Cliffs Natural Resources Updates 2008 Full-Year Outlook, Sets Date for Shareholder Vote on Alpha Natural Resources Merger

Business Wire, Oct 23, 2008

CLEVELAND -- Cliffs Natural Resources Inc. (NYSE: CLF), an international mining company, today updated its 2008 full-year outlook. The update is being made in conjunction with a definitive joint proxy statement/prospectus for the Company's proposed merger with Alpha Natural Resources. Cliffs said its outlook is based on expectations at the time of this release; however, economic uncertainty, tightening of credit markets and reductions in steel production are collectively reducing the degree of certainty with which it can forecast near-term sales volumes. In addition, the Company's board of directors has set Friday, Nov. 21, 2008, as the special meeting date for Cliffs shareholders to vote on the Company's proposed merger with Alpha Natural Resources, Inc. (NYSE: ANR). Details regarding the meeting follow the outlook information below.

North American Iron Ore Outlook

In 2008, Cliffs expects revenue per ton in its North American Iron Ore segment to average $91, up $1 from previously issued guidance. Cost per ton is currently expected to average $57, consistent with previous guidance. Cliffs said the recent pullback in energy-related costs has offset higher expected labor expenses related to the new four-year collective bargaining agreement reached with the United Steelworkers (USW) in late August. The USW represents hourly employees at certain Cliffs operations in Michigan and Minnesota.

Based on supply agreement commitments, the Company expects North American Iron Ore sales volume of approximately 25 million long tons in 2008.

Cliffs said, assuming no changes in sales volumes, World Pellet Prices, producer price indices or steel pricing (all adjustment factors that determine Cliffs' pricing in North American Iron Ore), average realized price per ton in its North American Iron Ore segment in 2009 will increase approximately 18% to $107. This increase is based on contractual base-price adjustments, lag-year adjustments and price caps contained in most of Cliffs' current supply agreements. Cliffs said increases or decreases in sales volume, World Pellet Prices, production inputs and/or steel prices will impact 2009 average revenue per long ton.

North American Coal Outlook

Cliffs indicated revenue per ton in its North American Coal segment is expected to average $93 for 2008, down from a previous estimate of $94. Cost per ton is anticipated to reach approximately $97, up from a previous estimate of $89. The increase in cost expectation is the result of lower than planned 2008 production of approximately 3.6 million short tons. This is a decline from the previously expected production of 4.0 million short tons.

Cliffs continues to refine and enhance the long-term mine plan and development activities at each of its North American Coal properties. These actions are designed to optimize production and, in 2009, result in expected production of approximately 4.7 million short tons.

Asia-Pacific Iron Ore Outlook

As a result of currency exchange changes as well as the expected sales mix between lump and fines product, the Asia-Pacific Iron Ore segment now expects average per-tonne revenue to be approximately $98, down from previous expectations of $102. Cost per tonne is expected to be $58 for 2008. These estimates represent respective per-tonne revenue and costs increases of 80% and 35% versus 2007 levels.

The Company currently expects full-year Asia-Pacific Iron Ore production volume of approximately 8 million tonnes. Cliffs currently anticipates Asia-Pacific sales volume of approximately 8 million tonnes, consistent with its previous estimates.

Sonoma Coal Project Outlook

Cliffs has a 45% economic interest in the project and expects total production of approximately 2.5 million tonnes for 2008, up from a previous estimate of 2.0 million tonnes. Sonoma is expected to have sales volume of 2.1 million tonnes and generate average revenue of $131 per tonne in 2008, down from the Company's previous guidance of $142. However, Cliffs indicated that improved efficiency in the project's wash plant, better-than-originally-expected coal quality and strengthening of the U.S. dollar have resulted in lower costs. Per-tonne costs at Sonoma are now expected to be $73, compared with a previous estimate of $92.

Amapa Iron Ore Project Outlook

Cliffs said its new partner in the Amapa project, Anglo-American, has closed its acquisition of MMX's 70% share of the project and assumed management control over the venture.

Anglo-American has indicated to Cliffs that it plans to complete construction of the concentrator and continue to ramp-up operations. Production and sales in 2008 are expected to total approximately 1 million tonnes, down from a previous estimate of 3 million tonnes. Based on this production delay, Cliffs expects to incur significant equity losses in 2008.

Other Expectations

Total operating expenses, excluding mark-to-market adjustments in currency hedges in the Company's Asia-Pacific Iron Ore segment, are anticipated to be approximately $140 million in 2008. Cliffs anticipates an effective tax rate of approximately 26% for the year. It also expects 2008 capital expenditures of approximately $240 million and depreciation and amortization of approximately $180 million, down from a previous estimate of $190 million.