Tough times in the iron and steel industry have presented Cliffs with a number of tough questions. Following are answers to the tough questions that are being asked by shareholders, analysts and employees:

	There has been a lot of talk about changing the business model for Cliffs' core iron ore pellet business. Where is Cliffs going?
	What are the benefits that Cliffs expects to realize from acquiring the mine ownership interests of steel company partners?
	Given Cliffs' financial position, how will the Company find the money to lead the consolidation of the North American iron ore industry?
	There is much talk about consolidation of the domestic steel industry. Is consolidation necessary?
	Will consolidation of the steel industry be good for Cliffs?
	What is Cliffs doing to improve the competitive position of its iron ore operations?
	Labor contracts negotiated in 1999 provided for a strategic alliance with the United Steelworkers Union. Has this alliance provided Cliffs with the cost reductions and productivity improvements that were anticipated, and necessary?
	What are the future prospects for the Empire Mine?
	How much iron ore pellet production capacity is being displaced by imported slabs?
	Cliffs' priorities are focused on its core iron ore pellet business. Does this indicate a loss of interest in developing a significant ferrous metallics business?
	There has been a lot of talk about changing the business model for Cliffs' core iron ore pellet business. Where is Cliffs going?
	Cliffs has traditionally operated its iron ore pellet business through partnerships with various integrated steel companies. The Company has managed and held minority ownership positions in partnership mines. Cliffs' earnings in the pellet business have come from three principal sources: • royalty income from leasing iron ore reserves to the Tilden and Empire Mines • management fee income from managing partner mines • merchant sales of pellets For many years, the mine partnerships have been successful, but Cliffs and its partners have reached a point where the model needs to be changed. Our partners need their cash flow for making steel, not mining and processing iron ore. Cliffs' fundamental objective in operating the mines is maximum long-term profitability and productivity, which often conflicts with partner objectives that are focused largely on minimizing costs in the short term. With most, if not all, of our partners looking for an opportunity to exit their ownership positions, Cliffs must restructure its mines by converting “partners” to “customers” with long-term pellet supply contracts. We must replace royalty and management fee income with profit margin on pellet sales. While there are risks in moving to the new business model, there are opportunities as well. We are not going to sit back and let the world change around us. We intend to be proactive and lead the change so that we construct a model that is in the best interests of Cliffs' shareholders, employees and other constituencies. back to top
	What are the benefits that Cliffs expects to realize from acquiring the mine ownership interests of steel company partners?
	With full ownership of our mines, we will have more flexibility to shift production between the mines to improve efficiency of our total production capacity and convert fixed costs to variable costs. In 2001, when we experienced a significant reduction in pellet demand, we were forced to curtail production at all of the mines in which we had ownership positions. This was very inefficient and very expensive. We will also be able to make operating and spending decisions faster and more efficiently, which will improve our ability to manage the mines to achieve sustainable, long-term efficient production. back to top
	Given Cliffs' financial position, how will the Company find the money to lead the consolidation of the North American iron ore industry?
	With limited ability to raise additional funding, Cliffs must be creative in how it structures transactions to acquire interests in iron ore mines. The consideration in many cases will include the assumption of liabilities and execution of long-term pellet supply agreements with the seller. The transaction we recently completed with Algoma Steel followed this blueprint. back to top
	There is much talk about consolidation of the domestic steel industry. Is consolidation necessary?
	It will be necessary to prevent a rolling sequence of failures like LTV. Failure to consolidate will likely mean a continuation of the chaotic process of bankruptcies and liquidations, which are disruptive for shareholders, employees, suppliers, creditors and communities. We expect 2002 will be a busy year. back to top
	Will consolidation of the steel industry be good for Cliffs?
	We believe consolidation will ultimately produce a stronger, more competitive industry. At the same time, we are mindful that consolidation is likely to accelerate the shrinkage of some integrated steelmaking capacity, which is not positive for iron ore consumption. We are managing our iron ore pellet business with the expectation that shrinkage will occur, sooner or later, with or without consolidation. We believe our mines can obtain a larger share of a smaller market. While much of our pellet capacity is cost competitive, some of our mines have cost disadvantages that must be corrected if they are to survive the inevitable rationalization process. back to top
	What is Cliffs doing to improve the competitive position of its iron ore operations?
	Every segment of our organization is focused on improving the competitive position of our mines from the standpoint of both cost and quality. Our cost reduction initiatives are managed through a corporatewide program termed “ForCE 21” (For Competitive Excellence in the 21st Century). This program, which is designed to produce organizational and operational excellence through employee involvement and cultural change, is accelerating change throughout the Company, with a focus on improvements in costs, safety and quality. The program has achieved impressive results in a number of areas, and we are optimistic about its potential as the program expands. We have established alliance agreements with suppliers of materials and equipment that are yielding major cost savings. Maintenance costs have been reduced through improved planning procedures. back to top
	Labor contracts negotiated in 1999 provided for a strategic alliance with the United Steelworkers Union. Has this alliance provided Cliffs with the cost reductions and productivity improvements that were anticipated, and necessary?
	No. There has been only limited progress under the alliance. To restore its competitiveness the iron and steel industry badly needs a complete overhaul of its labor contracts that will reflect the reality of the current business environment. New work practices and cooperation are required to justify the level of wages and benefits enjoyed by all of our employees. Many of the integrated steel companies have five or six retirees per active employee, nearly all of whom have generous pensions and full health care. Health care costs, in particular, are spiraling out of control again. While Cliffs and its managed mines are somewhat better positioned, with an average of 1.3 retirees per active employee, this is becoming a bigger issue as time progresses. We are exploring all options to better manage our pension and health care obligations while we seek to recognize and reward high performance in our work force. back to top
	What are the future prospects for the Empire Mine?
	Empire is under severe pressure as a result of losing LTV Steel as a 25 percent owner, and Cliffs' loss of LTV as a customer. A significant priority of the Company is the resolution of a long-range plan for Empire. We are working very closely with Ispat Inland, the other owner of the mine, and other stakeholders. Prior to the LTV decision to liquidate its steelmaking operations, we announced an optimization plan for Empire that would reduce the annual pellet production capacity to approximately 6 million tons. This action, which was to have been implemented in January 2002, was taken because the older sections of the plant could no longer economically process the ores Empire was mining. The optimization plan was designed to maximize the use of Empire's most efficient production equipment, resulting in the reduction of about one-third of the mine's employees. It was estimated that the fully implemented plan would reduce Empire costs by 5 to 10 percent. Implementation of the plan was put on hold when LTV terminated operations and the mine was idled in November. back to top
	How much iron ore pellet production capacity is being displaced by imported slabs?
	It takes approximately 1.4 million tons of iron ore to make one ton of semi-finished steel. Therefore, when semi-finished slab imports peaked at 8.6 million tons in 2000, they displaced approximately 12 million tons of iron ore pellets. Cheap slabs will be available in slow economic times, but prices will escalate quickly and significantly when better economic conditions return. Steelmakers and their customers will be jeopardized when this happens. back to top
	Cliffs' priorities are focused on its core iron ore pellet business. Does this indicate a loss of interest in developing a significant ferrous metallics business?
	Not at all, but activities have slowed due to the deterioration of the market for ferrous metallics products. CAL has been idled, but we are poised to restart the facility when market conditions improve. We also recently announced our participation in a new project that will be located at our Northshore Mine in Minnesota. We have joined with Kobe Steel, Steel Dynamics Inc. and the State of Minnesota in a project to convert iron ore into nearly pure iron in nugget form. Iron nuggets would be used as an alternative or supplement to pig iron in the steelmaking process, particularly in minimills. Cliffs and the other participants have approved the construction of a pilot plant to test and develop the process for commercial application. If the pilot plant is successful, the participants could decide to proceed with a commercial size facility capable of producing 300,000 tons annually. Construction of a commercial facility could start as early as 2004. We continue to believe that the ferrous metallics business represents a long-term growth opportunity for Cliffs. back to top