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Amended Pellet Sale And Purchase Agreement

This is an actual contract between Cliffs Natural Resources and Mittal Steel USA.

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EXHIBIT 10(a)


CONFIDENTIAL TREATMENT
CLEVELAND-CLIFFS INC HAS REQUESTED THAT THE
MARKED PORTIONS OF THIS DOCUMENT BE ACCORDED
CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2
UNDER THE SECURITIES EXCHANGE ACT OF 1934


AMENDED AND RESTATED PELLET SALE AND PURCHASE AGREEMENT


THIS AGREEMENT, entered into, dated and effective as of May 17, 2004 ("Agreement"), by and among THE CLEVELAND-CLIFFS IRON COMPANY, an Ohio corporation ("Iron"), CLIFFS MINING COMPANY, a Delaware corporation ("Mining"), NORTHSHORE MINING COMPANY, a Delaware corporation ("Northshore"), CLIFFS SALES COMPANY, an Ohio corporation ("Sales"; Iron, Mining, Northshore and Sales being collectively referred to herein as "Cliffs"), INTERNATIONAL STEEL GROUP INC., a Delaware corporation ("ISG"), and ISG WEIRTON INC., a Delaware corporation ("ISG Weirton"; ISG, and ISG Weirton being collectively referred to herein as "Steel").


RECITALS


WHEREAS, Cliffs and Weirton Steel Corporation ("Weirton") are parties to that certain Pellet Sale and Purchase Agreement dated September 30, 1991 (the "Original Contract"), pursuant to which Cliffs provided Weirton with iron ore pellets in connection with Weirton's steel manufacturing and processing activities;


WHEREAS, on May 19, 2003, Weirton filed for protection under Chapter 11 of the United States Bankruptcy Code in the bankruptcy case styled In re: Weirton Steel Corporation, et al., case number 5:03-BK-1802 (the "Bankruptcy Case") in the United States Bankruptcy Court for the Northern District of West Virginia;


WHEREAS, at the time of the filing of the Bankruptcy Case, Cliffs and Cleveland-Cliffs Inc asserted a claim for Weirton's alleged default under the Original Contract in the amount of $1,010,996.82 (the "Cure Amount");


ISG WEIRTON AMD PELLET SALE


WHEREAS, in connection with the Bankruptcy Case, Steel has acquired substantially all of Weirton's assets, including an assignment by Weirton of the Original Contract pursuant to Section 365 of the United States Bankruptcy Code to Steel, which Steel has expressly agreed to assume;


WHEREAS, in order to secure the consent of Cliffs to the assignment by Weirton and the assumption by ISG of the Original Contract, Cliffs and Steel have entered into a certain letter agreement dated April 21, 2004, setting forth the terms and conditions by which the Cure Amount would be waived by Cliffs and the Original Contract would be amended; and


WHEREAS, Cliffs desires to continue to sell to Steel and Steel desires to continue to purchase from Cliffs certain quantities of grades of iron ore flux pellets and iron ore standard pellets as follows: (i) such grades of iron ore flux pellets being those produced at the Tilden Mining Company, L.C. iron ore pellet plant ("Tilden Pellets"), located in Tilden, Michigan; (ii) such grades of iron ore standard pellets being those produced at the Northshore Mining Company iron ore pellet plant ("Northshore Pellets"), located in Silver Bay, Minnesota; (iii) such grades of iron ore standard pellets being those produced at the Hibbing Taconite Company Joint Venture iron ore pellet plant ("Hibbing Pellets"), located in Hibbing, Minnesota; (iv) such grades of iron ore partially fluxed pellets produced at the United Taconite LLC iron ore pellet plant ("Utac Pellets"), located in Eveleth, Minnesota; or (iv) such other pellet grades as may be mutually agreed to by the parties hereto (such Tilden Pellets, Northshore Pellets, Hibbing Pellets, Utac Pellets and other mutually agreed upon pellets collectively being referred to herein


ISG WEIRTON AMD PELLET SALE


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CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.


as "Cliffs Pellets"), all upon the terms and subject to the conditions contained herein.


NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth, Cliffs and Steel agree as follows:


SECTION 1. - DEFINITIONS.


The terms quoted in the above parentheses of the first introductory paragraph of this Agreement and the WHEREAS clause, other terms quoted throughout this Agreement, and the terms defined below in this Section 1 shall have the meanings assigned to them for purposes of this Agreement. Attached as Appendix I to this Agreement is a locator list of all defined terms used throughout the Agreement.


(a). The words, "Steel's Annual Pellet Tonnage Requirements", as used herein, shall mean for the years 2004 and 2005, the greater of [****] of Steel's total annual iron ore pellet requirements, or [****] tons and, for the years 2006 through and including 2018, a tonnage amount equal to Steel's total annual iron ore pellet tonnage requirements, with a minimum annual purchase obligation of [****] tons per year, required for consumption in Steel's iron and steel making facilities in any year at ISG Weirton, located in Weirton, West Virginia ("Weirton Works"). The word "pellets", as used herein, shall mean iron-bearing products obtained by the pelletizing of iron ore or iron ore concentrates, suitable for making iron in blast furnaces.


(b). The word "ton", as used herein, shall mean a gross ton of 2,240 pounds avoirdupois natural weight.


ISG WEIRTON AMD PELLET SALE


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CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.


(c). The words "net ton", as used herein, shall mean a ton of 2,000 pounds avoirdupois natural weight.


(d). The word "year", as used herein, shall mean a calendar year commencing on January 1 and ending December 31.


SECTION 2. - SALE AND PURCHASE/TONNAGE.


During each of the years 2004 through 2018, and each year thereafter as long as this Agreement remains in effect, Cliffs shall sell and deliver to Steel and Steel shall purchase and receive from Cliffs and pay for a tonnage of Cliffs Pellets which tonnage shall be equal to Steel's Annual Pellet Tonnage Requirements for each such year.


SECTION 3. - PELLET GRADES; QUALITY


(a). For the years 2004 and 2005, the Cliffs Pellets shall consist of 100% Tilden Pellets. For the years 2006 and beyond, the Cliffs Pellets delivered hereunder shall be allocated [****] Tilden Pellets and [****] consisting of any combination, determined by Cliffs in its sole discretion, of Northshore Pellets, Hibbing Pellets or Utac Pellets.


(b). Cliffs Pellets when loaded for shipment will be consistent with the typical specifications and analysis limits set forth in Exhibit 1 to this Agreement.


(c). In the event the monthly average vessel analysis exceeds one standard deviation as set forth in Exhibit 1 to this Agreement, Cliffs will take such commercially reasonable actions as shall be necessary to achieve specification conformity. If specification conformity cannot be achieved, Steel and Cliffs shall


ISG WEIRTON AMD PELLET SALE


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negotiate in good faith to determine what actions or remedies, if any, are appropriate.


(d). If any two vessel shipments made during any calendar month have analysis that exceeds the analysis limits in the specifications set forth in Exhibit 1, Steel may refuse any subsequent vessel shipments during that calendar month, and Steel shall not be required to accept any subsequent shipments until Cliffs has taken action to remedy the non-conformity so that future shipments will be within the analysis limits. If more than two vessel shipments made during any calendar month have analysis that exceeds such limits, Cliffs and Steel shall negotiate an appropriate cost adjustment (if any) for the cargoes in excess of the first cargo that exceeded the analysis limits, based upon the additional costs (if any) to Steel associated with the quality specifications in the additional vessel shipments made during that calendar month that exceeded such analysis limits.


SECTION 4. - NOTIFICATION AND NOMINATION.


(a). With respect to the tonnage of Cliffs Pellets to be purchased by Steel for the year 2004, as provided in Section 2, on or before June 30, 2004 of the current year, Steel shall notify Cliffs in writing of Steel's preliminary tonnage of Steel's Annual Pellet Tonnage Requirements which Steel shall purchase from Cliffs. Such notification shall be in the form set forth in Exhibits 2A and 2B to this Agreement and shall include the following: (i) Steel's Annual Operating Plan for the Weirton Works for the balance of the current year detailed by months, as such Annual Operating Plan relates to Steel's planned monthly consumption of all pellets for such year at the Weirton Works; (ii) the tonnage of Cliffs Pellets which


ISG WEIRTON AMD PELLET SALE


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Steel expects to purchase in the current year from Cliffs for the Weirton Works; and (iii) Steel's planned monthly pellet consumption of all pellets for the first four months of the year 2005 at the Weirton Works.


(b). With respect to the tonnage of Cliffs Pellets to be purchased by Steel for the Weirton Works for each of the years 2005 through 2018, as provided in Section 2, on or before November 1 of each of the years prior to the years above, Steel shall notify Cliffs in writing of Steel's preliminary tonnage of Steel's Annual Pellet Tonnage Requirements which Steel shall purchase from Cliffs. Such notification shall be in the form set forth in Exhibits 2A and 2B to this Agreement and shall include the following: (i) Steel's Annual Operating Plan for the Weirton Works for the following year detailed by months, as such Annual Operating Plan relates to Steel's planned monthly consumption of all pellets for such year; (ii) the tonnage of Cliffs Pellets which Steel expects to purchase in the following year from Cliffs for the Weirton Works; (iii) Steel's expected total pellet inventory as of December 31 for the then current year; (iv) Steel's planned total pellet inventory on December 31 for the following year; and (v) Steel's planned monthly pellet consumption for the first four months of the year which succeeds the following year.


(c). With respect to the tonnage of Tilden Pellets, Northshore Pellets, Hibbing Pellets and Utac Pellets which Cliffs will have available for sale to Steel in 2006, on or before December 31, 2005, and in each succeeding year thereafter as provided for in Section 4(b) above, Cliffs shall notify Steel in writing as to the tonnage of Tilden Pellets, Northshore Pellets, Hibbing Pellets and Utac Pellets


ISG WEIRTON AMD PELLET SALE


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CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.


Cliffs shall sell to Steel, which tonnage shall equal Steel's Annual Pellet Tonnage Requirements for such year.


(d). [****]


(e). [****]


(f). [****]


SECTION 5. - PRICE, ADJUSTMENTS [**** ].


(a). The final year 2004 price for the Cliffs Pellets, either currently at or to be delivered to Pinney Dock located in Ashtabula, Ohio or Cleveland Bulk Terminal located in Cleveland, Ohio or other Lake Erie dock that Steel and Cliffs mutually agree to designate (collectively, the "Lower Lake Docks) shall be as follows: Tilden Pellets shall have a final year 2004 price of [****] per ton (which at the expected natural iron content of [****] for Tilden Pellets equals [****] per iron unit); Northshore Pellets shall have a final year 2004 price of [****] per ton (which at the expected natural iron content of [****] for Northshore Pellets equals [****] per iron unit); Hibbing Pellets shall have a final year 2004 price of [****] per ton (which at the expected natural iron content of [****] for Hibbing Pellets equals [****] per iron unit); and Utac Pellets shall have a final year 2004 price of [****] per ton (which at the expected natural iron content of [****] for Utac Pellets equals [****] per iron unit).


(b). The prices for the specific grades of Cliffs Pellets sold and purchased in each of the years 2005 and thereafter for the Weirton Works shall be based on the 2004 base prices per iron unit as described in Section 5(a) above


ISG WEIRTON AMD PELLET SALE


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CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.


("2004 Base Prices "), which 2004 Base Prices shall then be adjusted, up or down, in the year 2005 and each year thereafter by an amount as determined in accordance with Section 5(c) below.


(c). In order to determine the adjusted prices to be paid each year for the Cliffs Pellets, as provided for under Section 5(b) above, the 2004 Base Prices and each of the following respective year's then adjusted prices per iron unit shall be further adjusted, up or down, each year for the year in determination as follows:


(1) Divide (x) the numerator, which is the amount by which the
[****] for the calendar year in determination changes (up or
down) from the immediately preceding calendar year's [****];
by (y) the denominator, which is the immediately preceding
calendar year's [****], and multiply the result obtained by
[****]; and


(2) Divide (x) the numerator, which is the amount by which the
[****] for the calendar year in determination changes from
the immediately preceding calendar year's [****]; by (y) the
denominator, which is the immediately preceding calendar
year's [****], and multiply the result obtain by [****]; and


(3) Sum the results obtained in paragraphs (1) and (2) above and
multiply that total by [****]; and


(4) Multiply the results determined in (3) above by the preceding
year's adjusted prices per iron unit for the Weirton Works


ISG WEIRTON AMD PELLET SALE


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CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.


which will then equal the current year's price adjustment per
iron unit for the Weirton Works; and


(5) Add the result determined in (4) above to the preceding year's
adjusted price per iron unit for the Weirton Works, which will
then equal the current year's adjusted prices per iron unit
for the Weirton Works; and


(6) Multiply the result determined in (5) above by the current
year's expected natural iron content, which will then equal
the current year's estimated price per ton for the Weirton
Works.


Those adjusted prices per ton for the Weirton Works shall then become the contract's year estimated price for the Cliffs Pellets delivered to the Lower Lakes Docks for the year in determination.


(d). The price for all tons sold by Cliffs to Steel shall be based on actual natural iron content shipped.


(e). Attached as Exhibit 3 is an example of the adjustment formula applying the provisions of Sections 5(c) and 5(d).


(f). (i) [****]


(1) [****]


(2) [****]


(3) [****]


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CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.


(4) [****]


(5) Attached as Exhibits 3 and 4 are examples of the calculations
applying the provisions of Sections 5(f)(i).


(ii) In the event that in any year [****] annual total [****] are
less than [****] of [****] total annual [****], then Cliffs and
Steel agree to review the annual total [****] of ISG Cleveland, Inc.
("ISG Cleveland"). If the annual total [****] of ISG Cleveland for
that year are greater than or equal to [****] of ISG Cleveland's
total annual [****], then the provisions of Section 5(f)(i) shall
apply without further modification. If such [****] threshold is
still not satisfied, then Cliffs and Steel agree to substitute
another [****] which substituted [****] comprises an amount in
excess of [****] of [****] total annual [****] in order to determine
the [****]. The [****] and [****] which are used for the [****], as
provided for in Section 5(f)(i) above, shall be adjusted as follows:
(i) the actual average [****] of [****] substituted [****] from the
previous year, less (ii) the [****] from the previous year, (iii)
with the difference between (i) and (ii) above being added to both
the [****] and the [****] to determine the revised [****] for the
substituted [****] in order to determine the [****].


SECTION 6. - PAYMENTS AND ADJUSTMENTS.


(a). Cliffs shall invoice Steel for each shipment of Cliffs Pellets delivered to the Lower Lake Docks and payment for shipments of Cliffs Pellets shall be


ISG WEIRTON AMD PELLET SALE


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CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.


made via wire transfer no later than [****] following delivery of the Cliffs Pellets to the Lower Lake Docks.


(b). Prices for Cliffs Pellets shall be adjusted on a calendar quarterly basis based upon estimated and actual changes in the published indices specified in Section 5(c) ("Quarterly Price Adjustment"). Cliffs shall calculate the Quarterly Price Adjustment and provide Steel with such Quarterly Price Adjustment by the 15th day after the end of each calendar quarter, or on such later date as may be mutually agreed between Cliffs and Steel. Cliffs shall issue an invoice or credit memo, as the case may be, to Steel concurrently with the Quarterly Price Adjustment, and payment from Cliffs to Steel or Steel to Cliffs, as the case may be, shall be made by the 15th day following issuance of the invoice or credit memo, as the case may be.


(c). Following each contract year, final adjustments and payments shall be determined as follows:


(1) The final [****] shall be determined by [****] and verified in
detail in writing to [****] by an officer of [****], such
verification due no later than January 31 of the year
following a contract year, and payment from Cliffs to Steel or
Steel to Cliffs, as the case may be, shall be made by February
15 of that year; and


(2) The adjustment to the contract year's price identified
pursuant to Section 5(c) shall be made by [****] by May 15 of
the following year (using the most recent final estimate of
the


ISG WEIRTON AMD PELLET SALE


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CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.


[****] which shall be verified in writing by an officer of
[****]. Cliffs shall issue an invoice or credit memo, as the
case may be, to Steel, and payment from Cliffs to Steel or
Steel to Cliffs, as the case may be, shall be made by June 15
of that year.


(d). During the term of this Agreement, Cliffs shall have the right to conduct, at Cliff's expense, pellet stockpile surveys at the Weirton Works to verify (i) the tonnage of Cliffs Pellets which Steel has consumed and (ii) the tonnage of Cliffs Pellets currently owned by Cliffs in stockpile at the Weirton Works. In the event that the pellet stockpile survey results vary by more than [****] (above or below) from [****] (after taking into account actual iron units shipped versus actual iron units consumed), then Cliffs shall notify Steel and the parties shall make appropriate, mutually agreeable adjustments to Steel's preliminary nomination for the year issued pursuant to Section 4(b) of this Agreement.


(e). At their own expense, Cliffs and/or Steel shall have an annual right to have the information and calculations relating to the contract price, [*** *], and adjustments verified by an independent third party auditor. In the event Steel shall fail to make payment when due of all amounts, Cliffs, in addition to all other remedies available to Cliffs in law or in equity, shall have the right, but not the obligation, to withhold further performance by Cliffs under this Agreement until all claims Cliffs may have against Steel under this Agreement are fully satisfied.


(f). All payments shall be made in U.S. dollars.


SECTION 7. - SAMPLING AND ANALYSES.


ISG WEIRTON AMD PELLET SALE


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CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.


All pellet sampling procedures and analytical tests conducted on Cliffs Pellets sold to Steel to demonstrate compliance with typical specifications and analysis limits shall be performed on each pellet vessel shipment. Sample and test metho
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