CCI in $10 billion coal deal

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ISHPEMING - The longstanding Cleveland Cliffs Inc. name will change with the announcement of the mining company's merger with Alpha Natural Resources Inc. in a cash and stock transaction valued at about $10 billion.

The combined company will be renamed Cliffs Natural Resources. The new company will own nine iron ore facilities and more than 60 coal mines in North and South America and Australia.

The boards of both companies have approved the deal, announced today, in which CCI will acquire all outstanding shares of Alpha and Alpha shareholders will receive .95 CCI shares and $22.23 in cash for each share held.

"Today's announcement represents a significant strategic milestone for both companies," Joseph A. Carrabba, CCI chairman, president and chief executive officer, said in a press release. "Cliffs Natural Resources will be positioned as a diversified natural resources company with significant holdings in a variety of important minerals. By combining our companies' complementary operations and management capabilities, we will be well positioned to meet the world's increasing demand for raw materials."

The merger will make Cliffs Natural Resources one of the largest U.S. mining companies and will make it a major supplier in the global steel industry. According to a press release from CCI, the combined company anticipates having an annual sales volume in excess of 30 million tons of iron ore and nearly 18 million tons of metallurgical coal.

The merger creates some changes for CCI in addition to the added mining operations. The new Cliffs Natural Resources will have two operating divisions - iron ore and coal.

Kevin Crutchfield, currently president of Alpha Natural Resources, will become president of the combined company's coal businesses.

Donald Gallagher, currently president of CCI's North American Business Unit, will become president of the combined company's iron ore businesses.

In addition, the Cliff's board of directors will be expanded by two seats to be filled by two current Alpha directors, Michael Quillen and Glenn Eisenberg. Carrabba will serve as chairman and CEO of the combined company and Quillen, who is Alpha's chairman and CEO, will serve as non-executive vice chairman.

The new company will be headquartered in Cleveland with the iron ore business operating from Cleveland and the coal business from Abingdon, Va.

"Together, Alpha and Cleveland Cliffs will have the size, the management depth and the mining expertise to compete on the global stage as a demand for raw materials continues to increase around the world," Quillen said. "We look forward to working together with Joe Carrabba and the Cleveland Cliffs management team to realize the substantial opportunities that this combination presents."

After the transaction closes, Cliffs Natural Resources will have estimated 2008 revenue sof nearly $6.5 billion and earnings before interest, taxes, depreciation and amortization of $1.9 billion. The company's estimated 2009 revenues could reach $10 billion with estimated earnings of $4.7 billion.

The transaction is subject to approval by CCI and Alpha shareholders, as well as the satisfaction of closing conditions and regulatory approvals, including a waiting period under antitrust regulations. According to CCI, the transaction is expected to close by the end of the year.

CCI operates six iron ore mines in Michigan, Minnesota and eastern Canada and three coking coal mines in West Virginia and Alabama. It operates the Empire and Tilden mines in Marquette County.

In addition, CCI owns 85 percent of Portman Limited, a large iron ore mining company in Australia. CCI also has a 30 percent interest in the Amapa Project, a Brazilian iron ore venture, and a 45 percent economic interest in the Sonoma Project, an Australian coking and thermal coal operation.

Alpha is the nation's largest supplier and exporter of metallurgical coal, a key ingredient in steel manufacturing. Alpha operates mining complexes in four states, consisting of 57 mines supplying 11 coal preparation and blending plants.

Combined, the companies will employ more than 8,900 workers.