growth was expected to be captured by Austradown 18% on actual exports of a revised record lian and Brazilian iron ore exporters, reflectof $197.44 billion last fiscal year. ing their cost competitiveness compared with The value of exports of metals and other other producers. minerals in 2009-10 is forecast to fall 10% year “As such, production in these countries is exon year to $75.27 billion, up 2% over an estipected to be at, or close to, capacity throughout mate in September.

2010,” ABARE said.

Jammie Penm, an ABARE analyst, said the Australian iron ore exports are forecast to ineconomy had been performing better than was crease by 9% to 394 Mts BW in 2010, signifi-11:56 expected because Ziegler"Not All" ad when 12/3/09 AM Page 1 of how Asian well economies cant additional production and export capacity were handling the downturn.

Labrador Iron Mines Acquires Significant DSO in Quebec In a series of five recent transactions, Labrador Iron Mines Holdings (LIM) has acquired control over an additional 50 million metric tons (Mt) of direct shipping iron ore (DSO) in Quebec, along with a large package of mineral claims in the Schefferville area, which is considered prospective for exploration for iron ore and which also hosts a number of small high grade manganese deposits.

All of the properties are in the Schefferville area, mostly in Quebec, and are in the same general vicinity as LIM’s planned DSO iron ore operations in Western Labrador, which will begin production in mid 2010.

“The acquisition of these properties represents a very significant increase in the resource base available to LIM and will both complement LIM’s planned DSO operations in Labrador as well as providing LIM with an excellent base and adjacent portfolio of properties within the Labrador Trough in the Province of Quebec,” said John Kearney, LIM chairman. “... the addition of 50 Mt of DSO resource will enable LIM to increase its planned DSO production and potentially extend the mine life.”

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JANUARY 2010

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SKILLINGS MINING REVIEW

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IRON ORE

Vale and Dongkuk Steel Constructing Steel Plant in NE Brazil In mid-December, Brazil’s Vale, the world’s largest iron ore producer, and Dongkuk Steel, a South Korean steel company, began construction at Companhia Siderúrgica do Pecém (CSP), the first integrated steel mill featuring a coking plant in Brazil’s Northeast region. The project, situtated at Pecém Industrial and Port Complex (CIPP) in São Gonçalo do Amarante, Ceará State, will generate more than 15,000 jobs during construction. CSP is due to come on stream in 2013, with estimated annual out-

put of 3 million tons of steel plates in the first phase, and will be expanded to 6 million tons annually in a second phase. In addition to steel plates, CSP will produce its own electricity and will sell surplus power to the domestic market.

CSP is one of the more important private sector projects in Brazil’s Northeast and one of the larger in Brazil. It is part of Vale’s strategy to encourage new steel projects in Brazil, which has one of the lower steel production costs in the world, by temporarily

Fortescue Continues to Hope for Rio Rail Access Fortescue Metals Group says it remains hopeful it will gain access to iron ore railway owned by mining giant Rio Tinto in Western Australia’s iron ore-rich Pilbara district.

Andrew Forrest, CEO, told the iron ore miner’s annual general meeting in Perth that Fortescue aimed to gain third-party access to infrastructure owned by Rio Tinto to allow Fortescue to transport ore to port from its proposed third mine, Solomon.

“We won’t do it through building another railway line,’’ Forrest told the meeting.

“If common sense prevails - if the ACCC (Australian Competition and Consumer Commission) determines that the railway lines ... are to be shared ... we’ll be able to really grow the Solomon hub,” Forrest said. “(BHP Billiton Ltd CEO Marius) Kloppers said Australians have lost market share, particularly in iron ore to Brazil. What I can assure you the reason why we’ve lost that market share is because we haven’t shared ... infrastructure.”

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SKILLINGS MINING REVIEW

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Russell Scrimshaw, Fortescue executive director, told reporters after the meeting that Fortescue continued to fight hard through various courts and tribunals to force Rio Tinto to open up its rail lines to third-party access.

He said Fortescue and Aquila Resources Ltd, a coal miner and iron ore explorer, continued to investigate developing a new shared access export port at Ankatell Point, also in the Pilbara.

Fortescue i currently s producing iron ore at a run rate of about 40 million metric tons (Mt) annually and exports through its own facilities at Port Hedland, but would probably need to export through another new port when its expansion proceeds.

“To 155 (Mt), we have ample capacity in Port Hedland, so we’ll continue to rail through there,” Scrimshaw said. “Our plans are still evolving beyond that.

JANUARY 2010

holding minority stakes in order to become the exclusive iron ore and pellet supplier. .

The project also will promote the country’s steelmaking industry, adding value to iron ore and generating wealth and development for Brazil and the state of Ceará. About US$4 billion will be invested in CSP in the first phase.

Ceará was chosen because of its logistical infrastructure and its strategic location for the export market. Furthermore, the size of the project site, covering about one thousand hectares, is well suited for the mill. The project also will benefit from CIPP’s port infrastructure, which has facilities for handling raw materials and end products, as well as easy road and rail access.

CSP was awarded a preliminary permit from the state government of Ceará to begin construction, starting with earthworks. The permit was issued after unanimous approval was given by the members of the State Environment Council, COEMA, which examined the project’s Environmental Impact Study and Environmental Impact Report. The full plans were communicated to the local community, business people and public authorities, with emphasis placed on CSP’s social and environmental commitments, with about 25% of total investment going toward modern equipment that will control air emissions and effluent discharge, as well as waste management.

In addition to boosting the local economy by creating jobs and training people, the project will contribute to Ceará State’s GDP growth.

FINANCE

Cliffs Natural Resources Diversifying into Chromite Cliffs . Natural . Resources . Inc ., . Cleveland . has . announced . it . has . entered . into . a . definitive . agreement .to .acquire .the .“Ring .of .Fire” .chromite . properties . of . Montreal-based . Freewest .

Resources .Canada .Inc .

Under . the . agreement, . Cliffs . will . acquire .

Freewest’s .interests .in the .Ring .of .Fire .properties, .comprising .three .world-class .chromite .deposits: .100% .of .“Black .Thor” .and .“Black .Label,” . and . 50% . of .“Big . Daddy,” . an . adjacent . deposit . held .by .a .joint .venture .of .Freewest, .KWG .Resources .and .Spider .Resources . .Freewest’s .other . assets . will . be . spun . off . into . a .“new” . Freewest . .

Following . this . spin-off . transaction, . the . new .

Freewest . would . exist . independently . and . its . common .stock .would .continue .to .trade .on .the .

TSX .Venture .Exchange .

At .closing .of .the .deal, .each .Freewest .shareholder .will .receive .C$0 .55 .per .share, .or .C$118 . million . in . aggregate, . of . consideration . in . the . form . of . Cliffs . Natural . Resources . common . stock . . The . fraction . of . a . Cliffs . share . to . be . issued . per . Westmoreland/Skillings Freewest . share . will .11775_2 be . determined .

JT average . price . based . on . JVthe . volume . weighted .

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of . Cliffs’ . shares .for . the . five . trading .days .ending .on .the .third .trading .day .before .the .effective . date .of .the .transaction . .Based .on .Cliffs’ .closing . price .on .November .20, .2009, .this .consideration . would . result . in . an . exchange . ratio . of . 0 .0119 . and .the .issuance .of .a .total .of .2 .4 .million .Cliffs . shares . . In .addition, .each .Freewest .shareholder . will .receive .1 .share .of .“new” .Freewest .for .each . share . of . Freewest . held . on . the . record . date . .

Shares . of . “new” . Freewest . have . an . estimated . value .of .C$0 .15 .per .share .

Freewest’s . board . unanimously . supports . the . transaction . and . recommends . all . shareholders . accept . Cliffs’ . offer . . This . recommendation . also .is .supported .by .a .Fairness .Opinion .from .

Freewest’s .financial .advisor . . The .transaction .is . expected . to . close . in . the . first . quarter . of . 2010 . .

Closing .of .the .transaction .is .subject .to .approval .by .Freewest .shareholders, .court .approval .of . the . transaction, . and . a . number . of . other . customary .conditions .

Cliffs .currently .owns .6 .9% .of .Freewest’s .basic .

6/18/08 shares .outstanding .and .also .owns .warrants .to . purchase .additional .shares .of .Freewest, .which, .

if .exercised, .would .further .increase .Cliffs .ownership . to . 9 .75% . . Subject . to . approval . of . the .

TSX .Venture .Exchange, .Cliffs .intends .to .infuse .

C$4 .1 .million .of .cash .into .Freewest .via .a .private . placement . for . working . capital . purposes . which, .when .combined .with .the .potential .exercise .of .its .warrants, .would .increase .its .ownership . to . 12 .7% . . Cliffs . will . retain . its . pro . rata . share .of .ownership .in .“new” .Freewest .

Cliffs .said .the .acquisition .will .allow .it .to .apply .its .expertise .in .open-pit .mining .and .mineral .processing .to .a .chromite .ore .resource .base, . which . would . form . the . foundation . of . North .

America’s .only .ferrochrome .production .operation . .The .planned .mine .is .expected .to .produce .

1 .million .to .2 .million .metric .tons .(Mt) .of .highgrade . chromite . ore . annually, . which . will . be . processed .further .into .400,000-800,000 .metric . tons .of .ferrochrome . . Cliffs .said .it .believes .the .

Black .Thor, .Black .Label .and .Big .Daddy .deposits .are .the .highest .quality .deposits .in .Canada’s .

“Ring . of . Fire” . district . and . would . provide . a . significantly .long .mine .life .and .expansion .potential .

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SKILLINGS MINING REVIEW

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Preliminary USGS Iron Ore Statistics for October 2009

PRELIMINARY U.S. PRODUCTION, SHIPMENTS & STOCKS OF IRON ORE IN OCTOBER 1,2 (Thousand metric tons)

Production

STATE

The preliminary figure for U.S. iron ore production in October 2009 was 3.1 million metric tons (Mt), compared to 4.5 Mt in October 2008 and 2.6 Mt in September 2009, according to the U.S. Geological Survey, Reston, Va. Minnesota’s preliminary iron ore output in October 2009 was 2.1 Mt, compared with 3.4 Mt the previous September.

Michigan’s preliminary iron ore production in October 2009 was .977 Mt, compared with 1.1 Mt the previous October.

The preliminary total for iron ore shipped in October 2009 was 3.4 Mt, compared with 4.9 Mt in September 2008. U.S. stockpiles of iron ore at the end of October were 5.1 Mt, compared to 5.8 Mt in October 2008. In September 2009, the preliminary figure for U.S. iron ore imports for consumption was 520 thousand metric tons.

2009

Shipments 3/ 2008

2009

Stocks 4/ 2008

2009

2008

Michigan......................................................977................... 1,100..................... 864....................1,110.................. 1,510................2,550 Minnesota.................................................2,100...................3,440...................2,510...................3,750..................3,620................3,260 Total.................................................. 3,080................4,540................3,370............... 4,860................ 5,130............. 5,800 1-Data are rounded to no more than three significant digits; may not add to totals shown. 2-Excludes by-product ore.

3-Includes rail and vessel. 4-Includes mines, plants and loading docks. Source: U.S. Geological Survey.

PRELIMINARY U.S. PRODUCTION AND SHIPMENTS OF IRON ORE 1/2/ (Exclusive of ore containing 5% or more of manganese) (Thousand metric tons)

Production

Period

Monthly

Year to Date

Shipments Monthly

Year to Date

2008 October......................................................... 4,540............................45,400.................................. 4,860...........................46,500 November..................................................... 3,940............................49,400...................................3,910...........................50,400 December......................................................3,570............................ 53,000...................................2,820........................... 53,300 2009 January.........................................................2,990.............................. 2,990...................................... 874................................. 874 February........................................................2,660.............................. 5,650......................................440..............................1,310

PRELIMINARY U.S. IMPORTS FOR CONSUMPTION OF IRON ORE, BY COUNTRY AND TYPE 1/ 2/ (Exclusive of ore containing 20% or more manganese)

September 2009

Year to date-Year 2009

Country of origin Thousand 2009 and type of product metric tons

Value 3 (thousand dollars)

Thousand metric tons

Value 3 (thousand dollars

Value 3 (dollars per ton)

2008

January-September thousand metric tons

Brazil....................................................... –.............................–.............................–..................................–...........................–................................23 Canada.................................................27......................1,670.........................141........................ 10,300................... 72.78..........................1,990 Chile......................................................50..................... 3,520........................ 148........................12,200....................82.11..............................173 China...................................................... –.............................–..........................(4)..................................2..............2,100.00................................14 Finland................................................... –.............................–.............................6..............................367...................62.89..................................6 Mexico.................................................... –.............................–...........................54...........................4,510....................84.10................................25 Norway................................................... –.............................–.............................2................................35....................18.00..................................– Peru........................................................ –.............................–...........................34...........................1,670...................49.31................................39 Russia...................................................70......................4,270...........................70.......................... 4,270................... 60.77................................66 South Africa.......................................... –.............................–...........................29..........................1,850.................. 64..28..................................– Spain....................................................... 3..........................117.............................4..............................159...................39.94..................................1 Sweden.................................................. –.............................–.............................4................................66....................18.00................................46 United Kingdom.................................... –.............................–.............................8..........................1,630..................197.51..................................– Total.............................................520................36,600..................2,380...................262,000..............109.78........................7,010 Concentrates.......................................50..................... 3,520.........................229........................ 18,500...................80.68.............................965 Coarse Ores........................................... –.............................–.............................8..........................1,630.................. 197.74................................37 Fine ores..............................................78.....................2,980.........................375........................28,300...................75.45..........................1,280 Pellets................................................ 390...................30,000..................... 1,760......................213,000.................120.87..........................4,280 Other agglomerates............................. –.............................–.............................2................................77...................40.01..................................– Roasted Pyrites.................................... –.............................–.............................6..............................367...................62.89................................12 Total.............................................520................36,600..................2,380...................262,000..............109.78........................7,010 – Zero. 1-Data, except dollars per ton, are rounded to no more than three significant digits; may not add to totals. 2-Includes agglomerates. 3-Customs value. Excludes international freight & insurance. (4) Less than 1/2 unit.

March............................................................ 2,240...............................7,890......................................663............................. 1,980 April............................................................... 1,700.............................. 9,590.................................. 1,930..............................3,910 May................................................................... 850............................ 10,400...................................2,470............................. 6,380 June................................................................... 811.............................11,200.................................. 2,440..............................8,810 July................................................................1,480............................ 12,700.................................. 3,080............................11,900 August........................................................... 1,780............................14,500...................................3,190............................15,100 September....................................................2,560..............................17,100...................................3,120............................18,200 October.........................................................3,080.............................20,100...................................3,370........................... 21,600 1-Data are rounded to no more than three significant digits.

2-Excludes byproduct ores. Source: U.S. Geological Survey.

PRELIMINARY U.S. IMPORTS FOR CONSUMPTION OF IRON ORE IN SEPTEMBER 2009 1,2 (Exclusive of ore containing 20% or more manganese) 1/ 2/ t (Thousand metric tons) Country of Coarse Fine origin concentrates ores ores pellets

Briquettes & other Roasted agglomerates pyrites

Total

Brazil –...................................... –...........................27......................–...................... –................................. –............................... 27 Canada ....................................... –............................–......................50...................320............................... –................................ –....................370 Russia –...................................... –............................–......................70..................... –...............................–70 Spain ....................................... –............................–.......................–...................... –................................. 3................................ –......................3 Total ...................................50...........................–......................78...................390............................ 3................................ –................. 520 – Zero. 1-Data, are rounded to no more than three significant digits; may not add to totals shown. 2-Includes agglomerates. 3-Less than 1/2 unit. Source: U.S. Census Bureau

IISI CRUDE STEEL PRODUCTION Monthly crude steel production in the 61 countries included in the report, in thousands of metric tons.

16

November 2009

October 2009

November 2008

% change Oct-09/08

Canada................................................... 960e Cuba..........................................................25e El Salvador.................................................7e Guatemala................................................30e Mexico.................................................1 400e Trinidad and Tobago.................................45 United States.......................................5 964 North America............................. 8 431

................... 970e ..................... 25e ........................7e ..................... 30e ..................1 443 ........................43 ................5 991r .............. 8 509

.....................617 ................. 55.7 ...................... 23......................9.2 .........................2................-218.2 ...................... 23....................32.7 ................ 1 067....................31.3 .......................19................. 132.8 ................4 699....................26.9 ..............6 450.................30.7

Argentina..................................................414 Brazil.....................................................2 676 Chile........................................................125e Colombia...................................................95e Ecuador.....................................................25e Paraguay.....................................................6e Peru...........................................................75e Uruguay......................................................8e Venezuela.............................................. 300e South America..............................3 724

..................... 431 ..................2 797 ...................130e ....................100e ..................... 25e ..........................6 ......................75e ..........................8 ...................305e ...............3 877

....................391......................5.9 ................ 2 324....................15.1 ...................... 64................... 95.9 ...................... 60................... 95.9 .......................17....................43.7 .........................8..................-25.9 ...................... 82....................-8.9 .........................7......................9.6 .....................319....................-6.0 .............. 3 273..................13.8

Algeria.......................................................35e Egypt........................................................ 469 Libya..........................................................60e Morocco......................................................13 South Africa.......................................... 680e Africa............................................. 1 257

..................... 35e ..................... 453 ........................63 ........................37 ................... 700e .............. 1 288

.......................47..................-25.5 ....................466......................0.8 .....................103..................-41.7 .........................6.................. 110.3 .....................474....................43.4 ..............1 096..................14.7

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Iran......................................................... 860e Qatar..........................................................85e Saudi Arabia.............................................357 Middle East.................................. 1 302

...................890e ..................... 90e ..................... 440 ...............1 420

....................891....................-3.5 ...................... 97..................-12.2 .................... 275....................29.9 ..............1 263................... 3.1

China...................................................47 262 India.....................................................4 770e Japan....................................................8 858 South Korea......................................... 4 319 Taiwan, China....................................1 570e Asia.............................................. 66 779

................51 747 ............... 4 930e ................8 801r ..................4 579 ............... 1 620e .............71 676

..............34 407....................37.4 ................ 4 554......................4.7 .................8 815......................0.5 .................4 018...................... 7.5 ................1 358....................15.6 ............ 53 152.................25.6

Australia..................................................626e New Zealand..............................................44 Oceania.............................................670 European Union (27).................14 153 Other Europe.................................2 511 C.I.S. (6)........................................8 656 Total 66 countries................... 107 484

..................... 627 ........................71 ..................698 .............14 272 .............. 2 699 ...............8 975 ............113 414

....................586......................6.7 ...................... 66..................-32.6 ..................652................... 2.7 .............12 779..................10.8 .............. 2 078.................20.9 .............. 5 771.................50 0 ............ 86 513................... 24.

The 66 countries included in this table account for about 98% of total world crude steel production in 2006. e - estimated r - revised

WORLD STEEL PRODUCTION

WORLD STEEL PRODUCTION

U.S. RAW STEEL PRODUCTION IN THOUSANDS OF NET TONS - SOURCE - AMERICAN IRON & STEEL INSTITUTE

WEEKLY PRODUCTION

WEEK ENDING Production

12/12/2009 Previous Year 12/5/2009 Previous Year 11/28/2009 Previous Year

10/24/2009 Previous Year

1,547 975 1,519 975 1,499 1,200 1,540 1,209

Percent Change*

1.9% 58.7% 1.4% 55.8% -2.7% 24.0% -1.1% 27.4%

YEAR-TO-DATE PRODUCTION Capability Utilization Rate

Percent Change

Production

64.9% 40.9% 63.7% 40.9% 62.8% 50.7% 64.5% 50.7%

59,878 97,611 58,331 96,636 56,812 95,661 55,313 94,452

-38.7% -39.7% -40.7% -41.4 -

Capability Utilization Rate

50.8% 81.4% 50.0% 81.4% 50.2% 84.7% 49.9% 84.7%

* % change is a comparison between a given week and the previous week. The % change figure in the previous year row refers to the change from a given week compared with the corresponding week of the previous year.

WEEKLY U.S. RAW STEEL PRODUCTION BY DISTRICT SOURCE - AMERICAN IRON & STEEL INSTITUTE

PRODUCTION IN THOUSANDS OF NET TONS FOR THE WEEKS ENDING: DISTRICT

12/12

12/5

11/28

1/21

Northeast Coast

143

141

152

155

Pittsburgh/Youngstown

94

90

99

99

Lake Erie

49

48

55

59

Detroit

84

80

74

68

Indiana/Chicago

436

429

443

435

Midwestern

199

207

212

208

Southern

471

462

401

468

Western

71

62

63

64

Northern Engine & Supply Inc. Construction & Mining Machinery, Equipment & Supplies

November 2009 Crude Steel Production World . crude . steel . production . for . the . 66 . countries . reporting . to . the . World . Steel .

Association, . formerly . the . International . Iron . and . Steel . Institute, . Brussels, . Belgium, . was . 107 .5 . million . metric . tons . (Mt) . in . November . 2009 . . That . is . 24 .2% . increase . over .

November .2008 . . November .2009 .is .the .third .month .in .a .row .showing .a .positive .yearon-year .growth .rate .since .September .2008 .

China’s . crude . steel . production . for . November . 2009 . was . 47 .3 . Mt, . up 37 .4% . over .

November .2008 .

Japan .yielded .8 .9 .Mt .of .crude .steel .in .November, .up .0 .5% .over .2008 . . South .Korea’s . yield, .at .4 .3 .Mt, .was .up .7 .5% .over .November .2008 .

Germany’s .crude .steel .production .was .3 .5 .Mt .in .November, .up .8 .0% .over .November .2008 . .

Russia’s .crude .steel .production .for .November .2009 .was .5 .3 .Mt, .up .42 .6% .over .November .

2008 . .Ukraine .produced .2 .7 .Mt .in .November .2009, .67 .1% .higher .than .November .2008 .

The . US . produced . 6 .0 . Mt . of . crude . steel . in . November . 2009, . up . of . 26 .9% . over .

November .2008 . .Brazil’s .crude .steel .production .in .November .2009 .was .2 .7 .Mt, .up .15 .1% . over .November .2008 .

420 South Hoover Road Virginia, Minnesota 55792 Phone: 218.741.2980 • Fax: 218.741.2989

NorthernEngineSupply.indd 1

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SKILLINGS MINING REVIEW

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Nuggets of News January 13, 1940 — Shipments of iron ore from the Lake Superior district during the season of 1940 may set a new record. The peak season was 1916 when they amounted to 66,902,778 gross tons. That was during the World War, and it is recalled that the producers designed shipping 70,000,000 tons in 1917. But there was a late opening of interlake navigation in 1917 and much ice caused delays, which it was afterwards estimated, cost the season 5 million tons. Again there is war in Europe, and while its length and importance as a stimulant of business and industry in the United States are unknown quantities for the current year, the outlook is good in any event. The blast furnaces in the United states are consuming ore at the rate of more than 60 million tons annually.

January 7, 1950 – Lake Superior is the largest body of fresh water in the world, also one of the deepest. The term superior referring to its position as the upper lake of the five Great Lakes of North America was first used according to Grace Lee Nute in the Jesuit Relation of

By Alice Blancher

1647-1648. The lake is 360 miles long and has a maximum width of 160 miles with an area of about 32,000 square miles. Its normal surface level is 602 feet above sea level and the greatest depth 1,290 feet. Another fact of importance is occurrence of the lake in the trough of a great syncline or down fold in the rocks. This structure of the rocks has had an important effect on the origin of the lake.

January 23, 1960 – When you realize that 15 to 20% of the total cost of making a ton of finished steel is iron ore, it is obvious that steel companies, cannot afford to be too sentimental about where their ore comes from. The steel company with the lowest cost ore has too much advantage. Of course, every orebody is different. “Mother Nature” put it down differently all over the world. It can be mined from open pits or from underground mines. Some of it has to be washed or sink-floated. Other deposits have to be ground very fine for concentration and subsequent agglomeration. So many different conditions surround each deposit that it

Cliffs Natural Resources continued from page 15

Iron Ore Price Report North American Market (LTU)

COMPANY ORE TYPE IRON UNIT

Cleveland-Cliffs Inc Cleveland-Cliffs Inc

Pellets, FOB Michigan Pellets, FOB Minnesota

$1.25 $1.47

Every project is unique. Even changing the swing of a door can bring its own set of obstacles and solutions. Big or small, the success of every project is a result of a contractor who looks at all the angles. It is determined by a contractor who carefully plans every aspect of the job before the first tool is even taken out of the box.

The success of any project comes in the value

CR Meyer brings by minimizing your risk at every point in the process.

800.236.6650 / crmeyer.com / info@crmeyer.com 218.245.2766 / FX 218.245.3502 / 103 Industrial Dr / Coleraine MN

18

SKILLINGS MINING REVIEW

is most difficult to compare the many factors that go into final costs, such as labor, taxes, royalties, equipment and interest. For example, labor is a very high part of the cost of underground ore (about 65% in Michigan) whereas in South America the percent of labor to total cost is very low. In the Lake Superior area, state and federal taxes are a major cost factor, but in Canada mining receives very preferential tax treatment. The capital required and interest costs are extremely high on pellet properties, as well as many of the large foreign developments, but for the open pits of Minnesota, capital and interest is relatively low. Transportation charges from a mine on the Mesabi to a steel plant in the Pittsburgh area are $6.56 per gross ton which is 46% of the delivered market price.

This cost is made up of $1.28 for the rail haul from the mine to the head of the lakes. $2 for the lake haul, 66 cents for the loading and unloading, and $2.62 for the line haul ex-lake to Pittsburgh.

ı

JANUARY 2010

PER GROSS TON IRON CONTENT

PER TON AT 64% REPORTING DATE

$62.72 $64.64

12/17/08 12/17/08

Joseph Carrabba, Cliffs’ chairman, president and CEO, said, “This long-term project is consistent with Cliffs’ stated strategy to broaden its mineral diversification and opens the door to a new universe of customers. In addition to furnishing the raw material needs of carbon steel producers, we will become a supplier to producers of stainless steel.

“Ferrochrome is imported by the world’s fastest growing steel markets, and many countries have categorized it as a strategic resource.

We believe this discovery represents one of the premier chromite deposits in the world. Given the operation’s unique location, our objective will be to supply ferrochrome to stainless steel producers around the world.”

A formal study of the chromium deposits will begin in early 2010 and is expected to be completed in the first half of the year. The study will meet industry standards and be comparable to an NI 43-101 Technical Report or a Joint Ore Resource Committee (JORC) assessment of the mineral resource.

IRON ORE

Xstrata Funding Congo Exploration Xstrata Mining group has made its first entry into the iron ore sector by funding an exploration project in the Republic of Congo, according to Reuters.

Anglo-Swiss Xstrata will pay at least $50 million toward prospecting and prefeasibility work at the Zanaga iron ore project in the Lekoumou district of the Republic of Congo, also known as Congo Brazzaville.

Claire Divver, an Xstrata spokeswoman said, “We’ve always said that we were interested in iron ore, and this looks like a very interesting opportunity to enter into a very early stage project.

“It is at a very early stage, but the indication so far is that it may be a significant iron ore resource; it could be a world-class iron ore project,” she said.

The deal may mark a shift for Xstrata to smaller-scale, early stage growth projects, J.P. Morgan Cazenove, one of the UK’s leading investment banks, said.

On Oct. 15, Xstrata abandoned a merger proposal to combine with rival Anglo American Plc after building up the group over the years with a string of major acquisitions.

“While still early stage, this transaction marks a significant event for Xstrata as it enters into its much sought after commodity at a very attractive price,” said Cazenove.

Xstrata produces a range of minerals from copper and zinc to coal and ferrochrome.

“We also believe this agreement is indicative of how the company will move forward using small scale mergers and acquisitions to expand its already attractive organic growth portfolio,” he said.

The Zanga project, situated about 300 km northeast of Pointe Noire, will continue to be managed by Colin Harris, formerly project director of Rio Tinto’s Simandou project in Guinea.

November Great Lakes Iron Ore Shipments Iron ore shipments on the Great Lakes reached their highest level in 2010 in November, with trade totaling 4.6 million net tons, an increase of 27% over the preceding month.

The upturn reflects higher operating rates at the nation’s steel mills that, in turn, have required the sailing of some U.S.-Flag lakers that had been idled. The most recent reactivation was November 25, when the American Republic returned to service. The vessel was designed specifically to shuttle iron ore on the twisting Cuyahoga River in Cleveland, Ohio.

Comparisons with a year ago and the November’s five-year average illustrate the depth of this recession. November loadings were 6% off the pace of a year ago, and nearly 14% behind the month’s five-year average.

For the year, the Great Lakes iron ore trade stands at 27.5 million tons, down 50.1% compared to a year ago. The decrease is only slightly less when compared to the trade’s five-year average for the January-November time frame, which is 49.3%.

JANUARY 2010

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SKILLINGS MINING REVIEW

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IRON ORE

Rio Tinto Appoints New Iron Ore Negotiator Danny . Goeman, . a . Perth-based . Rio . Tinto . executive, .has .been .named .as .the .company’s’s . new .lead .iron .ore .price .negotiator .for .the .company’s .Asian .iron .ore .division, .according .to .WA Business News.

Goeman’s .appointment .is .in .response .to .“increased .complexities” .in .the .Asian .market . .

According .to .a .recent .company .memo, .Will .

Malaney .will .step .down .from .his .role .as .chief . negotiator .to .focus .on .managing .Asian .sales .as . president .of .Rio .Tinto .Iron .Ore .Asia .

Goeman .will .relocate .to .Singapore .in .January .and .will .report .to .Malaney .

The . changes . come . five . months . after . Stern .

Hu, . Rio . Tinto’s . most . senior . staff . member . in .

China, .was .arrested .on .spy .charges, .which .later . were . downgraded . to . bribery . and . obtaining . commercial .secrets .

Chinese .steel .mills .are .by .far .Rio .Tinto .Iron .

Ore’s .largest .customer, .and .the .arrest .sparked . claims . that . China . was . seeking . payback . after . the .failure .of .a .key .business .deal .

While . new . negotiations . for . next . year’s . benchmark . prices . are . expected . to . begin . later . in .December, .Hu .and .three .Chinese .colleagues . remain .incarcerated .in .China .awaiting .trial .

Recently, . there . has . been . renewed . criticism . from .Chinese .steelmakers .angry .over .the .proposed . US$116 . billion . joint . venture . between .

BHP . Billiton . and . Rio . Tinto . that . involves . Pilbara .iron .ore .assets .

A .Rio .Tinto .spokesman .denied .the .new .appointment .was .related .to .the .controversy .surrounding .Hu .

China . also . recently . announced . the . statecontrolled . China . Iron . and . Steel . Association . would . step . down . as . chief . negotiator . for . iron . ore .prices . .Instead, .Baosteel, .the .country’s .largest .steel .producer, .will .lead .the .negotiations .on . behalf .of .China’s .steel .mills .

Cliffs Pursues New WA Iron Ore Project Approval U .S . .firm .Cliffs .Natural .Resources .is .pursuing . approval .for .the .development .of .a .new .iron .ore . deposit .in .Western .Australia .

Cliffs .has .submitted .a .document .to .the .Australian .government .for .environmental .approval .for .development .of .the .deposit .

The . satellite . iron . ore . mine . at . Windarling .

Range, . part . of . the . company’s . Koolyanobbing . operation, .will .utilize .existing .infrastructure .

The .development .of .the .mine .will .not .have . an .impact .on .threatened .species .at .the .project . site, .the .company .said .

Canada’s September Iron Ore Exports Up 46% According . to . Canada’s . foreign . trade . statistics .for .September .2009 .compiled .by .Statistics .

Canada, . iron . ore . exports . were . 3 .067 . million . metric .tons .(Mt), .an .increase .of .46% .over .September .2008 .

The .statistic .agency .said .that .January .to .September .exports .totaled .21 .625 .Mt, .a .slight .de-

cline .of .0 .7% .from .the .same .period .last .year .

By .destination, .exports .to .China .steeply .rose . by .138 .2% .to .6 .084 .Mt, . .and .exports .to .several .

European . markets, . such . as . France, . Spain . and .

Belgium, .largely .surpassed .the .previous .comparable .levels .

Let Golder Push Your Project Forward Global Issues, Local Solutions Mining Offices Worldwide In Duluth, call Amy @ (218) 724-0088 www.golder.com Neurick@golder.com

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SKILLINGS MINING REVIEW

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GolderAssoc.indd 1

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STEEL

Wuhan to Up 2010 Output by 24% Wuhan . Iron . & . Steel . Group, . China’s . thirdlargest . steelmaker, . plans . to . boost . production . by .24% .in .2010 .as .demand .recovers .from .2009, . which .it .said .was .the .toughest .year .in .the .company’s .history, .Bloomberg reports .

Wuhan . said . it . expects . to . produce . 37 .9 . million . metric . tons . (Mt) . of . crude . steel . in . 2010, . up .from .a .forecast .30 .5 .Mt .in .2009 . . The .group . plans .to .earn .$22 .billion .in .revenue .in .2010, .its . website .said .

China’s . $586 . billion . stimulus . spending . has . boosted .steel .demand .from .automakers, .home . appliance . manufacturers . and . builders . . The . measure . helped . domestic . steelmakers . return . to .profit .in .May .after .seven .straight .months .of . losses .because .of .the .global .economic .crisis .

China’s . steel . output . may . exceed . 600 . Mt . in .

2010, .after .reaching .a .record .570 .million .tons . in .2009, .the .China .Securities .Journal .reported . .

Rising . steel . demand . and . prices . in . China . led . analysts . to . predict . higher . prices . of . iron . ore . and .coking .coal .in .2010 . . Macquarie .Securities .

Group .forecast .a .30% .gain .in .iron .ore .prices .

Still, . a . severe . steel . oversupply . in . China . has . overwhelmed .demand, .leading .to .high .inventories, .Deng .Qilin, .Wuhan .Steel .Group’s .GM, .said . recently . . China . is . studying . a . “more . feasible” . plan . to . tackle . steel . overcapacity, . the . Ministry . of .Industry .and .Information .Technology .said .

Wuhan .also .will .progress .with .its .10 .Mt .steel . project . in . the . southern . province . of . Guangxi . and .a .plan .to .build .a .steel .plant .in .Brazil .

IRR Provides Essar and Keetac with Welcomed Boosts Minnesota’s . Iron . Range . Resources . (IRR) . board .on .Dec . .14 .extended .the .terms .of .a .loan . to .India’s .Essar .Steel, .exempting .it .from .interest . payments . into . 2010, . according . to . the Duluth News Tribune .

The . move . continues . to . push . back . interest . payments . on . $6 . million . in . IRR . loans . to . the . company, . which . is . building . a . steelmaking . plant . near . Nashwauk, . Minn ., . on . the . Mesabi . iron .range . .The .loan .has .been .interest .free .since .

2006 .

The .move .saves .the .company .about .$180,000, . but . IRR . board . members . also . stipulated . that .

Essar .was .to .cover .the .interest .with .a .letter .of . credit, .or .pay .the .interest .for .2020 .

Several . lawmakers . said . they . had . hoped . to . see . more . progress . toward . construction . at .

Essar, . where . millions . of . dollars . in . public . improvements . already . have . been . or . are . being . made .to .roads, .railways, .gas .lines .and .more .

“I .just .need .to .feel .a .little .more .comfort .that . the .private .investment .is .being .made,’’ .said .Rep . .

Tom .Anzelc, .DFL-Balsam .

Narasimhan . Ramakrishnan, . Essar’s . finance . director, . said . the . company . has . invested . $115 . million .so .far, .including .$85 .million .to .acquire . the .former .Minnesota .Steel .holdings .at .the .site, . and .about .$30 .million .on .site .development . .He . said . construction . would . begin . in . earnest . in . summer .2010, .and .production .could .begin .as . early .as .late .2011 .

The .Essar .facility .would .cost .about .$1 .6 .billion .and .employ .nearly .500 .people . .

Keetac gets tax rebate

The . IRR . board . also . approved . a . $1 .72 . million .rebate .on .taconite .taxes .paid .by .U .S . .Steel’s .

Keetac .plant .in .Keewatin, .based .on .2008 .production .

Keetac .is .to .match .the .rebate .with .$371,000 . of .its .own .money .to .conduct .exploratory .drilling .for .a .proposed .expansion .and .to .help .control .dust .and .reclaim .the .plant’s .tailings .basin . .

Currently, . the . Keetac . plant . is . closed, . but . is . slated .for .a .restart .early .in .2010 .

ArcelorMittal to Cut 10,000 Steel Jobs In .a .sign .that .steel .demand .isn’t .expected .to . recover . strongly . in . 2010, . the . world’s . largest . steelmaker, .ArcelorMittal, .said .it .is .looking .to . eliminate .about .10,000 .jobs, .with .cuts .mainly . in .Europe .and .the .U .S ., .where .growth .potential . is . more . limited, . The Wall Street Journal . said .

Dec . .15 .

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The . company . would . not . specify . numbers, . but . people . familiar . with . the . matter . said . the . target . is . about . 3 .5% . of . the . 287,000-person .

ArcelorMittal . workforce . as . of . Sept . . 30 . . Many . of .the .cuts .are .expected .to .affect .workers .furloughed .after .a .round .of .plant .idling .this .year, . as .well .as .through .attrition .

The .company .also .said .it .would .increase .steel . production .so .that .its .capacity .utilization .rate . would .rise .to .about .70% .at .the .end .of .this .year, . up .from .61% .in .the .third .quarter .and .staying . at .that .level .until .2013 . . It .added .that .it .doesn’t . expect .steel .prices .to .recover .to .the .heights .of .

2007 .for .a .decade .

“Company . representatives . discussed . the . possibility .that .the .business .could .expect .some . global . workforce . reductions . next . year . due . mainly . to . natural . attrition . and . optimization . of .production,” .said .Giles .Read, .spokesman .for . the .steelmaker .

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ADVERTISING INDEX

Sam Walsh, CEO of Rio Tinto Iron Ore, was appointed CEO of Rio Tinto’s Australian operations and will maintain his position in the iron ore division as the company reshuffles its global organizational structure. Other changes will result in an expanded executive committee with three new appointments: Doug Ritchie will become CEO of Rio Tinto Energy, Brisbane; Andrew Harding will be CEO of Rio Tinto Copper, London; Harry Keyton-Slanley, will be CEO of Rio Tinto Diamonds and Minerals, London. David Peever was named managing director, Australia, for Rio Tinto. Peever willl retain his current role at Marine, based in Melbourne, and will report directly to Sam Walsh. .

Kurt Stalberg was named VP and a member of the executive committee of the HBI Association, a not-for-profit, international trade organization that promotes hot briquetted iron (HBI), providing information on effective handling, shipping, storage and use of HBI. .

Don Argus of BHP Billiton is retiring as chairman and non-executive director in early 2010.

He will be succeeded by Jac Nasser, who joined the board as a non-executive member in 2006 and is a member of the board’s risk and audit committee. Nasser, was with Ford Motor Co. for 33 years, where he was president and CEO. Ed Bolton, CFO of Cumberland Resources, joined the board of directors of the National Mining Association. Also joining the board for two-year terms are Nick Carter, president and COO of Natural Resource Partners, Keith Kimble, president Pen-Ohio Coal Co., and Vicor Stabio, director, Sunrise Coal.

Eric Blackburn, assistant treasurer for EXCO Corp., has assumed the responsibilities of treasurer and director of corporate planning at EXCO, reporting to Gene Huey, CFO. George Ellis was named president of Terex Construction, effective immediately, reporting to Tom Riordan, Terex president and COO. Paolo Rocca, chairman and CEO of Techint Group, was named to the board of directors of the World Steel Association, formerly the International Iron and Steel Institute. Lakshmi Mittal, chairman and CEO of ArcelorMittal, and Hajime Bada, president and CEO of JFE Steel Corp, are the new vice chairmen. John Surma, chairman and CEO of United States Steel Corp., was named treasurer of the World Steel Association. The 2009/10 executive committee is comprised of Hajime Bada, JFE Steel; Joon-Yang Sung, POSCO, Daniel DiMicco, Nucor Corp., Lakshmi Mittal, ArcelorMittal, Shoju Muneok, Nippon Steel Corp., and M. Aydin Muderrisoglu, Erdemir; Paolo Rocca, Teching Group; Shushil K. Roongta, chairman of Steel Authority of India; Ing,Ekkehard D. Schulz, ThyssenKrupp AG; John Surma, U. S. Steel Corp.; Sakari Tamminen, Rataruukki

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Skillings Mining Review is supported by these leading providers of materials, services and supplies to the mining industry. Please patronize them whenever possible and let them know you saw their advertisement in Skillings.

ASGCO. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Azcon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Barr Engineering. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 CR Meyer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 COREM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Dynamic Structural Steel. . . . . . . . . . . . . . . . . . . . . . . . 7 Eloranta & Associates. . . . . . . . . . . . . . . . . . . . . . . . . . 17 Engineering Design Services, Inc.. . . . . . . . . . . . . . . 17 FLSmidth/Krebs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Fryberger, Buchanan, Smith &Frederick, PA. . . . . . 6 Global Minerals Engineering. . . . . . . . . . . . . . . . . . . . 9 Golder Associates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Hallett Dock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 IDEA International Drilling. . . . . . . . . . . . . . . . . . . . 12 Iron Mining Association of Minnesota. . . . . . . . . . 21 Krech Ojard & Associates . . . . . . . . . . . . . . . . . . . . . . . 8 L & S Electric Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Lakehead Constructors. . . . . . . . . . . . . . . . . . . . . . . . . . 2 Magotteaux. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Malton Electric Co.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Mielke Electric Works. . . . . . . . . . . . . . . . . . . . . . . . . . 15 Mining Technologies International. . . . . . . . . . . . . . . 9 Naylor Pipe Co.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Neo Solutions Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Noramco Engineering Corp.. . . . . . . . . . . . . . . . . . . . 17 Northern Engine & Supply Inc.. . . . . . . . . . . . . . . . . 17 SEH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 TriTec of MN. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Tufco. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 University of Minnesota, Duluth. . . . . . . . . . . . . . . . 23 WP&RS Mars. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Ziegler Cat. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Oji; Xiaogang Zhang, Anshan Iron & Steel Corp.; and Ian Christmas, World Steel Association.

Matthew Lehtinen has joined Magnetation Inc. as VP of marketing and business development. Lehtinen, son of Larry Lehtinen, CEO, of the Nashwauk, Minnesota-based Magnetation, will be in charge of global marketing of Magnetation products and services and will lead strategic expansion efforts in the iron and steel, mineral processing, oil and gas, industrial minerals, construction, chemical manufacturing and water treatment industries.

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JANUARY 2010

FINANCE

MMX to Spend $1.2 Billion to Triple Output in Brazil

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MMX, .a .junior .miner .owned .by .Brazilian .magnate .Eike .Batista, .will . invest .up .to .$1 .2 .billion .to .more .than .triple .iron .ore .production .capacity . by .2015, .the .company’s .president .said .in .a .report .by .Reuters .

MMX .plans .to .reach .a .capacity .of .33 .7 .million .metric .tons .(Mt) .annually .from .the .current .9 .million .metric .tons .per .annum, .mainly .for .the . growing .Chinese .steel .industry .

“The .total .investment .will .be .between .$1 .and .$1 .2 .billion .to .take .MMX . to .a .production .of .33 .7 .Mt,” .said .Roger .Downey, .president .of .MMX . .“We . should .reach .that .around .2014, .2015 .”

The .investment .is .slated .for .the .expansion .of .the .Southeastern .system, . which .includes .the .7 .Mt .per .year .Serra .Azul .mine .and .the .Bom .Sucesso . project, .which .is .not .yet .operational .

The .company .also .owns .the .smaller .Corumba .system, .in .southwestern .

Brazil, .with .a .capacity .of .2 .Mt .per .year .

MMX’s . production . dropped . in . 2009 . to . as . low . as . 50% . of . capacity . in . response . to . the . 2008 . financial . crisis, . but . Downey . said . the . company . is . nearly .back .to .full .capacity .

In .November, .MMX .announced .a .$400 .million .deal .to .sell .a .22% .equity . stake .in .the .company .to .Wuhan .Iron .and .Steel .Co .through .a .share .offering .expected .to .bring .$200 .million .more .from .minority .shareholders .

Downey .said .the .Wuhan .deal, .together .with .additional .capital .from .minority .shareholders, .would .allow .it .to .pay .off .its .current .$600 .million .of . outstanding .debt .

The .accord .includes .a .20-year .ore .supply .contract .and .an .agreement . to .build .a .steel .mill .at .Porto .do .Acu, .a .port .terminal .controlled .by .EBX . logistics .subsidiary .LLX .

SME Minnesota Section

Strategies for a New Generation of Mining Technical Conference 83rd Annual Meeting Minnesota Section of the SME

71st Annual University of Minnesota Mining Symposium

April 20-21, 2010 Duluth Entertainment Convention Center Duluth, Minnesota, USA To Request a Registration Program:

University of Minnesota Duluth - Continuing Education Phone: 218/726-6680; Fax: 218/726-7609 E-mail: hsmithst@d.umn.edu

2010 Trade Show , and Vendors Reception , Don t miss this opportunity to see the latest in mining equipment and services, and to network with industry representatives and suppliers. , To request an exhibitor s packet or to list your company as a co-host of the , Vendors Reception, contact Marge Erickson at smetradeshow@hotmail.com or 218/726-8624

To Register Online: Go to the UMD-Continuing Education web site at www.d.umn.edu/goto/sme

The University of Minnesota is an equal opportunity educator and employer.

JANUARY 2010

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