IMPACT OF

1

• IMPACT OF
• MAJOR CHALLENGES
• IN IRON ORE INDUSTRY
• MAY 2, 2005

2
MAP
3
WABUSH MINES OWNERSCHANGE IN OWNERSHIP

• 1994 1998 2004
• Stelco 34.5 37.8 44.6
• Dofasco 22.1 24.3 28.6
• Cliffs 7.0 22.8 26.8
• Acme Steel 13.8 15.1
• Inland Steel 13.8
• Finsider 8.9

4
WABUSHS OWNERSRECENT FINANCIAL PERFORMANCE
Both Stelco Cliffs have experienced very poor
financial performance until the 2Q of 2004
Notes Stelco and Dofasco amounts are in CDN
million, Stelco 2003 to 2001 results were
restated in 2004 Cliffs amountss are in US
million
5
REALITY

• Wabush Mines was no longer a cost centre in
  practice
• Owners were no longer willing to pay extra
  premium for the product that day is gone
• At the end of the day, steel companies walked
  away ex LTV, Algoma, ACME, Wheeling Pittsburgh
  from Cliffs properties
• Wabush Mines had to establish itself in the
  global market and become a world class competitor

6
WORLD IRON ORE INDUSTRYPRODUCTION BY COUNTRY
Notes Source US Geological Survey
7
SEABORNE IRON OREEXPORTERS
2003 Seaborne Iron Ore Market 530 million tons
Notes Source CRU International 2003 estimates
8
SEABORNE IRON OREIMPORTERS
2003 Seaborne Iron Ore Market 530 million tons
Notes Source CRU International 2003 estimates
9
SEABORNE IRON ORETRADE BY PRODUCT TYPE (2003)
DRI Pellets 5
Blast Furnace Pellets 10
Lump 21
Fines 64
Notes Source CRU International estimates Fines
include pellet feed
10
WORLD IRON ORE MARKETCAPACITY EXPANSION PLANS

• CVRD planned to add up to 90 MT of new capacity
  between 2004 and 2009.
• Rio Tinto had specific plans to bring on 51 MT of
  new capacity by 2006.
• BHP had 90 MT of new capacity under feasibility
  studies today.
• Smaller iron ore companies, other than the Big
  Three, were considering projects with the
  potential to produce another 200 MT over the next
  5 to 8 years.

Notes Source Company websites
11
WABUSH MINES CHALLENGES

• Needs to be involved in global market
• Must become cost competitive
• Must be more productive
• Must compensate for change in currency
• We must cope with demographics
• Needs a major culture change and change the way
  we do business

12
IMPACT OF CHANGE IN CANADIAN DOLLAR ON WABUSH
MINES

• Cnd US Exchange rate
• 2002 53.82 34.27 0.6368
• 2003 49.00 35.73 0.7165
• 2004 44.20 33.08 0.7500

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HOW DO WE MEET THE CHALLENGE?

• Good communication program
• Communicate the good and bad news
• Do it consistently
• Have an effective cost program
• Training
• Establish credibility do what you say youre
  going to do
• Accountability