Cliffs has agreed to binding terms with privately owned QCoal to invest over $100 million to construct a wash plant and acquire mining assets and rights at Sonoma.

 

Cliffs will operate and own 100% of the wash plant and 8.3% of the mining leases, resulting in a 45% economic interest in the project.

 

Subject to granting of the mining lease, on which the wash plant is to be located, closing is expected to occur before the end of the second quarter of 2007.

 

“Our interest in the Australian Sonoma Project is integral to our strategy of expanding Cliffs’ global presence. It diversifies our product offerings and provides Cliffs with another means of participating in the expanding Asian steel markets,” Cliffs CEO Joseph A Carrabba said.

 

The Sonoma Project is expected initially to produce 2 million tonnes of marketable coal each year, beginning late in 2007, with plans for annual production to increase to 3–4Mt during 2008.

 

The Cliffs Asia-Pacific business unit in Perth, Australia will oversee the company’s interest in the project.