Cleveland-Cliffs Inc. · NYSE:CLF
Cleveland-Cliffs — BMO Capital Markets 2007 Global Resources Conference
45 slides from Cleveland-Cliffs's conference presentation, Feb 27, 2007
Slide 1: BMO Capital Markets 2007 Global Resources Conference
BMO CAPITAL MARKETS 2007 GLOBAL RESOURCES CONFERENCE February 27, 2007 JOSEPH CARRABBA President and Chief Executive Officer LAURIE BRLAS Senior Vice President — CFO and Treasurer Exhibit 99(a)
Slide 2: Forward-Looking Statements
This presentation includes predictive information that is intended to be made as “forward-looking” within the safe harbor protections of the Private Securities Litigation Reform Act of 1995. Although the Company believes that its forward-looking information is based on reasonable assumptions, such i
Slide 3: Today's Agenda
TODAY’S AGENDA • Cliffs’ Strategy • Industry Overview – Cliffs’ Customer Base – Our Industry • Cleveland-Cliffs – North America – Asia-Pacific – Latin America • Financials • Summary
Slide 4: Cleveland-Cliffs
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Slide 5: Vision of Cliffs – Four Strategic Changes
Growth and Diversification Shareholder Returns Global Execution Operational Excellence VISION OF CLIFFS – FOUR STRATEGIC CHANGES Growth and Diversification • Revenue Growth • Product Diversification • Geographic Growth Operational Excellence • Safety • Technical Competencies • Operating Efficiencies
Slide 6: Cliffs' Strategy
CLIFFS’ STRATEGY • Maintain the Core – North America • Capitalize on Cliffs ’ Unique Technological Expertise • Expand Globally and Diversify Products Strategy
Slide 7: Cliffs' Growth in North American Market Share
Cliffs' Sales Gross Tons (millions) 0% 5% 10% 15% 20% 25% 30% Cliffs' Market Share CLIFFS’ GROWTH IN NORTH AMERICAN MARKET SHARE Cliffs’ Pellet Sales Cliffs’ North American Market Share Strategy
Slide 8: New Iron Technology
NEW IRON TECHNOLOGY • Continue to be a global leader and innovator in technological “know how” to upgrade low-grade iron ores to make high-quality products – Commercialization of Kobe’s ITmk3 Technology – Allows Cliffs to participate in the EAF Market – Use the technology to reduce transportation co
Slide 9: Target Markets – Overview
Coal – Domestic Thermal Coal – Seaborne Metallurgical* Iron Ore Diamonds TARGET MARKETS - OVERVIEW Attractive • Insufficient Chinese production, or • Geologic oligopoly, or • Structured oligopoly Medium Unattractive • On-demand capacity, or • Backed-up pipeline, or • By-product production Bentonite
Slide 10: First Priority – Iron Ore
FIRST PRIORITY - IRON ORE 1. Diversification analysis shows it to be one of the most attractive markets - Strong demand driven by world growth in steel production - Geologic shortage of quality ore in China - Highly concentrated supplier base 2. Opportunities to acquire smaller assets that do not in
Slide 11: Target Markets: Seaborne Met. Coal and Domestic Thermal Coal
Business Environment Supply Dynamics Demand Growth TARGET MARKETS: SEABORNE MET. COAL AND DOMESTIC THERMAL COAL Good fit with current operations Historically holds a cost advantage over natural gas Stable pricing over the long term Good fit with Cliffs' operational competencies Opportunity to serve
Slide 12: Cliffs' Customer Base
CLIFFS’ CUSTOMER BASE
Slide 13: Global Steel Production
1,067 1,130 1,190 1,240 1,000 1,200 1,400 2006E 2007E GLOBAL STEEL PRODUCTION 5-Year CAGR = 8% Cliffs’ Customer Base Millions of Tonnes (Production)
Slide 14: China's Impact on the World Steel Industry
1,000 1,250 2007E 2006E Rest of World (5-YR CAGR 3%) China (5-YR CAGR 27%) CHINA’S IMPACT ON THE WORLD STEEL INDUSTRY Millions of Tonnes (Production) 1,067 1,130 1,240 1,190 Cliffs’ Customer Base
Slide 15: Cleveland-Cliffs
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Slide 16: Global Iron Ore Industry Profile
GLOBAL IRON ORE INDUSTRY PROFILE • Very few steel producers have vertically integrated into iron ore • 1.5 billion metric tons of iron ore production capacity • Limited new discovery of large iron ore deposits • Pricing is negotiated and set annually among the largest buyers and sellers – 2007 settl
Slide 17: Iron Ore Producers and Consumers
Consumers by Country IRON ORE PRODUCERS AND CONSUMERS Producers by Country 2006 World Production: 1,755 million tonnes Commonwealth of Independent States 11% China 32% North America 6% India 8% Other 8% Australia 17% Brazil 18% China 51% Japan 8% Middle East & Africa 3% North America 5% South Americ
Slide 18: Iron Ore Producers and Consumers
IRON ORE PRODUCERS AND CONSUMERS Producers by Company Consumers by Company Corus 2% Arcelor Mittal 10% Other 70% Thyssenkrupp 2% US Steel 2% Nucor 2% Boasteel 3% POSCO 3% JFE 3% Nippon 3% BHP 15% CVRD 35% Other 19% Cliffs 1% LKAB 3% Kumba 4% Rio Tinto 23% Concentration vs Fragmentation Largest Iron
Slide 19: Global Iron Ore Historic Market Prices
$0 $10 $20 $30 $40 $50 $60 $70 $80 Pellets Lump Fines GLOBAL IRON ORE HISTORIC MARKET PRICES Pellet Prices $DMT Based on Eastern Canadian Pellet Price With 64% Iron Content Lump and Fines $DMT for Australian Iron Ore Shipments to Japan Source: TEX Report, Cleveland-Cliffs +86% +5.3% +19% +71.5% -3%
Slide 20: Cleveland-Cliffs
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Slide 21: Cliffs' Key Events
Early 1950s High-grade ore exhausted in North America; enriching leaner ore becomes a necessity Late 1990s/Early 2000s Transitions from primarily mine manager to merchant mining company Late 1950s Iron ore pellets become steel industry’s preferred feedstock 2005 Acquires Portman Limited, then Austra
Slide 22: Cliffs Stock Performance
CLIFFS STOCK PERFORMANCE Cleveland-Cliffs’ Stock Price: January 1, 2002 – February 1, 2007 (Adjusted for dividends and stock splits) $0 $10 $20 $30 $40 $50 $60
Slide 23: Cliffs' Sales by Segment
CLIFFS’ SALES BY SEGMENT 21% 79% North America Austalia Cliffs’ Profile
Slide 24: Cliffs' Consolidated Production and Sales
2005* 2006* Managed Production Cliffs' Equity Production Cliffs' Sales *Reflects Cliffs’ Portman ownership as of 3/31/2005, and includes minority interest. Managed production does not include Portman’s 50% joint-venture interest in the Cockatoo Island operation. CLIFFS’ CONSOLIDATED PRODUCTION AND S
Slide 25: Cliffs' Profile: North America
CLIFFS’ PROFILE NORTH AMERICA
Slide 26: Cliffs' Profile: North America
CLIFFS’ PROFILE NORTH AMERICA • Largest supplier of iron ore pellets to the integrated steel industry in North America • Cliffs led the consolidation of the North American iron ore industry and obtained a larger share of the market • Virtually 100% of current North American iron ore production is co
Slide 27: North American Integrated Steel
NORTH AMERICAN INTEGRATED STEEL North America 2001 Market Participants 2006 Market Participants US Steel 20% Bethlehem 15% Other 13% LTV 11% National 10% Stelco 10% Ispat 6% Weirton 5% Algoma 4% Rouge 3% Dofasco 3% Mittal 39% US Steel 30% Stelco 10% AK Steel 7% Other 7% Algoma 4% Severstal 3%
Slide 28: North American Pellet Producers
4% 11% 15% 24% 46% US Steel Quebec Cartier Mining Company Minorca (Mittal) Cliffs Managed Iron Ore Company of Canada NORTH AMERICAN PELLET PRODUCERS North America
Slide 29: Cliffs' Iron Ore Shipping Routes
CLIFFS’ IRON ORE SHIPPING ROUTES North America
Slide 30: Cliffs' Profile: Asia-Pacific
CLIFFS’ PROFILE ASIA-PACIFIC
Slide 31: Cliffs Asia-Pacific
CLIFFS ASIA-PACIFIC Asia-Pacific
Slide 32: Portman Port Operations, Esperance
PORTMAN PORT OPERATIONS, ESPERANCE Asia-Pacific
Slide 33: Global Market Growth: Portman
GLOBAL MARKET GROWTH PORTMAN • Provided immediate presence in Australia and Asia • When acquired by Cliffs, Portman Limited was Australia’s third-largest iron ore producer • Access to fastest growing steel markets and relationships where Cliffs’ iron ore competencies can be levered • Capacity increa
Slide 34: Asia-Pacific Market Growth: Sonoma Coal Project
ASIA-PACIFIC MARKET GROWTH SONOMA COAL PROJECT • Partnered with QCoal for a 45% interest in the Sonoma Project • At the northern limit of Queensland’s Bowen Basin coalfields • Initial production two million tonnes beginning in late 2007 • Production increasing to between three million and four milli
Slide 35: Cliffs' Profile: Latin America
CLIFFS’ PROFILE LATIN AMERICA
Slide 36: Latin America
• Regional office opened February 1, 2007, in Rio de Janeiro staffed by two ex-pats • Active business development program evaluating numerous deposits • Amapá provides an attractive opportunity in Latin America and, over time, is anticipated to serve as a platform for further expanding Cliffs’ prese
Slide 37: Amapá Project
AMAPÁ PROJECT • Signed share purchase agreement with MMX Mineração e Metálicos SA for the purchase of 100% of the shares of Centennial Asset Amapá Participações SA Latin America
Slide 38: Amapá Project
• Centennial Amapá owns 30% of the Amapá Project, a Brazilian iron ore project on the banks of the Amazon – Iron ore deposit – 192-kilometer railway – 71 hectares of real estate • Cliffs would purchase 100% of the shares of Centennial Amapá for $133 million • Anticipated ~ $275 million in future cap
Slide 39: Cleveland-Cliffs
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Slide 40: Cliffs' Revenues
Financials CLIFFS’ REVENUES (In Billions) $0.8 $1.2 $1.7 $2.0 $0.0 $0.5 $1.0 $1.5 $2.0 3-Year CAGR = 34%
Slide 41: Cliffs' Sales Margin
Financials CLIFFS’ SALES MARGIN (In Millions) ($9.9) $149.5 $389.0 $435.8 ($50) $50 $150 $250 $350 $450 $550
Slide 42: Financial Results
FINANCIAL RESULTS Product Sales and Service Revenue Operating Income Net Income EPS (Diluted) Cash and Marketable Securities Debt Book Net Worth Equity Market Cap Full Year Ended: Includes after-tax gain on sale of ISG stock and the reversal of a deferred tax asset valuation allowance totaling $213
Slide 43: Cleveland-Cliffs
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Slide 44: Vision of Cliffs – Summary
Growth and Diversification Shareholder Returns Global Execution Operational Excellence VISION OF CLIFFS - Summary Growth and Diversification • Revenues doubled • 50% of revenues from outside of North America • Up to 25% of revenues from outside of iron ore Operational Excellence • MSHA frequency rat
Slide 45: BMO Capital Markets 2007 Global Resources Conference
BMO CAPITAL MARKETS 2007 GLOBAL RESOURCES CONFERENCE February 27, 2007 JOSEPH CARRABBA President and Chief Executive Officer LAURIE BRLAS Senior Vice President — CFO and Treasurer
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