Cliffs Natural Resources Inc (CLF) SEC Annual Report (10-K) for 2010

ceased to be published and asked the arbitration panel to either amend the agreement in this regard or require Algoma to enter into negotiations with Cliffs to amend the agreement. In a binding decision on December 17, 2010, the arbitration panel redefined world prices for blast furnace pellets, a factor used in determining annual price increases or decreases under the agreement. This revised definition entitled us to use an increase in excess of 95 percent over 2009 prices for seaborne blast furnace pellets in the agreement's pricing formula. On December 21, 2010, Algoma filed an application to vacate the award in the U.S. District Court for the Northern District of Ohio. On January 3, 2011, Algoma filed a complaint in the U.S. District Court, Northern District, Eastern Division of Ohio seeking to enjoin Cliffs from suspending performance if Algoma continued to pay the interim price agreed to in the Canadian litigation. The court denied Algoma's motion for a temporary restraining order. Algoma then agreed to pay a current price and a true-up payment based on the arbitration and to withdraw its motion for the injunctive relief in exchange for continued shipments. On January 6, 2011, we received $129 million in "true-up" payments from Algoma. Despite this cash payment, Algoma is maintaining a court application to vacate the arbitration award. We are vigorously contesting Alogma's motion to vacate the award and we have counterclaimed to confirm the award. Currently, Algoma's invoices are calculated pursuant to the arbitration panel's decision. On January 28, 2011, Cliffs filed three counterclaims against Algoma in the U.S. District Court for the Northern District of Ohio. The first counterclaim relates to the interpretation of a term used in the arbitration panel's award and seeks a declaratory judgment. The second counterclaim alleges that Algoma is obligated to pay the 2010 contract price for any pellets nominated for 2010, but not delivered until 2011, and seeks a declaratory judgment. The third counterclaim alleges that Algoma breached its contract with Cliffs by failing to take delivery in 2010 of the full amount of pellets that it nominated for 2010 and refusing to pay the 2010 price for any pellets not delivered until 2011 and seeks an award of damages.

KHD Humboldt Wedag International Ltd. ("KHD") .    On June 20, 2006, KHD and Cade Struktur Corporation ("Cade") submitted an arbitration notice, appointment of an arbitrator and request to appoint an arbitrator to the participants in Wabush in connection with a dispute over the calculation of royalties under the terms of an Amended and Consolidation of Mining Leases Agreement dated September 2, 1959, as amended, between Wabush Iron Co. Limited and Canadian Javelin Limited (a predecessor to KHD and Cade). KHD and Cade claimed that Wabush had underpaid royalties since 1991 and claimed underpayments in excess of C$21 million plus interest and costs. As part of the Wabush acquisition earlier this year, the agreement contains certain provisions that allow Cliffs to recover a portion of any liability from the former owners of Wabush. On May 28, 2010, the arbitration panel delivered a verdict wherein both parties were successful in various parts of the claim. The panel concluded that Cliffs was using the correct iron ore content of 63.5 percent and had fulfilled its fiduciary duties, but that certain portions of the royalty calculation were incorrectly tabulated. On October 8, 2010, approximately C$2.3 million was paid to the Newfoundland tax authority and approximately C$9.3 million was paid to KHD as a result of the misinterpretation of the royalty calculation from December 22, 1999. The amount owed in interest and costs remains outstanding before the arbitration panel. The hearing on interest and costs has been scheduled for March 1, 2011 through March 3, 2011.

Maritime Asbestos Litigation.     The Cleveland-Cliffs Iron Company and/or The Cleveland-Cliffs Steamship Company have been named defendants in 489 actions brought from 1986 to date by former seamen in which the plaintiffs claim damages under federal law for illnesses allegedly suffered as the result of exposure to airborne asbestos fibers while serving as crew members aboard the vessels previously owned or managed by our entities until the mid-1980s. All of these actions have been consolidated into multidistrict proceedings in the Eastern District of Pennsylvania, whose docket now includes a total of over 30,000 maritime cases filed by seamen against ship-owners and other defendants. All of these cases have been dismissed without prejudice, but could be reinstated upon application by plaintiffs' counsel. By a series of court orders, the court has been reinstating cases and dismissing other cases without prejudice. We are a defendant in 14 cases that have been reinstated and 34 cases that have been dismissed. The claims in the 14 reinstated cases involve allegations with respect to lung cancer, asbestosis and pleural changes of varying severity. The court entered an order on March 2, 2010, dismissing without prejudice, at the request of plaintiffs' counsel, the claims against the viable defendants in 7,405 cases. Separately, the cases that were reinstated have been placed in suspense pending further order of the court. In their place, plaintiffs' counsel are identifying approximately 4,000 cases that they wish to pursue, with the remaining cases to be dismissed subject to a tolling agreement, which remains under negotiation, and presented to the parties for approval. Currently, approximately 3,400 cases have been identified of which we are

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named the defendant in 68. The claims against our entities are insured in amounts that vary by policy year; however, the manner in which these retentions will be applied remains uncertain. Our entities continue to vigorously contest these claims and have made no settlements on them.

Pinnacle Mine Environmental Litigation.     On June 24, 2010, the West Virginia DEP filed a lawsuit against the Pinnacle Mine and other West Virginia coal mining operations alleging non-compliance with its NPDES discharge permit. The complaint alleges various exceedances of the permit's effluent quality limits and seeks injunctive relief and penalties. Pinnacle has responded denying the alleged violations and we are currently seeking a meeting with the DEP to clarify and resolve the suit. At this time, we do not believe this suit will have a material impact on the mine's operations.

The Rio Tinto Mine Site.     The Rio Tinto Mine Site is a historic underground copper mine located near Mountain City, Nevada, where tailings were placed in Mill Creek, a tributary to the Owyhee River. Site investigation and remediation work is being conducted in accordance with a Consent Order between the NDEP and the RTWG composed of Cliffs, Atlantic Richfield Company, Teck Cominco American Incorporated, and E. I. du Pont de Nemours and Company. The Consent Order provides for technical review by the U.S. Department of the Interior Bureau of Indian Affairs, the U.S. Fish & Wildlife Service, U.S. Department of Agriculture Forest Service, the NDEP and the Shoshone-Paiute Tribes of the Duck Valley Reservation (collectively, "Rio Tinto Trustees"). The Consent Order is currently projected to continue with the objective of supporting the selection of the final remedy for the site. As of December 31, 2010, the estimated costs of the available remediation alternatives currently range from approximately $10.0 million to $30.5 million in total for all potentially responsible parties. In recognition of the potential for an NRD claim, the parties actively pursued a global settlement that would include the EPA and encompass both the remedial action and the NRD issues.

On May 29, 2009, the RTWG entered into a Rio Tinto Mine Site Work and Cost Allocation Agreement (the "Allocation Agreement") to resolve differences over the allocation of any negotiated remedy. The Allocation Agreement contemplates that the RTWG will enter into an insured fixed-price cleanup agreement, or IFC, pursuant to which a contractor would assume responsibility for the implementation and funding of the remedy in exchange for a fixed price. We are obligated to fund 32.5 percent of the IFC. In the event an IFC is not implemented, the RTWG has agreed on allocation percentages in the Allocation Agreement, with Cliffs being committed to fund 32.5 percent of any remedy. We have a current reserve that we believe is adequate to fund our anticipated portion of the IFC. While a global settlement with the EPA has not been finalized, we expect an agreement will be reached in 2011.

United Taconite Air Emissions Matter.     On March 27, 2008, United Taconite received a DSA from the MPCA alleging various air emissions violations of the facility's air permit limit conditions, reporting and testing requirements. The allegations generally stem from procedures put in place prior to 2004 before our acquisition of our interest in the mine. The DSA requires the facility to install continuous emissions monitoring, evaluate compliance procedures, submit a plan to implement procedures to eliminate air deviations during the relevant time period, and proposes a civil penalty in an amount to be determined. While United Taconite does not agree with MPCA's allegations, United Taconite and the MPCA continue discussions on the matter with the intent of working toward a mutual resolution. In the second quarter of 2009, United Taconite satisfied various requirements of the DSA, including installation of continuous emission monitoring systems (CEMS) on furnace waste gas stacks, purchase of a new water truck, installation of improved dust collector controls, retirement of 1,160 tons of sulfur dioxide emission allowances, and payment of a $125,000 civil penalty. All outstanding stipulation agreement requirements have been completed except for the certification of the CEMS units. All the relevant units have been certified except the SO 2 monitor on Line 1, which will undergo certification when Line 1 switches to solid fuel in late 2011.

Wisconsin Electric Power Company Rate Cases .    On July 2, 2009, WEPCO filed a new rate case at the MPSC wherein WEPCO proposed to increase its rates for electric service. On August 18, 2009, the judge granted our petition to intervene in the new rate case. Testimony in the case was completed in early February 2010. On July 1, 2010, the MPSC approved new rates, effective on July 2, 2010, that were projected to increase Tilden and Empire's electric costs by approximately $14.4 million per year, or 13.6 percent, as compared to the rates that

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were in effect when the case was filed. Because WEPCO had self-implemented an interim rate increase in February 2010, the actual increase in rates beginning in July 2010 was much lower than 13.6 percent. Tilden and Empire's rates increased by approximately $2.5 million, or 2.1 percent, on an annual basis in July over the rates in effect since February 2010. On August 2, 2010, Tilden and Empire filed a petition for rehearing with respect to certain issues in the rate case. On October 14, 2010, the MPSC granted, in part, Tilden and Empire's petition for rehearing and directed that WEPCO's rates implemented in July 2010 be reduced. The rate reduction is projected to lower Tilden and Empire's annual electric costs by approximately $200,000 below the annual electric costs that Tilden and Empire would have incurred under the rates implemented in July. On November 12, 2010, Tilden and Empire filed a Claim of Appeal with the Michigan Court of Appeals raising two issues, which if decided favorably to the mines could further reduce the mines' annual electric costs. On December 28, 2010, the MPSC filed a motion for remand with the Court of Appeals requesting that the case be sent back to the MPSC for further clarification. It is expected that the Court of Appeals will rule on the motion for remand in February 2011. Assuming the motion is denied, a final decision from the Court of Appeals would be expected sometime during the middle of 2012.

Item 4.    (Removed and Reserved)

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PART II

Item 5.

Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Stock Exchange Information

Our common shares (ticker symbol CLF) are listed on the New York Stock Exchange and the Professional Segment of NYSE Euronext Paris.

Common Share Price Performance and Dividends

The following table sets forth, for the periods indicated, the high and low sales prices per common share as reported on the NYSE and the dividends declared per common share:

		2010												2009
		High				Low				Dividends				High				Low				Dividends
First Quarter		$	73.95			$	39.13			$	0.0875			$	32.48			$	11.80			$	0.0875
Second Quarter			76.17				46.40				0.1400				32.14				17.18				0.0400
Third Quarter			68.83				44.20				0.1400				35.57				19.44				0.0400
Fourth Quarter			80.40				61.93				0.1400				48.41				29.05				0.0875
Year			80.40				39.13			$	0.5075				48.41				11.80			$	0.2550

At February 14, 2011, we had 1,466 shareholders of record.

Shareholder Return Performance

The following graph shows changes over the past five-year period in the value of $100 invested in: (1) Cliffs' common shares; (2) S&P 500 Stock Index; (3) S&P 500 Steel Group Index; and (4) S&P Midcap 400 Index. The values of each investment are based on price change plus reinvestment of all dividends report to shareholders.

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				2005				2006				2007				2008				2009				2010
Cliffs Natural Resources Inc.		Return %							9.77				108.77				-48.90				81.92				70.69
		Cum $			100.00				109.77				229.16				117.11				213.05				363.65
S&P 500 Index - Total Returns		Return %							15.78				5.49				-36.99				26.47				15.07
		Cum $			100.00				115.78				122.14				76.96				97.33				111.99
S&P 500 Steel Index		Return %							80.26				21.72				-51.73				28.88				33.86
		Cum $			100.00				180.26				219.41				105.91				136.50				182.72
S&P Midcap 400 Index		Return %							10.31				7.97				-36.24				37.37				26.64
		Cum $			100.00				110.31				119.10				75.94				104.32				132.11

Issuer Purchases of Equity Securities

Period		Total Number of Shares (or Units) Purchased				Average Price Paid per Share (or Unit) $				Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs				Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet be Purchased Under the Plans or Programs (1)
October 1 - 31, 2010			-				-				-				2,495,400
November 1 - 30, 2010			-				-				-				2,495,400
December 1 - 31, 2010			-				-				-				2,495,400
Total			-				-				-				2,495,400

(1)	On July 11, 2006, we received the approval by the Board of Directors to repurchase up to an aggregate of four million common shares. There were no repurchases in the fourth quarter of 2010 under this program.

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Item 6.

Selected Financial Data.

Summary of Financial and Other Statistical Data

Cliffs Natural Resources Inc. and Subsidiaries

		2010 (e)				2009				2008 (b)				2007 (a)				2006
Financial data (in millions, except per share amounts and employees)
Revenue from product sales and services		$	4,682.2			$	2,342.0			$	3,609.1			$	2,275.2			$	1,921.7
Cost of goods sold and operating expenses			(3,158.7	)			(2,033.1	)			(2,449.4	)			(1,813.2	)			(1,507.7	)
Other operating expense			(258.5	)			(78.7	)			(220.8	)			(80.4	)			(48.3	)
Operating income			1,265.0				230.2				938.9				381.6				365.7
Income from continuing operations (f)			1,019.7				204.3				537.0				285.4				296.9
Income from discontinued operations			-				-				-				0.2				0.3
Net income			1,019.7				204.3				537.0				285.6				297.2
Less: Net income (loss) attributable to noncontrolling interest			(0.2	)			(0.8	)			21.2				15.6				17.1
Net income attributable to Cliffs shareholders			1,019.9				205.1				515.8				270.0				280.1
Preferred stock dividends			-				-				(1.1	)			(5.2	)			(5.6	)
Income attributable to Cliffs common shareholders			1,019.9				205.1				514.7				264.8				274.5
Earnings per common share attributable to Cliffs shareholders - basic (c)
Continuing operations			7.54				1.64				5.07				3.19				3.26
Discontinued operations			-				-				-				-				-
Earnings per common share attributable to Cliffs shareholders - basic (c)			7.54				1.64				5.07				3.19				3.26
Earnings per common share attributable to Cliffs shareholders - diluted (c)
Continuing operations			7.49				1.63				4.76				2.57				2.60
Discontinued operations			-				-				-				-				-
Earnings per common share attributable to Cliffs shareholders - diluted (c)			7.49				1.63				4.76				2.57				2.60
Total assets			7,778.2				4,639.3				4,111.1				3,075.8				1,939.7
Long-term obligations			1,881.3				644.3				580.2				490.9				47.2
Net cash from operating activities			1,320.0				185.7				853.2				288.9				428.5
Redeemable cumulative convertible perpetual preferred stock			-				-				0.2				134.7				172.3
Distributions to preferred shareholders cash dividends			-				-				1.1				5.5				5.6
Distributions to common shareholders cash dividends (d)
- Per share (c)			0.51				0.26				0.35				0.25				0.24
- Total			68.9				31.9				36.1				20.9				20.2
Repurchases of common shares			-				-				-				2.2				121.5
Iron ore and coal production and sales statistics (tons in millions - North America; metric tons in millions - Asia-Pacific)
Production tonnage - North American iron ore			32.0				19.6				35.2				34.6				33.6
- North American coal			3.2				1.7				3.5				1.1				-
- Asia Pacific iron ore			9.3				8.3				7.7				8.4				7.7
Production tonnage - North American iron ore (Cliffs' share)			25.4				17.1				22.9				21.8				20.8
Sales tonnage - North American iron ore			26.2				16.4				22.7				22.3				20.4
- North American coal			3.3				1.9				3.2				1.2				-
- Asia Pacific iron ore			9.3				8.5				7.8				8.1				7.4
Common shares outstanding - basic (millions) (c)
- Average for year			135.3				125.0				101.5				83.0				84.1
- At year-end			135.5				131.0				113.5				87.2				81.8

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(a)	On July 31, 2007, we completed the acquisition of Cliffs North American Coal LLC (formerly PinnOak), a producer of high-quality, low-volatile metallurgical coal. Results for 2007 include PinnOak's results since the acquisition.

(b)

On May 21, 2008, Portman authorized a tender offer to repurchase shares, and as a result, our ownership interest in Portman increased from 80.4 percent to 85.2 percent on June 24, 2008. On September 10, 2008, we announced an off-market takeover offer to acquire the remaining shares in Portman, which closed on November 3, 2008. We subsequently proceeded with a compulsory acquisition of the remaining shares and have full ownership of Portman as of December 31, 2008. Results for 2008 reflect the increase in our ownership of Portman since the date of each step acquisition.

(c)

On March 11, 2008, our Board of Directors declared a two-for-one stock split of our common shares. The record date for the stock split was May 1, 2008 with a distribution date of May 15, 2008. On May 9, 2006, our Board of Directors approved a two-for-one stock split of our common shares. The record date for the stock split was June 15, 2006 with a distribution date of June 30, 2006. Accordingly, all common shares and per share amounts for all periods presented have been adjusted retroactively to reflect the stock splits.

(d)

On May 12, 2009, our Board of Directors enacted a 55 percent reduction in our quarterly common share dividend to $0.04 from $0.0875 for the second and third quarters of 2009 in order to enhance financial flexibility. The $0.04 common share dividends were paid on June 1, 2009 and September 1, 2009 to shareholders of record as of May 22, 2009 and August 14, 2009, respectively. In the fourth quarter of 2009, the dividend was reinstated to its previous level. On May 11, 2010, our Board of Directors increased our quarterly common share dividend from $0.0875 to $0.14 per share. The increased cash dividend was paid on June 1, 2010, September 1, 2010, and December 1, 2010 to shareholders on record as of May 14, 2010, August 13, 2010, and November 19, 2010, respectively.

(e)

On January 27, 2010, we acquired all of the remaining outstanding shares of Freewest, including its interest in the Ring of Fire properties in Northern Ontario Canada. On February 1, 2010, we acquired entities from our former partners that held their respective interests in Wabush, thereby increasing our ownership interest from 26.8 percent to 100 percent. On July 30, 2010, we acquired all of the coal operations of privately-owned INR, and since that date, the operations acquired from INR have been conducted through our wholly-owned subsidiary known as CLCC. Results for 2010 include Freewest's, Wabush's and CLCC's results since the respective acquisition dates. As a result of acquiring the remaining ownership interest in Freewest and Wabush, our 2010 results were impacted by realized gains of $38.6 million primarily related to the increase in fair value of our previous ownership interest in each investment held prior to the business acquisition.

(f)

In December 2010, we completed a legal entity restructuring that resulted in a change to deferred tax liabilities of $78.0 million on certain foreign investments to a deferred tax asset of $9.4 million for tax basis in excess of book basis on foreign investments as of December 31, 2010. A valuation allowance of $9.4 million was recorded against this asset due to the uncertainty of realization. The deferred tax changes were recognized as a reduction to our income tax provision in 2010.

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Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations.

Overview

Cliffs Natural Resources Inc. traces its corporate history back to 1847. Today, we are an international mining and natural resources company. A member of the S&P 500 Index, we are the largest producer of iron ore pellets in North America, a major supplier of direct-shipping lump and fines iron ore out of Australia, and a significant producer of metallurgical coal. Our company's operations are organized according to product category and geographic location: North American Iron Ore; North American Coal; Asia Pacific Iron Ore: Asia Pacific Coal; Latin American Iron Ore; Alternative Energies; Ferroalloys; and our Global Exploration Group.

Over recent years, we have been executing a strategy designed to achieve scale in the mining industry and focused on serving the world's largest and fastest growing steel markets. In North America, we operate six iron ore mines in Michigan, Minnesota and Eastern Canada, five metallurgical coal mines located in West Virginia and Alabama and one thermal coal mine located in West Virginia. Our Asia Pacific operations are comprised of two iron ore mining complexes in Western Australia, serving the Asian iron ore markets with direct-shipping fines and lump ore, and a 45 percent economic interest in a coking and thermal coal mine located in Queensland, Australia. In Latin America, we have a 30 percent interest in Amapá, a Brazilian iron ore project, and in Ontario, Canada, we have recently acquired chromite properties. Our operations also include our 95 percent controlling interest in renewaFUEL located in Michigan. In addition, our Global Exploration Group was established in 2009 and is focused on early involvement in exploration activities to identify new world-class projects for future development or projects that add significant value to existing operations.

The strengthening recovery and improving outlook during 2010 was characterized by increased steel production, higher demand and rising prices. In 2010, global crude steel production, a significant driver of our business, was up approximately 15 percent from 2009 with even greater production increases in some areas, including North America, where the economy grew at an annual rate of nearly three percent during 2010. Steel production in China also remained strong, increasing 10.4 percent from 2009.

Consolidated revenues for 2010 increased to $4.7 billion, with net income per diluted share of $7.49. This compares with revenues of $2.3 billion and net income per diluted share of $1.63 in 2009. Based on the signs of marked improvement in customer demand, we increased production at all of our facilities in order to meet increases in demand. Higher sales volumes in North America during the year were attributable to increased sales of iron ore pellets, as well as metallurgical and thermal coal made available through our acquisitions of Wabush and CLCC during the first and third quarters of 2010, respectively. In Asia Pacific, the demand for steelmaking raw materials remained strong throughout 2010 primarily led by demand from China. Earlier in 2010, the world's largest iron ore producers moved away from the annual international benchmark pricing mechanism referenced in our customer supply agreements, resulting in a shift in the industry toward shorter-term pricing arrangements linked to the spot market. We finalized short-term pricing arrangements with our Asia Pacific Iron Ore customers and reached final pricing settlements with some of our North American customers through the fourth quarter of 2010 for the 2010 contract year, reflecting significant increases over 2009 prices. Although pricing has been settled with some of our North American customers for 2010, we are still in the process of assessing the impact a change to the historical annual pricing mechanism will have on certain of our larger existing North American Iron Ore customer supply agreements that extend over multiple years, and negotiations are still ongoing with these customers.

Results in 2010 reflect strong performance at our operations around the world and improved pricing for our products. Our strong cash flow generation and positive outlook for our business are allowing us to resume our focus on investments in our assets, which will enable us to continue to pursue strategic objectives and enhance our long-term operating performance, while also providing us with greater confidence and the ability to increase our cash payouts to shareholders. In May 2010, our Board of Directors increased our quarterly common share dividend from $0.0875 to $0.14 per share. We also continued to strengthen our balance sheet and enhance financial flexibility, including the completion of two public offerings of senior notes in the aggregate principal amount of $400 million and $1 billion in the first and third quarters of 2010, respectively. The net proceeds from

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these offerings have been used for the repayment of a portion of our debt obligations and have been or may be used for the funding of all or a portion of other strategic transactions and acquisitions, such as the pending acquisition of Consolidated Thompson for which a definitive arrangement agreement to acquire all of its common shares in an all-cash transaction was entered into in January 2011 and is subject to the satisfaction or waiver of various closing conditions.

Segments

We organize our business according to product category and geographic location: North American Iron Ore; North American Coal; Asia Pacific Iron Ore; Asia Pacific Coal; Latin American Iron Ore; Alternative Energies; Ferroalloys and Global Exploration Group. The Asia Pacific Coal, Latin American Iron Ore, Alternative Energies; Ferroalloys and Global Exploration Group operating segments do not meet reportable segment disclosure requirements and therefore are not separately reported.

The North American Iron Ore and North American Coal business segments are headquartered in Cleveland, Ohio. Our Asia Pacific headquarters is located in Perth, Australia, and our Latin American headquarters is located in Rio de Janeiro, Brazil. In addition, the Alternative Energies, Ferroalloys and Global Exploration Group operating segments are currently managed at our Cleveland, Ohio location. See NOTE 2 – SEGMENT REPORTING for further information.

Growth Strategy and Strategic Transactions

Throughout 2010, we continued to increase our operating scale and presence as an international mining and natural resources company by expanding both geographically and through the minerals we mine and market. The long-term outlook remains healthy and we are now focusing on our growth projects with sustained investment in our core businesses. Our growth in North America, as well as acquisitions in minerals outside of iron ore and coal, illustrate the execution of this strategy during 2010. We also expect to achieve growth through early involvement in exploration activities by partnering with junior mining companies, which provide us low-cost entry points for potentially significant reserve additions.

We continued our strategic growth and transformation to an international mining and natural resources company through the following transactions:

•

Acquisition of remaining interest in Freewest

•

Acquisition of remaining interest in Wabush

•

Acquisition of certain coal operations of privately-owned INR

•

Acquisition of Spider

We plan to continue to execute our strategy in 2011 through acquisitions such as the pending acquisition of Consolidated Thompson that was announced in January 2011 and is subject to the satisfaction or waiver of various closing conditions.

The Freewest, Wabush, CLCC, and Spider acquisitions allowed us to increase production capacity and add additional reserves at our North American Iron Ore and North American Coal businesses, gain additional access to the seaborne iron ore markets serving steelmakers in Europe and Asia, and further broaden our mineral and customer diversification. The agreement to acquire Consolidated Thompson will allow us to continue to build scale within our North American Iron Ore business through the acquired ownership of expandable and exportable steelmaking raw material assets serving international markets. Refer to Recent Developments within Item 1 - Business , for additional information regarding each of these strategic transactions.

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Results of Operations - Consolidated

2010 Compared to 2009

The following is a summary of our consolidated results of operations for 2010 compared with 2009:

		(In Millions)
		2010				2009				Variance Favorable/ (Unfavorable)
Revenues from product sales and services		$	4,682.2			$	2,342.0			$	2,340.2
Cost of goods sold and operating expenses			(3,158.7	)			(2,033.1	)			(1,125.6	)
Sales Margin		$	1,523.5			$	308.9			$	1,214.6
Sales Margin %			32.5	%			13.2	%			19.3	%

Revenue from Product Sales and Services

Sales revenue in 2010 increased $2.3 billion, or 100 percent from 2009. The increase in sales revenue was primarily due to higher sales volume and pricing related to our Asia Pacific and North American business operations. Sales volume increased 60 percent at North American Iron Ore in 2010 when compared to 2009, and sales volume for North American Coal was 75 percent higher than the prior year. Improving market conditions throughout 2010 led to increasing production in the North American steel industry, and in turn higher demand for iron ore and metallurgical coal. Higher sales volumes in 2010 were also attributable to increased sales of Wabush pellets, made available through our acquisition of full ownership of the mine during the first quarter of 2010, and increased sales of metallurgical and thermal coal, made available through our acquisition of CLCC during the third quarter of 2010.

Higher sales prices also contributed to the increase in our consolidated revenue for the year ended 2010. A recent shift in the industry toward shorter-term pricing arrangements that are linked to the spot market and elimination of the annual benchmark system caused us to reassess and, in some cases, renegotiate the terms of certain of our supply agreements, primarily with our North American Iron Ore and Asia Pacific Iron Ore customers. We renegotiated the terms of our supply agreements with our Chinese and Japanese Asia Pacific Iron Ore customers moving to shorter-term pricing mechanisms of various durations based on the average daily spot prices, with certain pricing mechanisms that have a duration of up to a quarter. This change was effective in the first quarter of 2010 for our Chinese customers and the second quarter of 2010 for our Japanese customers. The increase in 2010 pricing was on average an 87 percent and 98 percent increase for lump and fines, respectively. In North America, we reached final pricing settlement with some of our North American Iron Ore customers through the fourth quarter of 2010. The increase in 2010 pricing was an average increase of 98 percent over 2009 prices for contracts based on world pellet prices. Although pricing has been settled with some of our North American customers for 2010, for the 2010 contract year, we are still in the process of assessing the impact a change to the historical annual pricing mechanism will have on certain of our larger existing North American Iron Ore customer supply agreements that extend over multiple years, and negotiations are still ongoing with these customers.

Refer to "Results of Operations - Segment Information" for additional information regarding the impact of specific factors that impacted revenue during the period.

Cost of Goods Sold and Operating Expenses

Cost of goods sold and operating expenses was $3.2 billion in 2010, an increase of $1.1 billion, or 55 percent compared with 2009. The increase in 2010 was primarily attributable to higher costs at both our North American and Asia Pacific business operations as a result of higher sales volume, partially offset by lower idle expense at our North American businesses as a result of higher production levels in 2010 to meet increasing customer demand. Costs were also negatively impacted in 2010 by approximately $125.3 million related to unfavorable foreign exchange rates compared with the same period in 2009, $35.3 million of inventory step-up

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and amortization of purchase price adjustments related to the accounting for the acquisition of the remaining interest in Wabush and $143.3 million related to higher royalty expenses, maintenance and repairs spending, energy and labor rates and stripping and recovery costs at our North American Iron Ore operations.

Refer to "Results of Operations - Segment Information" for additional information regarding the impact of specific factors that impacted our operating results during the period.

Other Operating Income (Expense)

Following is a summary of other operating income (expense) for 2010 and 2009:

		(In Millions)
		2010				2009				Variance Favorable/ (Unfavorable)
Royalties and management fee revenue		$	12.1			$	4.8			$	7.3
Selling, general and administrative expenses			(238.0	)			(120.7	)			(117.3	)
Gain on sale of other assets - net			3.0				13.2				(10.2	)
Casualty recoveries			3.3				-				3.3
Miscellaneous - net			(38.9	)			24.0				(62.9	)
		$	(258.5	)		$	(78.7	)		$	(179.8	)

The increase in selling, general and administrative expense of $117.3 million in 2010 compared with 2009 was primarily due to higher compensation costs of $25.8 million, additional performance royalty expense for our investment in Sonoma of $26.3 million and various other costs totaling $19.7 million. These various other costs consisted of outside professional service costs associated with our current year acquisition activity and on-going arbitrations, higher insurance premiums and higher technology costs. We also incurred costs of $16.6 million related to our recently acquired Ferroalloys operating segment that were primarily comprised of feasibility study costs of $11 million, drilling costs of $1.6 million, and other administrative expenses of $1.6 million. In addition, we incurred $13.1 million in 2010 related to our involvement in exploration activities, as our Global Exploration Group focuses on identifying new world-class projects for future development or projects that are intended to add significant value to existing operations.

The prior year gain on sale of assets of $13.2 million primarily related to the Asia Pacific Iron Ore sale of its 50 percent interest in the Irvine Island iron ore project to its joint venture partner, Pluton Resources Limited ("Pluton Resources"). The consideration received consisted of a cash payment of approximately $5 million and the issuance of 19.4 million shares in Pluton Resources, all of which resulted in recognition of a gain on sale amounting to $12.1 million.

Miscellaneous - net losses of $38.9 million in 2010 primarily relate to foreign exchange losses on our Australian bank accounts that are denominated in U.S. dollars and short-term intercompany loans that are denominated in Australian dollars, as a result of the increase in exchange rates during the current year from A$0.90 at December 31, 2009 to A$1.02 at December 31, 2010. In the prior year, we had gains on foreign currency transactions related to loans denominated in Australian dollars, as a result of the increase in exchange rates during the period from A$0.69 at December 31, 2008 to A$0.90 at December 31, 2009.

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Other income (expense)

Following is a summary of other income (expense) for 2010 and 2009:

		(In Millions)
		2010				2009				Variance Favorable/ (Unfavorable)
Gain on acquisition of controlling interest		$	40.7			$	-			$	40.7
Changes in fair value of foreign currency contracts, net			39.8				85.7				(45.9	)
Interest income			9.9				10.8				(0.9	)
Interest expense			(69.7	)			(39.0	)			(30.7	)
Impairment of securities			(1.2	)			-				(1.2	)
Other non-operating income			13.7				2.9				10.8
		$	33.2			$	60.4			$	(27.2	)

As a result of acquiring the remaining ownership interests in Freewest and Wabush during the first quarter of 2010, our 2010 results were impacted by realized gains of $38.6 million primarily related to the increase in fair value of our previous ownership interest in each investment held prior to the business acquisition. The fair value of our previous 12.4 percent interest in Freewest was $27.4 million on January 27, 2010, the date of acquisition, resulting in a gain of $13.6 million being recognized in 2010. The fair value of our previous 26.8 percent equity interest in Wabush was $38.0 million on February 1, 2010, resulting in a gain of $25.0 million also being recognized in 2010. Refer to NOTE 5 – ACQUISITIONS AND OTHER INVESTMENTS for further information.

The impact of changes in the fair value of our foreign currency contracts held as economic hedges on the Statement of Consolidated Operations is due to fluctuations in foreign currency exchange rates during the year. The favorable changes in fair value of our foreign currency contracts of $39.8 million in 2010 relates to the Australian to U.S. dollar spot rate of A$1.02 as of December 31, 2010, which increased from the Australian to U.S. dollar spot rate of A$0.90 as of December 31, 2009. The changes in the spot rates are correlated to the appreciation of the Australian dollar relative to the U.S. dollar during the year. In addition, we entered into additional foreign exchange contracts during 2010 resulting in the notional amount of outstanding contracts in our foreign exchange hedge book increasing from $108.5 million at December 31, 2009 to $230.0 million at December 31, 2010. During 2010, approximately $228.5 million of outstanding contracts matured, resulting in a cumulative net realized gain of $12.2 million since inception of the contracts. The following table represents our foreign currency derivative contract position for contracts held as economic hedges as of December 31, 2010:

		($ in Millions)
Contract Maturity		Notional Amount				Weighted Average Exchange Rate				Spot Rate				Fair Value
Contract Portfolio (excluding AUD Call Options) (1):
Contracts expiring in the next 12 months		$	205.0				0.86				1.02			$	32.3
Contracts expiring in the next 13 to 24 months			15.0				0.86				1.02				2.0
Total		$	220.0				0.86				1.02			$	34.3
AUD Call Options (2)
Contracts expiring in the next 12 months		$	10.0				0.85				1.02			$	1.9
Total		$	10.0				0.85				1.02			$	1.9
Total Hedge Contract Portfolio		$	230.0											$	36.2

(1)	Includes collar options and convertible collar options.

(2)	AUD call options are excluded from the weighted average exchange rate used for the remainder of the contract portfolio due to the unlimited downside participation associated with these instruments.

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The increase in interest expense in 2010 compared with 2009 is attributable to the completion of two public offerings of senior notes during the year. In the first quarter of 2010, we completed a $400 million public offering of 10-year senior notes at a 5.90 percent fixed interest rate. In addition, a $1 billion public offering of senior notes was completed in the third quarter of 2010 consisting of two tranches; a $500 million 10-year tranche at a 4.80 percent fixed interest rate and a $500 million 30-year tranche at a 6.25 percent fixed interest rate. See NOTE 8 - DEBT AND CREDIT FACILITIES for further information.

Income Taxes

Our tax rate is affected by recurring items, such as depletion and tax rates in foreign jurisdictions and the relative amount of income we earn in our various jurisdictions. It is also affected by discrete items that may occur in any given year, but are not consistent from year to year. The following represents a summary of our tax provision and corresponding effective rates for the years ended December 31, 2010 and 2009:

		(In Millions)
		2010				2009
Income tax expense		$	292.0			$	20.8
Effective tax rate			22.5	%			7.2	%

A reconciliation of the statutory tax rate to the effective tax rate for the years ended December 31, 2010 and 2009 is as follows:

		2010				2009
U.S. statutory rate			35.0	%			35.0	%
Increases/(Decreases) due to:
Percentage depletion			(7.9	)			(11.6	)
Impact of foreign operations			(6.9	)			(9.1	)
Valuation allowance			6.6				11.9
Other items - net			1.0				0.4
Effective income tax rate before discrete items			27.8				26.6
Discrete items			(5.3	)			(19.4	)
Effective income tax rate			22.5	%			7.2	%

Our tax provision for the years ended December 31, 2010 and 2009 was $292.0 million, for a 22.5 percent effective tax rate, and $20.8 million, for a 7.2 percent effective tax rate, respectively. The difference in the effective tax rate for 2010 compared with 2009 is primarily a result of discrete items that occurred during the year, as discussed below.

The PPACA and the Reconciliation Act were signed into law in March 2010. As a result of these two acts, tax benefits available to employers that receive the Medicare Part D subsidy are reduced beginning in years ending after December 31, 2012. The income tax effect related to the acts for year ended 2010 was an increase to expense, recorded discretely, of $16.1 million, representing approximately 1.2 percent of the effective tax rate. The amount recorded is related to the postretirement prescription drug benefits computed after the elimination of the deduction for the Medicare Part D subsidy beginning in taxable years ending after December 31, 2012.

Discrete items other than the expense resulting from the acts signed into law in March 2010, related legal entity restructuring, prior year U.S. and foreign provision benefits recognized in 2010 and interest expense related to unrecognized tax benefits. Discrete items for 2009 related to the benefits associated with the settlement of tax audits and filings for prior years.

The valuation allowance of $172.7 million against certain deferred tax assets as of December 31, 2010 relates primarily to ordinary losses of certain foreign operations.

See NOTE 13 - INCOME TAXES for further information.

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Equity Income (Loss) in Ventures

Equity income (loss) in ventures is primarily comprised of our share of the results from Amapá and AusQuest, for which we have a 30 percent ownership interest in each. The equity income in ventures for the year ended December 31, 2010 of $13.5 million primarily represents our share of the operating results of our equity method investment in Amapá. Such results consisted of income of $17.2 million. During 2010, we recorded income of $12.9 million related to the reversal of certain accruals. In addition, during the second quarter of 2010, Amapá repaid its total project debt outstanding, for which we provided a several guarantee on our 30 percent share. Upon repayment of the project debt, our obligations under the provisions of the guarantee arrangement were relieved, and our estimate of the aggregate fair value of the outstanding guarantee of $6.7 million was reversed through Equity income (loss) from ventures for year ended December 31, 2010. Apart from the reversal of the debt guarantee and the reversal of certain accruals, our investment in Amapá realized nearly break-even operating results. This compares with equity losses related to Amapá of $62.2 million in 2009. The negative operating results in the prior year were primarily due to slower than anticipated ramp-up of operations and product yields.

2009 Compared to 2008

The following is a summary of our consolidated results of operations for 2009 compared with 2008:

		(In Millions)
		2009				2008				Variance Favorable/ (Unfavorable)
Revenues from product sales and services		$	2,342.0			$	3,609.1			$	(1,267.1	)
Cost of goods sold and operating expenses			(2,033.1	)			(2,449.4	)			416.3
Sales Margin		$	308.9			$	1,159.7			$	(850.8	)
Sales Margin %			13.2	%			32.1	%			-18.9	%

Revenue from Product Sales and Services

Sales revenue in 2009 declined $1.3 billion, or 35 percent from 2008. The decrease in sales revenue was primarily due to lower sales volumes related to our North American business operations as a result of the volatility and uncertainty in global markets throughout much of 2009, which led to production slowdowns in the North American steel industry, and in turn reduced demand for iron ore and metallurgical coal. In addition, the global economic crisis resulted in a great deal of pressure from customers, particularly in China, for a roll back of the 2008 price increases for seaborne iron ore and metallurgical coal in 2009. We experienced a reduction in 2009 pricing at each of our business units, thereby contributing to lower revenue levels during the year.

As a result of the deteriorating market conditions that continued throughout much of 2009, revenues related to our North American Iron Ore and Coal segments decreased approximately $921.8 million and $139.1 million, respectively, compared with 2008. Based upon the economic downturn and the resulting impact on demand, sales volumes in 2009 declined approximately 28 percent at North American Iron Ore. North American Coal experienced a decrease in volume of 42 percent year over year. Revenues in 2009 were also negatively impacted by base rate adjustments related to reductions in World Pellet Pricing and producer price indices referenced in certain of our North American Iron Ore contracts as well as the estimated decline in average annual hot band steel pricing for one of our North American Iron Ore customers.

Revenues from our Asia Pacific operations were negatively impacted by the decline in 2009 iron ore prices caused by lower demand for steel worldwide. As a result, revenues at Asia Pacific Iron Ore in 2009 declined 30 percent from 2008. Pricing decreases in 2009 contrasted with settled price increases in 2008 of 97 percent and 80 percent for lump and fines, respectively. The overall decline in 2009 revenue at Asia Pacific Iron Ore was partially offset by positive sales mix and a 9 percent increase in sales volume as a result of increased demand from China.

Refer to "Results of Operations - Segment Information" for additional information regarding the impact of specific factors that impacted revenue during the period.

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Cost of Goods Sold and Operating Expenses

Cost of goods sold was $2.0 billion in 2009, a decrease of $416.3 million, or 17 percent compared with 2008. The decrease was primarily attributable to lower costs at our North American business operations as a result of declines in sales volume and cost reductions during the year related to ongoing cash conservation efforts that were reinforced in light of the economic environment. Costs were also favorably impacted in 2009 by approximately $35.2 million related to favorable foreign exchange rates compared with 2008. In addition, year-to-date fuel and energy costs in our North American and Asia Pacific iron ore operations for 2009 decreased approximately $71.6 million from 2008.

The overall decrease in cost of goods in 2009 was partially offset by idle expense of approximately $159.6 million related to production curtailments in North America throughout the year. In addition, costs in 2009 reflected the impact of the Asia Pacific Iron Ore and United Taconite step acquisitions, which occurred in the second half of 2008.

Refer to "Results of Operations - Segment Information" for additional information regarding the impact of specific factors that impacted our operating results during the period.

Other Operating Income (Expense)

Following is a summary of other operating income (expense) for 2009 and 2008:

		(In Millions)
		2009				2008				Variance Favorable/ (Unfavorable)
Royalties and management fee revenue		$	4.8			$	21.7			$	(16.9	)
Selling, general and administrative expenses			(120.7	)			(188.6	)			67.9
Terminated acquisition costs			-				(90.1	)			90.1
Gain on sale of other assets - net			13.2				22.8				(9.6	)
Casualty recoveries			-				10.5				(10.5	)
Miscellaneous - net			24.0				2.9				21.1
		$	(78.7	)		$	(220.8	)		$	142.1

The decrease in royalties and management fee revenue of $16.9 million in 2009 compared with 2008 was primarily attributable to lower production at our iron ore mines and reduced sales prices. Additionally, we received all of Tilden's production in 2009. Therefore, the remaining venture partner at Tilden was not required to pay us the resulting royalty for its share of tons mined and produced from the ore reserves owned by Cliffs.

The decrease in selling, general and administrative expense of $67.9 million in 2009 compared with 2008 was primarily the result of an increased focus on cost reduction efforts due to the economic conditions during the year. In particular, outside professional service and legal fees associated with the expansion of our business declined approximately $38.4 million during 2009. Additionally, employment costs were reduced by $26.2 million primarily as a result of lower share-based and incentive compensation. Expenses at our Asia Pacific Iron Ore segment were $6.2 million higher in 2009 when compared with 2008, reflecting an increased focus on marketing activities due to the weakening economic climate, as well as higher employment costs and outside professional services to support business development and improvement efforts. In addition, selling, general and administrative expense in 2008 was impacted by a charge in the first quarter of approximately $6.8 million in connection with a legal judgment.

On November 17, 2008, we announced the termination of the definitive merger agreement with Alpha Natural Resources, Inc., under which we would have acquired all outstanding shares of Alpha. Both our Board of Directors and Alpha's Board of Directors made the decision after considering various issues, including the macroeconomic environment, uncertainty in the steel industry, shareholder dynamics, and the risks and costs of potential litigation. Considering these issues, each board determined that termination of the merger agreement was in the best interest of its equity holders. Under the terms of the settlement agreement, we were required to

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pay Alpha a $70 million termination fee, which was financed through our revolving credit facility and paid in November 2008. As a result, $90.1 million in termination fees and associated acquisition costs were expensed in the fourth quarter of 2008 upon termination of the definitive merger agreement.

In October 2009, Asia Pacific Iron Ore completed the sale of its 50 percent interest in the Irvine Island iron ore project to its joint venture partner, Pluton Resources. The consideration received consisted of a cash payment of approximately $5 million and the issuance of 19.4 million shares in Pluton Resources, all of which resulted in recognition of a gain on sale amounting to $12.1 million. Our interest in Pluton Resources was approximately 12.5 percent at December 31, 2009. The gain on sale of assets of $22.8 million in 2008 primarily related to the sale of Cliffs Synfuel Corp. ("Synfuel"), which was completed in June 2008.

Casualty recoveries in 2008 were primarily attributable to a $9.2 million insurance recovery related to a 2006 electrical explosion at our United Taconite facility.

Miscellaneous - net of $24.0 million in 2009 was primarily attributable to exchange rate gains on foreign currency transactions related to loans denominated in Australian dollars, as a result of the increase in exchange rates during the period from A$0.69 at December 31, 2008 to A$0.90 at December 31, 2009.

Other income (expense)

Following is a summary of other income (expense) for 2009 and 2008:

		(In Millions)
		2009				2008				Variance Favorable/ (Unfavorable)
Changes in fair value of foreign currency contracts, net		$	85.7			$	(188.2	)		$	273.9
Interest income			10.8				26.2				(15.4	)
Interest expense			(39.0	)			(39.8	)			0.8
Impairment of securities			-				(25.1	)			25.1
Other non-operating income			2.9				4.3				(1.4	)
		$	60.4			$	(222.6	)		$	283.0

The impact of changes in the fair value of our foreign currency contracts on the Statement of Consolidated Operations was due to fluctuations in foreign currency exchange rates during the year. The favorable unrealized mark-to-market fluctuation of $85.7 million in 2009 related to the Australian to U.S. dollar spot rate of A$0.90 as of December 31, 2009, which increased considerably from the Australian to U.S. dollar spot rate of A$0.69 as of December 31, 2008. The changes in the spot rates were correlated to the appreciation of the Australian dollar relative to the U.S. dollar during the year. During 2009, approximately $780 million of outstanding contracts matured or were sold, resulting in a cumulative net realized loss of $37.0 million since inception of the contracts. The following table represents our foreign currency derivative contract position as of December 31, 2009:

		($ in Millions)
Contract Maturity		Notional Amount				Weighted Average Exchange Rate				Spot Rate				Fair Value
Contract Portfolio (excluding AUD Call Options) (1):
Contracts expiring in the next 12 months		$	33.0				0.82				0.90			$	0.9
Total		$	33.0				0.82				0.90			$	0.9
AUD Call Options (2)
Contracts expiring in the next 12 months		$	75.5				0.88				0.90			$	3.3
Total		$	75.5				0.88				0.90			$	3.3
Total Hedge Contract Portfolio		$	108.5											$	4.2

(1)	Includes collar options and convertible collar options.

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(2)	AUD call options are excluded from the weighted average exchange rate used for the remainder of the contract portfolio due to the unlimited downside participation associated with these instruments.

The decrease in interest income in 2009 compared with 2008 was attributable to a decline in interest-bearing cash and investments held during the period coupled with lower overall average returns. Investment returns in 2009 were lower as a result of market declines. The slight decrease in interest expense in 2009 was primarily due to lower average interest rates on total debt outstanding of 4.48 percent at December 31, 2009, compared with 5.85 percent at December 31, 2008, partially offset by an increase in the period outstanding related to borrowings under our senior notes. Higher interest expense in 2008 also reflected interest accretion for the deferred payment related to the PinnOak acquisition. See NOTE 8 – DEBT AND CREDIT FACILITIES for further information.

In 2008, we recorded impairment charges of $25.1 million related to declines in the fair value of our available-for-sale securities which we concluded were other than temporary. As of December 31, 2008, our investments in PolyMet and Golden West had fair values totaling $6.2 million and $4.7 million, respectively, compared with a cost of $14.2 million and $21.8 million, respectively. The severity of the impairments in relation to the carrying amounts of the individual investments was consistent with the macroeconomic market and industry developments during 2008. However, we evaluated the near-term prospects of the issuers in relation to the severity and rapid decline in the fair value of each of these investments, and based upon that evaluation, we could not reasonably assert that the impairment period would be temporary primarily as a result of the global economic crisis and the corresponding uncertainties in the market.

Income Taxes

Our tax rate is affected by recurring items, such as depletion and tax rates in foreign jurisdictions and the relative amount of income we earn in our various jurisdictions. It is also affected by discrete items that may occur in any given year, but are not consistent from year to year. The following represents a summary of our tax provision and corresponding effective rates for the years ended December 31, 2009 and 2008:

		(In Millions)
		2009				2008
Income tax expense		$	20.8			$	144.2
Effective tax rate			7.2	%			20.1	%

Our tax provision for the years ended December 31, 2009 and 2008 was $20.8 million and $144.2 million, respectively. The $123.4 million decrease in income tax expense and 12.9 percent decrease in the effective tax rate were primarily attributable to lower pre-tax book income and increased benefits from certain discrete items, partially offset by increased valuation allowances. Discrete items in 2009 related to benefits associated with the settlement of tax audits and filings for prior years. We had a $39.0 million increase in the valuation allowance of certain deferred tax assets. Of this amount, $24.5 million related to certain foreign operating losses and $14.5 million related to certain foreign assets where tax basis exceeded book basis.

A reconciliation of the statutory tax rate to the effective tax rate for the years ended December 31, 2009 and 2008 is as follows:

		2009				2008
U.S. statutory rate			35.0	%			35.0	%
Increases/(Decreases) due to:
Percentage depletion			(11.6	)			(11.9	)
Impact of foreign operations			(9.1	)			(2.1	)
Valuation allowance			11.9				1.6
Other items - net			0.4				(0.6	)
Effective income tax rate before discrete items			26.6				22.0
Discrete items			(19.4	)			(1.9	)
Effective income tax rate			7.2	%			20.1	%

See NOTE 13 - INCOME TAXES for further information.

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Equity Loss in Ventures

Equity loss in ventures is primarily comprised of our share of the results from Amapá and AusQuest, for which we have a 30 percent ownership interest in each. The equity loss in ventures for the year ended December 31, 2009 of $65.5 million primarily represented our share of the operating results of our equity method investment in Amapá. Such results consisted of operating losses of $62.2 million. Results in 2008 mainly consisted of operating losses of $45.6 million, partially offset by foreign currency hedge gains of $10.5 million. The negative operating results in each year were primarily due to slower than anticipated ramp-up of operations and product yields. Our equity share of the losses for Amapá was also higher in 2009 due to a write-down in the value of inventory, asset impairment charges, as well as changes in foreign currency exchange rates during 2009 and the resulting impact on project debt denominated in Brazilian real.

Noncontrolling Interest

Noncontrolling interest in consolidated income was a loss of $0.8 million in 2009 compared with income of $21.2 million in 2008. The change was primarily attributable to the acquisition of the remaining 19.6 percent interest in Asia Pacific Iron Ore (formerly known as Portman Limited) during 2008, thereby eliminating the related noncontrolling interests in 2009.

Results of Operations - Segment Information

Our company is organized and managed according to product category and geographic location. Segment information reflects our strategic business units, which are organized to meet customer requirements and global competition. We evaluate segment performance based on sales margin, defined as revenues less cost of goods sold identifiable to each segment. This measure of operating performance is an effective measurement as we focus on reducing production costs throughout the Company.

2010 Compared to 2009

North American Iron Ore

Following is a summary of North American Iron Ore results for 2010 and 2009:

		(In Millions)
										Change due to
		2010				2009				Rate				Volume				Idle cost/ Production volume variance				Freight and reimbursements				Total change
Revenues from product sales and services		$	2,921.4			$	1,447.8			$	549.0			$	794.9			$	-			$	129.7			$	1,473.6
Cost of goods sold and operating expense			(1,999.4	)			(1,172.3	)			(244.4	)			(534.9	)			81.9				(129.7	)			(827.1	)
Sales margin		$	922.0			$	275.5			$	304.6			$	260.0			$	81.9			$	-			$	646.5
Sales tons			26.2				16.4
Production tons (1):
Total			32.0				19.6
Cliffs' share of total			25.4				17.1	(2)

(1)	Long tons of pellets (2,240 pounds).

(2)	Includes 1.6 million tons allocated to Cliffs due to re-nominations by Cliffs' partners at Tilden and Wabush.

Sales margin for North American Iron Ore was $922.0 million in 2010, compared with a sales margin of $275.5 million in 2009. The improvement over 2009 is attributable to an increase in revenue of $1.5 billion, partially offset by an increase in cost of goods sold and operating expenses of $827.1 million. The increase in revenue is a result of improvements in both rate and sales volumes, which caused revenue to increase $549.0

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million and $794.9 million, respectively, over 2009 results. Sales volumes for 2010 increased 60 percent at North American Iron Ore when compared to the prior year primarily due to an overall increase in customer demand as a result of improving market conditions during 2010 and incremental sales of 1.2 million tons of Wabush pellets that were made available through our acquisition of the remaining 73.2 percent interest in February 2010.

The increase in pricing in 2010 is attributable to higher demand in 2010 as the market continued to strengthen. There has been a recent shift in the industry toward shorter-term pricing arrangements that are linked to the spot market and elimination of the annual world pellet pricing mechanism referenced in certain of our supply contracts. We reached final pricing settlement with some of our North American Iron Ore customers through the fourth quarter of 2010 for the 2010 contract year, reflecting an average increase of 98 percent over 2009 prices for contracts based on world pellet prices. This compares to the prior year settled price decrease of 48.3 percent below 2008 prices. Although pricing has been settled with some of our North American customers for 2010, we are still in the process of assessing the impact a change to the historical annual pricing mechanism will have on certain of our larger existing North American Iron Ore customer supply agreements that extend over multiple years, and negotiations are still ongoing with these customers. In addition, 2010 sales rates were positively impacted by a favorable sales mix of seaborne shipments at higher average sales rates due to the incremental tonnage available through our acquisition of the remaining interest in Wabush. Revenue in 2010 also included $120.2 million related to supplemental contract payments compared with $22.2 million in 2009. The overall increase between years relates to the estimated rise in average annual hot band steel pricing for one of our North American Iron Ore customers. The increase in revenue was partially offset by lower prices realized for sales under one of our customer supply agreements that is currently in arbitration. Given the early stage of the arbitration, as discussed below, and the uncertainty regarding its outcome as of December 31, 2010, the prices realized for sales under this contract in 2010 do not reflect the estimated increase in 2010 iron ore pricing.

Throughout 2010, we have been party to two arbitration demands that were filed in relation to the pricing provisions referenced in the supply contracts for two of our largest customers. One arbitration relates to amendments of the supply contracts made necessary by changes in the world pellet pricing mechanism in 2010, specifically the move away from annual benchmark prices. In December 2010, a binding decision was reached by the arbitration panel that redefined world prices for blast furnace pellets, a factor used in determining annual price increases or decreases under the agreement. Although we received a $129 million settlement payment from the customer in January 2011, the customer is maintaining a court application to vacate the arbitration award. We are vigorously contesting the customer's motion to vacate the award and we have counterclaimed to confirm the award. Currently, invoices and revenue are calculated pursuant to the arbitration panel's decision. The other arbitration relates to a price reopener provision in the customer supply agreement and whether we are entitled to such a reopener for 2010. We are currently awaiting a ruling from the arbitration panel; however, we expect that we may collect approximately $300 million related to this arbitration in 2011. The outcome of such arbitrations may result in changes to the pricing mechanisms used and therefore, could impact sales prices realized in current and future periods. Refer to Part I - Item 3. Legal Proceedings , for additional information.

In 2010 and 2009, certain customers purchased and paid for approximately 2.4 million tons and 0.9 million tons of pellets, respectively, in order to meet minimum contractual purchase requirements for each year under the terms of take-or-pay contracts. The inventory was stored at our facilities in upper lakes stockpiles. At the request of the customers, the ore was not shipped, resulting in deferred revenue at December 31, 2010 and 2009 of $155.3 million and $81.9 million, respectively. As of December 31, 2010, all of the 0.9 million tons that were deferred at the end of 2009 were delivered, resulting in the related revenue being recognized in 2010.

Cost of goods sold and operating expense in 2010 increased $827.1 million or 71 percent from the prior year primarily due to higher sales volumes as noted above, which resulted in cost increases of approximately $534.9 million. In addition, cost of goods sold and operating expenses were unfavorably impacted during the current year by $244.4 million due to higher cost rates. The increase was attributable to higher maintenance and repairs costs of $57.6 million, higher energy and labor costs of $49.0 million, unfavorable exchange rate variances of $44.0 million, higher stripping and recovery costs of $20.2 million, and higher royalty expenses of $16.5 million. Costs also increased during 2010 due to $35.3 million of inventory step-up and amortization of purchase price adjustments related to our acquisition of Wabush. Approximately $10.7 of the inventory step-up was recognized

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in the first quarter of 2010 and was associated with the pelletizing and sale of acquired in-process inventory that occurred during that period in conjunction with our acquisition of the remaining interest in Wabush. As such, the expense will not be recurring at this level in the future. The overall increase in cost was partially offset by $81.9 million related to lower idle expense due to increased production as a result of improving market conditions in the current year.

Production

Based on signs of marked improvements in customer demand that continued throughout 2010, we increased production at all of our facilities and called employees back to work in order to ensure that we were positioned to meet increases in demand. During 2010, Empire, Tilden and United Taconite were operating at full capacity. Northshore was operating three of its furnaces, with the fourth restarted in September. Wabush was operating two of its three furnaces with Cliffs taking all of the tonnage since acquiring full ownership on February 1, 2010. The shutdown at Hibbing, which began in May 2009, ended April 1, 2010.

Prior year production levels were impacted by production curtailments and temporary facility shutdowns, which were executed in response to the economic downturn and production slowdowns in the steel industry.

North American Coal

Following is a summary of North American Coal results for 2010 and 2009:

		(In Millions, except tonnage)
										Change due to
		2010 (1)				2009				Rate				Volume				CLCC acquisition				Idle cost/ Production volume variance				Freight and reimbursements				Total change
Revenues from product sales and services		$	438.2			$	207.2			$	82.9			$	31.7			$	111.7			$	-			$	4.7			$	231.0
Cost of goods sold and operating expenses			(466.8	)			(279.1	)			(57.1	)			(36.2	)			(98.3	)			8.6				(4.7	)			(187.7	)
Sales margin		$	(28.6	)		$	(71.9	)		$	25.8			$	(4.5	)		$	13.4			$	8.6			$	-			$	43.3
Sales tons (in thousands)			3,284				1,874
Production tons (in thousands) (2)			3,245				1,741

(1)	Results include CLCC since the July 30, 2010 acquistion date.

(2)	Tons are short tons (2,000 pounds).

We reported a sales margin loss for North American Coal of $28.6 million and $71.9 million for the years ended December 31, 2010 and 2009, respectively. Revenue for 2010 was $231.0 million higher than 2009 due to increases in both sales volume and prices. North American Coal sold 3.3 million tons during 2010 compared with 1.9 million tons during 2009, as a result of improving market conditions in 2010 and 1,072 thousand tons of additional sales since the third quarter 2010 acquisition of CLCC. The increase in North American Coal sales volume resulted in an increase in revenues of $143.4 million over the prior year, of which $111.7 million was related to the acquisition of CLCC. Sales prices were also higher during 2010, reflecting increases in steel demand and the associated raw material prices. The increase in our 2010 contract rates caused revenue for 2010 to increase $82.9 million over the prior year.

Cost of goods sold and operating expense in 2010 increased $187.7 million or 67 percent from the prior year primarily due to the significant increase in sales volume, which resulted in a cost increase of approximately $134.5 million. Of this amount, $98.3 million was attributable to the acquisition of CLCC. The increase in cost of goods sold and operating expenses during the year was also a result of increased costs primarily due to a lower-of-cost-or-market inventory charge of $26.1 million taken at our Pinnacle and Oak Grove mines as a result of geological and operational issues, higher depreciation and amortization of $11.7 million, higher royalties and

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severance taxes of $8.2 million, and purchases of $6.6 million of third-party coal at our Pinnacle mine to meet shipping requirements. Despite the production issues encountered at our legacy coal mines throughout 2010, the cost increase was partially offset by a reduction in idle expense of $8.6 million, attributable to increased production at our mines as a result of improving market conditions in the current year. Idle costs in the first half of 2009 were significantly higher due to production curtailments, delays associated with mine development issues at Oak Grove as a result of unplanned geological conditions.

Production

We increased production levels in 2010 in response to improving market conditions and increases in customer demand. The increase over the prior year was primarily related to production curtailments that occurred in 2009 to match declining market conditions as well as delays in developing the longwall panel at Oak Grove during the first quarter of 2009. In addition, the increase in production levels over the prior year was a direct result of the acquisition of CLCC during the third quarter of 2010. The overall increase in current year production at our Pinnacle Complex was partially offset by a decrease in production at Green Ridge due to the planned closure of Green Ridge No. 1 in February 2010 as well as the idling of Green Ridge No. 2 during 2010. Production recommenced at the Green Ridge No. 2 mine in January 2011. Despite the increase in production over the prior year, our Pinnacle mine was negatively impacted during 2010 by adverse geological conditions and delayed longwall operations, resulting in force majeures being declared on customer shipments during the third and fourth quarters of 2010. The force majeure declared in the fourth quarter was due to roof falls at the Pinnacle mine and was lifted in January 2011 with the restarting of the longwall.

Asia Pacific Iron Ore

Following is a summary of Asia Pacific Iron Ore results for 2010 and 2009:

		(In Millions)
										Change due to
		2010				2009				Rate				Volume				Exchange Rate				Total change
Revenues from product sales and services		$	1,123.9			$	542.1			$	517.7			$	72.3			$	(8.2	)		$	581.8
Cost of goods sold and operating expenses			(557.7	)			(454.9	)			19.1				(40.6	)			(81.3	)			(102.8	)
Sales margin		$	566.2			$	87.2			$	536.8			$	31.7			$	(89.5	)		$	479.0
Sales metric tons			9.3				8.5
Production metric tons (1)			9.3				8.3

(1)	Metric tons (2,205 pounds). Cockatoo production reflects our 50 percent share.

Sales margin for Asia Pacific Iron Ore increased to $566.2 million in 2010 compared with $87.2 million in 2009. Revenue increased $581.8 million in 2010 compared with the prior year primarily as a result of higher prices for lump and fines, increased sales volume and favorable sales mix. During the first quarter of 2010, the world's largest iron ore producers moved away from the annual international benchmark pricing mechanism referenced in our customer supply agreements, resulting in a shift in the industry toward shorter-term pricing arrangements linked to the spot market. As a result, we renegotiated the terms of our supply agreements with our Chinese and Japanese Asia Pacific Iron Ore customers moving to shorter-term pricing mechanisms of various durations based on the average daily spot prices, with certain pricing mechanisms that have a duration of up to a quarter. This change was effective in the first quarter of 2010 for our Chinese customers and the second quarter of 2010 for our Japanese customers. The increase in 2010 pricing over 2009 was on average an 87 percent and 98 percent increase for lump and fines, respectively. This compares to settled price decreases in the prior year of 44 percent and 33 percent for lump and fines, respectively. Pricing settlements in the current year reflect the increase in steel demand and spot prices for iron ore and are based upon quarterly index pricing mechanisms.

Sales volume reached 9.3 million metric tons in 2010 compared with 8.5 million metric tons for the prior year, resulting in an increase in revenue of $72.3 million. In addition, revenue was favorably impacted by a positive sales mix variance of $4.0 million primarily due to the cessation of low-grade fines sales in 2010.

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Cost of goods sold and operating expenses in 2010 increased $102.8 million compared to 2009 primarily due to unfavorable foreign exchange rate variances of $81.3 million coupled with a nine percent increase in sales volume, which resulted in cost increases of approximately $40.6 million. The overall increase in cost was partially offset by favorable rate variances, driven by lower inventory movement of $33.2 million primarily due to increased long-term stockpile utilization and $14.6 million associated with lower shipping and processing costs during 2010. Higher royalties related to the increase in revenue, higher mining costs related to increased mining fleet maintenance and higher depletion costs due to increased rail volumes of $27.2 million partially offset the favorable rate variance.

Production

Production at Asia Pacific Iron Ore in 2010 was higher than 2009 as a result of increased sales demand in 2010 and initiatives taken to improve supply conditions and eliminate certain production and logistics constraints, including upgrades to the rail system. The increase in production over the prior year is also due to reduced availability in 2009 as a result of repairs to the production plant. Production at Cockatoo Island resumed in the third quarter of 2010.

2009 Compared to 2008

North American Iron Ore

Following is a summary of North American Iron Ore results for 2009 and 2008:

		(In Millions)
										Change due to
		2009				2008				Rate				Volume				Idle cost/ Production volume variance				Freight and reimbursements				Total change
Revenues from product sales and services		$	1,447.8			$	2,369.6			$	(165.5	)		$	(580.7	)		$	-			$	(175.6	)		$	(921.8	)
Cost of goods sold and operating expense			(1,172.3	)			(1,565.3	)			(22.0	)			358.3				(118.9	)			175.6				393.0
Sales margin		$	275.5			$	804.3			$	(187.5	)		$	(222.4	)		$	(118.9	)		$	-			$	(528.8	)
Sales tons			16.4				22.7
Production tons (1):
Total			19.6				35.2
Cliffs' share of total			17.1	(2)			22.9

(1)	Long tons of pellets (2,240 pounds).

(2)	Includes 1.6 million tons allocated to Cliffs due to re-nominations by Cliffs' partners at Tilden and Wabush.

Revenue in 2009 decreased $921.8 million, or 39 percent, compared with 2008 primarily as a result of a 28 percent decline in sales volume, which contributed $580.7 million to the overall decrease in revenue. The decline in sales volume was a result of the economic downturn and its impact on the global steel industry, which led to a decline in demand for steel-making products in North America during 2009. In addition to the year-over-year decline in sales volume, reported price settlements for iron ore pellets reflected a decrease of approximately 48 percent below 2008 prices, compared with an increase of 87 percent in 2008. As a result, base rate adjustments related to estimated reductions in World Pellet Pricing and producer price indices contributed to a $165.5 million decline in revenues in 2009. Revenue in 2009 included approximately $22.2 million related to supplemental contract payments compared with $225.5 million in 2008. The decrease between periods related to the estimated decline in average annual hot band steel pricing for one of our North American Iron Ore customers.

In 2009 and 2008, certain customers purchased and paid for approximately 0.9 million tons and 1.2 million tons of pellets, respectively, in order to meet minimum contractual purchase requirements for each year under the terms of take-or-pay contracts. The inventory was stored at our facilities in upper lakes stockpiles. At the request

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of the customers, the ore was not shipped, resulting in deferred revenue at December 31, 2009 and 2008 of $81.9 million and $82.9 million, respectively. As of December 31, 2009, all of the 1.2 million tons that were deferred at the end of 2008 were delivered, resulting in the related revenue being recognized in 2009. Furthermore, the supply agreement with one of our customers required the customer to pay for any tons remaining under its 2009 nomination in addition to certain stockpile payments by December 31, 2009. There were approximately 1.7 million unshipped tons remaining under the customer's 2009 nomination and 0.8 million tons related to December 2009 shipments, for which payment of $147.5 million was due on December 31, 2009 per the terms of the contract. The customer did not remit payment of this amount until January 4, 2010. As a result, such amounts were not reflected in our 2009 consolidated financial statements.

Cost of goods sold and operating expense in 2009 decreased $393.0 million or 25 percent from the prior year primarily due to lower sales volume, which resulted in cost reductions of approximately $358.3 million. The overall decrease was partially offset by idle expense of $118.9 million related to production curtailments at nearly all of the North American Iron Ore mines during 2009 in order to balance production with anticipated sales demand. In addition, cost of goods sold and operating expenses were unfavorably impacted in 2009 by approximately $22 million due to higher cost rates. The increase was primarily attributable to $43 million of higher labor costs related to the new labor agreement entered into in September 2008 at our iron ore facilities as well as higher fringe rates combined with an increase of $22 million related to higher energy costs. This was partially offset by a $25 million reduction in fuel costs, a decrease in royalty costs of $18 million as a result of lower iron ore pellet pricing, and cost reductions of $11 million related to ongoing cash conservation efforts during 2009. In addition, due to lower partner demand, Cliffs acquired 1.6 million tons produced at Tilden and Wabush from the mine partners' share at variable cost, which resulted in a favorable cost impact of approximately $79 million in 2009.

Production

In response to the economic downturn, we continued to rationalize production to match customer demand. In 2009, we reduced production at our six North American Iron Ore mines to 17.1 million equity tons compared with 2008 production of 22.9 million equity tons.

Based on signs of marked improvements in customer demand beginning in the second half of 2009, we increased production at most of our facilities and called employees back to work in order to ensure that we were positioned to meet increases in demand. During the fourth quarter of 2009, Tilden and United Taconite began operating at full capacity. Northshore was operating its two large furnaces, and Empire continued to maintain its production levels. Wabush was operating two of its three furnaces with Cliffs taking essentially all of the tonnage. Only Hibbing continued to be fully curtailed.

North American Coal

Following is a summary of North American Coal results for 2009 and 2008:

		(In Millions, except tonnage)
										Change due to
		2009				2008				Rate				Volume				Idle cost/ Production volume variance				Freight and reimbursements				Total change
Revenues from product sales and services		$	207.2			$	346.3			$	0.9			$	(127.1	)		$	-			$	(12.9	)		$	(139.1	)
Cost of goods sold and operating expense			(279.1	)			(392.7	)			(5.3	)			146.7				(40.7	)			12.9				113.6
Sales margin		$	(71.9	)		$	(46.4	)		$	(4.4	)		$	19.6			$	(40.7	)		$	-			$	(25.5	)
Sales tons (in thousands)			1,874				3,241
Production tons (in thousands) (1)			1,741				3,468

(1)	Tons are short tons (2,000 pounds).

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We reported sales margin losses of $71.9 million and $46.4 million for the years ended December 31, 2009 and 2008, respectively. Revenue of $207.2 million in 2009 was 40 percent lower than revenue in 2008. The decrease in revenue was primarily attributable to a 42 percent decline in sales volume as a result of market conditions which adversely impacted the demand for steel-making raw materials throughout 2009.

Cost of goods sold and operating expense in 2009 decreased $113.6 million or 29 percent from 2008 primarily due to lower sales volume, which resulted in cost reductions of approximately $146.7 million. The decrease in 2009 sales volume also resulted in a decline in freight costs of $12.9 million and a reduction in royalty costs of $7.5 million. In addition, in response to the economic downturn, we decreased spending across the North American Coal business segment and idled production at both the Oak Grove and Pinnacle complexes during 2009. Production curtailments and headcount reductions during 2009 resulted in lower production-related costs, including maintenance, supplies, and labor costs. Headcount reductions resulted in labor and benefit cost reductions of $32.2 million in 2009. Spending on operating supplies and maintenance costs was reduced in 2009 by approximately $26.1 million as we continued to focus on cash conservation and cost management strategies. However, these cost reductions were more than offset by higher cost per ton rates in 2009, due to the impact of lower volume, resulting in an overall unfavorable rate variance of $5.3 million. Cost of goods sold and operating expenses in 2009 were also negatively impacted by an increase in idle expense and production volume variance of $40.7 million related to production curtailments at both mine locations during the year and delays associated with development of longwall panels at Oak Grove in early 2009.

Production

Metallurgical coal demand decreased in 2009 as the steel industry cut back production in response to the global economic slowdown. As a result, we initiated plans in 2009 to align production with customer demand. In West Virginia, production was idled at our Green Ridge mines for part of the year, and production at our Pinnacle mine was temporarily suspended. In Alabama, operating levels were also reduced at our Oak Grove mine. However, production levels began to increase at the end of 2009 due to improvements in market conditions and increases in customer demand. In particular, during the fourth quarter, production increased at Oak Grove and development was also accelerated to avoid downtime in 2010. At Pinnacle, the longwall move was completed and we resumed production in mid-October. These production adjustments at North American Coal resulted in a 2009 annual operating rate of approximately 1.7 million tons. This compares with 2008 production of 3.5 million tons.

The Oak Grove mine was idled towards the end of 2009 due to ventilation, water and roofing issues at the mine. MSHA denied our request to continue limited production while we addressed these issues. Oak Grove continued to operate a continuous miner section to develop future longwall panels. MSHA approval was received on February 9, 2010 for longwall operations to resume.

Asia Pacific Iron Ore

Following is a summary of Asia Pacific Iron Ore results for 2009 and 2008:

		(In Millions)
										Change due to
		2009				2008				Rate				Volume				Other				Total change
Revenues from product sales and services		$	542.1			$	769.8			$	(257.5	)		$	72.5			$	(42.7	)		$	(227.7	)
Cost of goods sold and operating expense			(454.9	)			(421.2	)			1.8				(33.8	)			(1.7	)			(33.7	)
Sales margin		$	87.2			$	348.6			$	(255.7	)		$	38.7			$	(44.4	)		$	(261.4	)
Sales metric tons			8.5				7.8
Production metric tons (1)			8.3				7.7

(1)	Metric tons (2,205 pounds). Cockatoo production reflects our 50 percent share.

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Sales margin for Asia Pacific Iron Ore declined to $87.2 million in 2009 compared with $348.6 million in 2008. Revenue decreased 30 percent in 2009 primarily as a result of lower pricing for lump and fines during the year compared with 2008 prices. While the 2009 benchmark prices for iron ore lump and fines did not settle with all of our customers, we negotiated pricing arrangements with certain customers in China to reflect the decline in steel demand and prices. Pricing decreases in 2009 of 44 percent and 33 percent for lump and fines, respectively, contrasted with settled price increases in 2008 of 97 percent and 80 percent, respectively. Pricing in 2009 was based upon previously reported settlements in Japan and worldwide pressures in the market and remained unchanged from the estimates we made throughout most of 2009. The overall decline in 2009 revenue was partially offset by a favorable variance of $72.5 million due to a nine percent increase in sales volume as a result of increased demand as well as a positive sales mix variance of $34.1 million due to more sales of lump and fines at higher prices and reduced sales of low-grade fines.

Cost of goods sold and operating expenses in 2009 were relatively consistent with 2008. Costs were unfavorably impacted by approximately $38.8 million of amortization expense related to the accounting for the acquisition of the remaining ownership interest in Asia Pacific Iron Ore, which occurred during the second half of 2008. Costs in 2009 also increased by approximately $29.6 million due to higher sales volumes as well as higher shipping costs of $5.3 million due to freight arrangements with customers to secure sales during the period. Increases in costs during 2009 were partially offset by favorable foreign exchange variances of $35.2 million.

Production

Production at Asia Pacific Iron Ore in 2009 was higher than 2008 as a result of increased demand and initiatives taken during the year to improve supply conditions and eliminate certain production and logistics constraints, including rail upgrades and stockpile utilization. Increases in production in 2009 were partially offset by the end of production at Cockatoo Island during 2008.

Liquidity, Cash Flows and Capital Resources

Our primary sources of liquidity are cash generated from our operating and financing activities. Our cash flows from operating activities are driven primarily by our operating results and changes in our working capital requirements. Our cash flows from financing activities are dependent upon our ability to access credit or other capital.

Throughout 2010, we have taken a balanced approach to the allocation of our capital resources and free cash flow. We have continued to strengthen our balance sheet and enhance financial flexibility, including the completion of two public offerings of senior notes in the aggregate principal amount of $400 million and $1 billion during the first and third quarters of 2010, respectively. All or a portion of the net proceeds from the offerings have been used for the repayment of a portion of other debt obligations, including those related to our investment in Amapá, and have been or may be used for the funding of all or a portion of other strategic transactions, such as the 2010 acquisitions and the pending acquisition of Consolidated Thompson pursuant to the definitive arrangement agreement that was entered into in January 2011 and is subject to the satisfaction or waiver of various closing conditions. Other uses of the proceeds from the $1 billion public offering of senior notes may include general corporate purposes and pending final use, investments in short-term marketable securities.

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The following is a summary of significant sources and uses of cash in 2010 and 2009:

		(In Millions)
		2010				2009
Cash and cash equivalents - January 1		$	502.7			$	179.0
Net cash provided by operating activities			1,320.0				185.7
Significant Investing Transactions
Investment in ventures		$	(191.3	)		$	(81.8	)
Rail upgrade in Asia Pacific			(11.0	)			(28.8	)
Acquisition of Wabush			(101.9	)			-
Acquisition of Freewest (1)			(5.3	)			-
Acquisition of Spider			(108.0	)			-
Acquisition of CLCC			(775.9	)			-
Other capital expenditures			(255.9	)			(87.5	)
Redemption of marketable securities			32.5				5.4
Sale of assets			59.1				28.3
Total			(1,357.7	)			(164.4	)
Sources (Uses) of Financing
Proceeds from sale of common shares			-				347.3
Net proceeds from issuance of $400 million senior notes			397.8				-
Net proceeds from issuance of $1 billion senior notes			990.3				-
Dividend distributions			(68.9	)			(31.9	)
Repayment of term loan			(200.0	)			-
Net borrowings under credit facility			450.0				3.3
Repayments under credit facility			(450.0	)			-
Total			1,119.2				318.7
Other net activity			(17.5	)			(16.3	)
Cash and cash equivalents - December 31		$	1,566.7			$	502.7

(1)	The purchase consideration for Freewest included the issuance of 4.2 million common shares valued at $173.1 million and $12.8 million in cash. This amount represents the cash paid for the acquisition of the remaining interest of Freewest, net of the cash acquired through the acquisition.

The following discussion summarizes the significant activities impacting our cash flows during the year as well as those expected to impact our future cash flows over the next 12 months. Refer to the Statements of Consolidated Cash Flows for additional information.

Operating Activities

Net cash provided by operating activities was $1.3 billion in 2010, compared with $185.7 million in 2009 and $853.2 million in 2008. Operating cash flows in 2010 were primarily impacted by higher operating results, as previously noted. Our operating cash flows vary with prices realized from iron ore and coal sales, production levels, production costs, cash payments for income taxes and interest, other working capital changes and other factors. As a result of improved economic conditions, operating plans for 2011 reflect increased production and modestly higher prices for iron ore and coal.

The long-term outlook remains strong and we are now focusing on our growth projects with sustained investment in our core businesses. Throughout 2010, capacity utilization among steelmaking facilities in North America demonstrated ongoing improvement. The industry continued to show signs of stabilization based on increasing steel production and the restarting of blast furnaces in North America and Europe. As a result, we experienced marked improvements in customer demand and market expectations and increased production at most of our facilities.

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Based on current mine plans and subject to future iron ore and coal prices, we expect estimated operating cash flows in 2011 to be greater than our budgeted investments and capital expenditures, expected debt payments, dividends, and other cash requirements. This expectation excludes acquisition activities related to the pending acquisition of Consolidated Thompson. Refer to "Outlook" for additional guidance regarding expected future results, including projections on pricing, sales volume and production for our various businesses.

Investing Activities

Net cash used by investing activities was $1.4 billion in 2010, compared with $179.3 million and $795.6 million in 2009 and 2008, respectively. Capital expenditures were $266.9 million, $116.3 million and $182.5 million in 2010, 2009 and 2008, respectively. Investing activities in 2010 also included $26.5 million of capital contributions related to the funding of operations at Amapá as well as $155 million related to the repayment of all Amapá's debt in 2010. This compares with capital contributions of $70.2 million related to our investment in Amapá during 2009. In February 2010, we completed the acquisition of the remaining 73.2 percent interest in Wabush for an aggregate acquisition price of $103 million. We also completed the acquisition of all of the coal operations of CLCC in July 2010 for an aggregate acquisition price of $775.9 million. During the fourth quarter of 2010, we completed the acquisition of the remaining shares of Spider through an amalgamation, increasing our ownership interest to 100 percent and resulting in a total cash investment in Spider of $108 million as of December 31, 2010. In December 2010, our North American Coal segment sold the new longwall plow system at our Pinnacle mine in West Virginia and subsequently leased the longwall back for a period of ten years. We received proceeds of $57.3 million from the sale of the longwall, and the leaseback was accounted for as a capital lease. Significant investing activities in 2009 included the sale of a fleet of Asia Pacific Iron Ore rail cars that were subsequently leased back for a period of ten years. We received proceeds of $23.8 million from the sale of the rail cars, and the leaseback was accounted for as a capital lease.

Non-cash investing activities during 2010 included the issuance of 4.2 million of our common shares valued at $173.1 million as part of the purchase consideration for the acquisition of the remaining interest in Freewest, which was completed on January 27, 2010. Non-cash items during 2010 also included gains of $38.6 million primarily related to the remeasurement of our previous ownership interest in Freewest and Wabush held prior to each business acquisition.

Based upon improving market conditions and a strengthening long-term outlook, we anticipate that total cash used for capital expenditures in 2011 will be approximately $700 million. This expectation excludes capital expenditures related to the pending acquisition of Consolidated Thompson. As we continue to increase production into 2011, capital expenditures will include the expansion of our Empire and Tilden mines in Michigan's Upper Peninsula in order to increase production capacity. The project has currently been approved for capital investments in equipment of approximately $143 million, of which approximately $125 million is expected to be spent in 2011. In Asia Pacific, an expansion project has been approved at our Koolyanobbing mine in order to increase production capacity to 11 million metric tons per year. We estimate the project to require an initial capital cash outflow of approximately $195 million, of which approximately $22 million was spent in 2010 and $146 million is expected to be spent in 2011. At Pinnacle, a new longwall plow system was purchased to reduce maintenance costs and increase production at the mine. Remaining expenditures for the new longwall plow system of approximately $14 million are expected to be made in 2011. The remaining expenditures are related to the longwall plow system assets pending delivery; therefore, they were not included within the longwall sale-leaseback discussed above. Construction of a new portal at Oak Grove will continue in 2011 in order to improve productivity and support growth and expansion of the mine. The portal requires a total capital investment of approximately $29 million, of which $25 million was committed and $9 million was spent in 2010. Remaining expenditures for the portal of approximately $16 million are expected to be made in 2011. We are also in the process of upgrading the preparation plant at Pinnacle in order to increase product yield and plant availability. The modification project requires a capital investment of approximately $20 million, of which $17 million was spent in 2010. Additional significant capital expenditures are expected in 2011 related to our pending acquisition of Consolidated Thompson.

We have implemented a global exploration program, which is integral to our growth strategy and is focused on identifying and capturing new world-class projects for future development or projects that add significant

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value to existing operations. Our Global Exploration Group is expected to spend between $50 million and $55 million on exploration activities in 2011, which we expect will provide us with opportunities for significant future potential reserve additions globally. Throughout 2010, we incurred expenses of $13.3 million and investments of $16.3 million related to our involvement in exploration activities.

We continue to evaluate funding options for our capital needs and expect to be able to fund these requirements through operations and availability under our existing borrowing arrangements. Other funding options may include new lines of credit or other financing arrangements.

The following represents our future cash commitments and contractual obligations as of December 31, 2010:

		Payments Due by Period (1) (In Millions)
Contractual Obligations		Total				Less Than 1 Year				1 - 3 Years				3 - 5 Years				More Than 5 Years
Long-term debt		$	1,729.0			$	4.0			$	270.0			$	55.0			$	1,400.0
Interest on debt (2)			1,462.3				101.2				190.5				163.1				1,007.5
Operating lease obligations			81.5				21.3				34.1				18.1				8.0
Capital lease obligations			201.9				33.0				60.9				65.9				42.1
Purchase obligations:
Longwall plow system			14.4				14.4				-				-				-
Oak Grove portal project			16.1				16.1				-				-				-
Michigan expansion project			101.0				96.0				5.0				-				-
Koolyanobbing expansion project			99.8				89.6				10.2				-				-
Open purchase orders			216.5				215.4				1.1				-				-
Minimum "take or pay" purchase commitments (3)			407.6				120.8				158.2				87.0				41.6
Total purchase obligations			855.4				552.3				174.5				87.0				41.6
Other long-term liabilities:
Pension funding minimums			328.8				72.5				137.6				96.1				22.6
OPEB claim payments			592.6				40.0				58.8				42.2				451.6
Deferred revenue (6)			215.6				174.7				34.2				6.7				-
Environmental and mine closure obligations			199.1				14.2				10.7				51.2				123.0
FIN 48 obligations (4)			6.6				6.6				-				-				-
Personal injury			20.1				6.1				7.8				4.4				1.8
Other (5)
Total other long-term liabilities			1,362.8				314.1				249.1				200.6				599.0
Total		$	5,692.9			$	1,025.9			$	979.1			$	589.7			$	3,098.2

(1)	Includes our consolidated obligations.

(2)

For the $325 million senior notes, interest is calculated for the $270 million five-year senior notes using a fixed rate of 6.31 percent from 2011 to maturity in June 2013, and the $55 million seven-year notes, interest is calculated at 6.59 percent from 2010 to maturity in June 2015. For the $400 million senior notes, interest is calculated using a fixed rate of 5.90 percent from 2011 to maturity in March 2020. For the $1 billion senior notes, interest is calculated for the $500 million 10-year notes using a fixed rate of 4.80 percent from 2011 to maturity in October 2020, and the $500 million 30-year notes using a fixed rate of 6.25 percent from 2011 to maturity in October 2040.

(3)	Includes minimum electric power demand charges, minimum coal, diesel and natural gas obligations, minimum railroad transportation obligations, and minimum port facility obligations.

(4)	Includes accrued interest.

(5)	Other contractual obligations of approximately $87.2 million primarily include FIN 48 obligations and deferred income tax amounts for which timing of payment is non-determinable.

(6)	This is for services to be provided in future periods.

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Refer to NOTE 17 - COMMITMENTS AND CONTINGENCIES of the Consolidated Financial Statements for additional information regarding our future purchase commitments and obligations.

Financing Activities

Net cash provided by financing activities in 2010 was $1.1 billion compared with $304.3 million in 2009 and $32.4 million in 2008. Cash flows from financing activities in 2010 primarily included $397.8 million and $990.3 million in net proceeds, respectively, from two public offerings of senior notes, which we completed on March 17, 2010 and September 20, 2010, respectively. A portion of the net proceeds from the $400 million public offering of senior notes were used for the repayment of our $200 million term loan under our credit facility, which we repaid in March 2010, as well as the repayment of our share of Amapá's remaining debt outstanding of $100.8 million in May 2010. In addition, a portion of the net proceeds were used to fund a portion of the purchase price for the Spider and CLCC acquisitions. A portion of the net proceeds from the $1 billion public offering of senior notes were used for the repayment of the $350 million borrowings outstanding under our credit facility. Other uses of the net proceeds from the $1 billion public offering of senior notes may include general corporate purposes, the funding of strategic acquisitions such as the pending acquisition of Consolidated Thompson and pending final use, investments in short-term marketable securities. Successful execution of these offerings allowed us to enhance our financial flexibility and better position ourselves to take advantage of possible opportunities as the market continues to improve in 2011.

In May 2010, our Board of Directors increased our quarterly common share dividend from $0.0875 to $0.14 per share. The increased cash dividend was paid on June 1, 2010, September 1, 2010 and December 1, 2010. In May 2009, our Board of Directors enacted a 55 percent reduction in our quarterly common share dividend to $0.04 from $0.0875 for the second and third quarters of 2009 in order to enhance financial flexibility. In the fourth quarter of 2009, the dividend was reinstated to its previous level.

Cash flows from financing activities in 2009 primarily included $348 million in net proceeds from the sale of our common shares.

As previously discussed, on January 11, 2011, we entered into a definitive arrangement agreement with Consolidated Thompson to acquire all of its common shares in an all-cash transaction including net debt, valued at approximately C$4.9 billion. We have currently entered into a $3.7 billion bridge financing commitment to provide for the financing of the arrangement. We intend to arrange permanent financing for the transaction by, among other things, accessing the capital markets depending on market conditions during 2011. A portion of our cash will also be used to fund a portion of the purchase price; however management focus is on maintaining sufficient cash balances to address our future operational needs.

Capital Resources

We expect to fund our business obligations from available cash, current operations and existing borrowing arrangements. The following represents a summary of key liquidity measures as of December 31, 2010 and 2009:

		(In Millions)
		December 31, 2010				December 31, 2009
Cash and cash equivalents		$	1,566.7			$	502.7
Credit facility		$	600.0			$	800.0
Senior notes			1,725.0				325.0
Senior notes drawn			(1,725.0	)			(325.0	)
Term loans drawn			-				(200.0	)
Letter of credit obligations and other commitments			(64.7	)			(31.4	)
Borrowing capacity available		$	535.3			$	568.6

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Refer to NOTE 8 - DEBT AND CREDIT FACILITIES of our consolidated financial statements for further information regarding our debt and credit facilities.

We are subject to certain financial covenants contained in the agreements governing certain of our debt instruments. As of December 31, 2010 and 2009, we were in compliance with each of our financial covenants.

Apart from cash generated by the business, our primary source of funding is cash on hand, which totaled $1.6 billion as of December 31, 2010. We also have a $600 million revolving credit facility, which matures in 2012. This facility has available borrowing capacity of $535.3 million as of December 31, 2010. Effective October 29, 2009, we amended our credit facility agreement, which resulted in improved borrowing flexibility, more liberally defined financial covenants and debt restrictions, and other benefits in exchange for a modest increase in pricing. The combination of cash and the credit facility gives us over $2.0 billion in liquidity entering the first quarter of 2011, which is expected to be used to fund operations and finance strategic transactions such as the pending acquisition of Consolidated Thompson.

We are party to financing arrangements under which we issue guarantees on behalf of certain of our unconsolidated subsidiaries. In the event of non-payment, we are obligated to make payment in accordance with the provisions of the guarantee arrangement. As of December 31, 2010, Amapá repaid its total project debt outstanding, for which we had previously provided a several guarantee on our 30 percent share. Repayment of our share of the total project debt outstanding consisted of $54.2 million and $100.8 million repaid on February 17, 2010 and May 27, 2010, respectively. Upon repayment of the project debt, our obligations under the provisions of the guarantee arrangement have been relieved.

Based on our current borrowing capacity and the actions we have taken in response to the global financial crisis to conserve cash, we have adequate liquidity and expect to fund our business obligations from available cash, current operations and existing borrowing arrangements. Other sources of funding may include new lines of credit or other financing arrangements.

Several credit markets may provide additional capacity should that become necessary. The bank market may provide funding through a term loan, bridge loan, revolving credit facility, or through exercising the $200 million accordion in our current credit facility. The risk associated with this market is significant increases in borrowing costs as a result of limited capacity. As in all debt markets, capacity is a global issue that impacts the bond market. Our issuance of a $400 million public offering of 10-year senior notes in March 2010 and a $1 billion public offering of 10-year and 30-year senior notes in September 2010 provide evidence that capacity in the bond markets has improved for investment grade companies compared to conditions impacting such markets in 2009. These transactions represent the successful execution of our strategy to increase liquidity and extend debt maturities to align with longer-term capital structure needs. Accessing the capital markets may provide additional sources of funding, as well as other alternative sources such as lease financing.

Off-Balance Sheet Arrangements

We have operating leases, which are primarily utilized for certain equipment and office space. Aside from this, we do not have any other off-balance sheet financing arrangements.

Market Risks

We are subject to a variety of risks, including those caused by changes in foreign currency exchange rates, interest rates and commodity prices. We have established policies and procedures to manage such risks; however, certain risks are beyond our control.

Foreign Currency Exchange Rate Risk

We are subject to changes in foreign currency exchange rates primarily as a result of our operations in Australia, which could impact our financial condition. Foreign exchange risk arises from our exposure to fluctuations in foreign currency exchange rates because our reporting currency is the United States dollar, but the functional currency of our Asia Pacific operations is the Australian dollar. Our Asia Pacific operations receive funds in U.S. currency for their iron ore and coal sales and incur costs in Australian currency. We use forward

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exchange contracts, call options and collar options to hedge our foreign currency exposure for a portion of our sales receipts. The primary objective for the use of these instruments is to reduce exposure to changes in Australian and U.S. currency exchange rates and to protect against undue adverse movement in these exchange rates. At December 31, 2010, we had $70 million of outstanding exchange rate contracts with varying maturity dates ranging from February 2011 to December 2011 for which we elected hedge accounting, effective October 2010. We also had $230 million of outstanding exchange rate contracts with varying maturity dates ranging from January 2011 to January 2012 that we have been holding as economic hedges, entered into prior to October 2010. A 10 percent increase in the value of the Australian dollar from the month-end rate would increase the fair value of these contracts by approximately $31.2 million, and a 10 percent decrease would reduce the fair value by approximately $26.4 million. We may enter into additional hedging instruments in the near future as needed in order to further hedge our exposure to changes in foreign currency exchange rates.

The pellets produced at our Wabush operation in Canada represented approximately 15 percent of our North American Iron Ore pellet production as of December 31, 2010. This operation is subject to currency exchange fluctuations between the United States and Canadian currency. We do not currently hedge our exposure to this currency exchange fluctuation; however, we plan to enter into hedging instruments in the future to hedge such exposures. The functional currency for Wabush was determined to be the Canadian dollar prior to our acquisition of the remaining interest. At the time, we had a 26.8 percent noncontrolling interest in the mining venture. Our acquisition to obtain full ownership of Wabush and the resulting change in control in February 2010 triggered a reassessment of the accounting principles related to the determination of Wabush's functional currency during the first quarter of 2010. As a result, effective February 1, 2010, we changed the functional currency of Wabush from the local currency to the U.S. dollar reporting currency primarily due to changes in the nature of intercompany transactions and changes in the structure under which the entity is financed, resulting in the U.S. dollar becoming the currency of the primary economic environment in which the business operates.

Interest Rate Risk

Interest payable on our $1 billion, $400 million and $325 million senior notes is at fixed rates. Interest for borrowings under our credit facility is at a floating rate, dependent in part on the LIBOR rate, which could expose us to the effects of interest rate changes; however, there were no borrowings outstanding under our credit facility as of December 31, 2010.

Pricing Risks

Provisional Pricing Arrangements

During the first quarter of 2010, the world's largest iron ore producers moved away from the annual international benchmark pricing mechanism referenced in certain of our customer supply agreements, resulting in a shift in the industry toward shorter-term pricing arrangements linked to the spot market. Such changes are likely to yield increased volatility in iron ore pricing. In addition, these changes led to extended pricing negotiations with certain customers during 2010. As a result, we recorded certain shipments made throughout the year on a provisional basis until final settlements were reached. The pricing provisions were characterized as freestanding derivatives, which were marked to fair value as a revenue adjustment each reporting period based upon the estimated forward settlement until prices were actually settled. The fair value of the instrument was determined based on the forward price expectation of the final price settlement. Therefore, to the extent final prices were higher or lower than what was recorded on a provisional basis, an increase or decrease to revenues was recorded each reporting period until the date of final pricing. We renegotiated the terms of our supply agreements and reached short-term pricing arrangements with our Asia Pacific Iron Ore customers. In addition, we reached final pricing settlements with some of our North American Iron Ore customers through the fourth quarter of 2010 for the 2010 contract year. With respect to the North American Iron Ore customers for which final pricing for the 2010 contract year has not yet been settled as of December 31, 2010, we did not record shipments on a provisional basis due to pending arbitrations. As a result, there are no provisionally priced derivative assets recorded at December 31, 2010. Although pricing has been settled with some of our North American customers for 2010, we are still in the process of assessing the impact a change to the historical annual pricing mechanism will have on certain of our larger existing North American Iron Ore customer supply agreements that extend over multiple years, and negotiations are still ongoing with these customers.

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Arbitration

We are currently in discussions with certain of our customers regarding how our supply agreements will take into account the change in international market pricing. Additionally, we currently have arbitrations pending relating to the price adjustment provisions of two supply agreements, as further discussed under Part II – Item 1, Legal Proceedings. These discussions and arbitrations may result in changes to the pricing mechanisms used with our various customers and could impact sales prices realized in current and future periods. In the event that we are unsuccessful in defending our position, the retroactive revised pricing for 2010 sales under one of the supply agreements could have a material impact on our consolidated results of operations. The outcome and timing of the arbitrations are uncertain.

Customer Supply Agreements

Certain supply agreements with one North American Iron Ore customer provide for supplemental revenue or refunds based on the customer's average annual steel pricing at the time the product is consumed in the customer's blast furnace. The supplemental pricing is characterized as an embedded derivative, which is finalized based on a future price, and is marked to fair value as a revenue adjustment each reporting period until the pellets are consumed and the amounts are settled. The fair value of the instrument is determined using a market approach based on an estimate of the annual realized price of hot rolled steel at the steelmaker's facilities, and takes into consideration current market conditions and nonperformance risk.

At December 31, 2010, we had a derivative asset of $45.6 million, representing the fair value of the pricing factors, based upon the amount of unconsumed tons and an estimated average hot band steel price related to the period in which the tons are expected to be consumed in the customer's blast furnace at each respective steelmaking facility, subject to final pricing at a future date. This compares with a derivative asset of $63.2 million as of December 31, 2009, based upon the amount of unconsumed tons and the related estimated average hot band steel price. We estimate that a $100 change in the average hot band steel price realized from the December 31, 2010 estimated price recorded would cause the fair value of the derivative instrument to increase or decrease by approximately $10 million, thereby impacting our consolidated revenues by the same amount.

We have not entered into any hedging programs to mitigate the risk of adverse price fluctuations, nor do we intend to hedge our exposure to such risks in the future; however, certain of our term supply agreements contain price collars, which typically limit the percentage increase or decrease in prices for our products during any given year.

Volatile Energy and Fuel Costs

The volatile cost of energy is an important issue affecting our production costs, primarily in relation to our iron ore operations. Our consolidated North American Iron Ore mining ventures consumed approximately 14.4 million MMBtu's of natural gas at an average delivered price of $4.82 per MMBtu, and 28.7 million gallons of diesel fuel at an average delivered price of $2.45 per gallon in 2010. Our recently acquired CLCC operations consumed approximately 1.9 million gallons of diesel fuel at an average delivered rate of $2.60 per gallon since the date of acquisition. Consumption of diesel fuel by our Asia Pacific Operations was approximately 13.0 million gallons at an average delivered price of $1.67 per gallon for the same period.

Our strategy to address increasing energy rates includes improving efficiency in energy usage and utilizing the lowest cost alternative fuels. In addition, we purchased forward contracts for projected natural gas and diesel needs related to our North American Iron Ore operations as a hedge against price volatility during 2010. Such contracts are in quantities expected to be delivered and used in the production process. As of December 31, 2010, all of our natural gas hedge contracts have matured. We have 2011 diesel purchases for a volume of 1.1 million gallons at an average price of $2.36 per gallon. This represents five percent of the total projected usage for 2011. At December 31, 2010, the notional amount of the outstanding diesel fuel forward contracts was $2.5 million. The contracts for 2011 mature at various times through May 2011. If the forward rates were to change 10 percent from the month-end rate, the value and potential cash flow effect on the contracts would be approximately $0.3 million. We will continue to monitor relevant energy markets for risk mitigation opportunities and may make additional forward purchases or employ other hedging instruments in the future as warranted and deemed

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appropriate by management. Assuming we do not enter into further hedging activity in the near term, a 10 percent change in natural gas and diesel fuel prices would result in a change of approximately $16.9 million in our annual fuel and energy costs base on expected consumption in 2011.

Supply Concentration Risks

Many of our mines are dependent on one source for electric power and for natural gas. A significant interruption or change in service or rates from our energy suppliers could materially impact our production costs, margins and profitability.

Uncertainties of Health Care Reform Legislation

On March 23, 2010, the PPACA was signed into law. On March 30, 2010, a companion bill, the Reconciliation Act was also signed into law. Among other things, the PPACA and the Reconciliation Act, when taken together, reduce the tax benefits available to an employer that receives the Medicare Part D subsidy. The Reconciliation Act partially restores the reduction under the PPACA.

The impact of the U.S. health care reform will be phased in between 2011 and 2014 and will likely have a significant impact on our costs of providing employee health benefits beginning in 2011. In addition, as a result of the health care reform legislation that has been passed, our results of operations have been negatively impacted by a non-cash income tax charge of approximately $16.1 million in the first quarter of 2010 to reflect the reduced deductibility of the postretirement prescription drug coverage. The charge was recorded in the first quarter of 2010 based upon the period of enactment. As with any significant government action, the provisions of the Acts are still being assessed and may have additional financial accounting and reporting ramifications. In addition, it is possible that standard setters or regulators may decide to address the accounting for the Acts in the future. The impact of any such changes on our business operations and financial statements remains uncertain. However, as additional information becomes available, we will continue to monitor current developments and assess the potential implications of the PPACA and the Reconciliation Act on our business.

Outlook

We anticipate global steel production will continue to grow in 2011, primarily driven by emerging economies such as China, India and Brazil. Based on these dynamics, we continue to have an optimistic outlook for our businesses.

Subsequent to year end, we announced we had entered into a definitive arrangement agreement with Consolidated Thompson to acquire all of its common shares in an all-cash transaction including net debt, valued at approximately C$4.9 billion, which was unanimously approved by Consolidated Thompson's board of directors. In addition, we entered into a support agreement with Consolidated Thompson's largest shareholder, Wuhan Iron and Steel (Group) Corporation of China, along with the directors and certain senior officers of Consolidated Thompson. This transaction is expected to close in early second quarter of 2011, subject to the satisfaction or waiver of various closing conditions. After closing this transaction, we anticipate including this business in subsequent market outlooks.

North American Iron Ore Outlook (Long tons)

For 2011, we are increasing our North American Iron Ore sales volume expectation to approximately 28 million tons, partially as a result of an additional 600,000 tons of sales volume that we expect to recognize in the first quarter of 2011. Revenue was not recognized during the fourth quarter of 2010 for these tons due to payment timing and severe weather conditions on the Great Lakes. The balance of the increase is due to improved market conditions.

Our North American Iron Ore 2011 revenue per ton expectation is $140 to $145, based on the following assumptions:

•

2011 U.S. blast furnace utilization of approximately 70 percent;

•

2011 average hot rolled steel pricing of $650 to $700;

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•

2011 settled annual pellet increases of 35 percent from 2010's pricing; and

•

Successful collection of $300 million associated with the pending arbitration discussed above.

The revenue per ton expectation also considers various contract provisions, lag year adjustments and pricing caps and floors contained in certain supply agreements. Actual realized average revenue per ton for the full year will ultimately depend on increases or decreases for blast furnace pellets from annual 2010 seaborne pellet prices, sales volume levels, customer mix, production input costs and/or steel prices (all factors in our formula-based pricing in the North American Iron Ore business segment) and the final award for the on-going arbitration.

In addition, the following approximate sensitivities could impact actual realized prices:

•

For every 10 percent change from the above expectation for annual blast furnace pellet prices, we expect our average realized revenue per ton in North American Iron Ore to change by approximately $6; and

•

For every $25 change from the estimated 2011 hot rolled steel prices noted above, we expect our average revenue per ton in North American Iron Ore to change by $0.55.

We expect our North American Iron Ore 2011 production volume to be approximately 28 million tons. At this production level, we anticipate our cost per ton to be $65 to $70, with approximately $5 per ton comprised of depreciation, depletion and amortization.

North American Coal Outlook (Short tons F.O.B. the mine)

We are maintaining our 2011 North American Coal sales and production volumes expectation of approximately 6.5 million tons, comprised of 1.0 million tons of thermal coal, 1.5 million tons of high volatile metallurgical coal and 4.0 million tons of low volatile metallurgical coal.

Our North American Coal 2011 revenue per ton expectation is $135 to $140. This revenue per ton estimate is based on the following factors:

•

Virtually all of the expected thermal coal sales volume committed at an average price of $71 per ton;

•

95 percent of the expected high-volatile metallurgical coal sales volume committed at an average of $115 per ton;

•

70 percent of the expected low-volatile metallurgical coal sales volume committed at an average of $150 per ton; and

•

Uncommitted tons of low-volatile metallurgical coal priced at $185 per ton.

In 2011, we anticipate cost per ton for the year of approximately $105 to $110, with approximately $15 per ton comprised of depreciation, depletion and amortization.

Asia Pacific Iron Ore Outlook (metric tons F.O.B. the port)

Asia Pacific Iron Ore 2011 sales and production volumes are expected to be 9 million tons.

Our 2011 Asia Pacific Iron Ore revenue per ton expectation is $175 to $180, based on the following assumptions:

•

The Platts spot price of $187 per ton (C.I.F. China) as of January 31, 2011, is maintained for the remainder of 2011;

•

Pricing for the majority of Chinese customers, which represents approximately 80 percent of the expected sales volume, continues to use a mechanism closely correlated to spot prices;

•

Pricing mechanisms for the majority of Japanese customers, which represents approximately 20 percent of the expected sales volumes, continue to use quarterly lag spot prices; and

•

A product mix of approximately 50 percent lump and 50 percent fines.

We expect costs per ton to be approximately $70 to $75. The year over year increase in the average cost expectation is primarily driven by higher royalties, higher stripping costs and a less favorable foreign exchange rate. Depreciation, depletion and amortization costs per ton are expected to be $12.

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The following table provides a summary of our 2011 guidance for these three business segments:

		2011 Outlook Summary
		North American Iron Ore (1)				North American Coal (2)				Asia Pacific Iron Ore (3)
		Current Outlook				Current Outlook				Current Outlook
Sales volume (in millions)			28.0				6.5				9.0
Revenue per ton		$	140 - $145			$	135 - $140			$	175 - $180
Cost per ton		$	65 - $70			$	105 - $110			$	70 - $75

(1)	North American Iron Ore tons are reported in long tons.

(2)	North American Coal tons are reported in short tons F.O.B. the mine.

(3)	Asia Pacific Iron Ore tons are reported in metric tons F.O.B. the port.

Outlook for Sonoma Coal and the Amapá Iron Ore Project (metric tons F.O.B. the port)

In 2011, we expect our equity sales and production volume at Sonoma Coal to be 1.6 million tons. The approximate product mix is expected to be two-thirds thermal coal and one-third metallurgical coal. We expect per ton costs to be $105 to $110. The year over year increase in the average cost expectation is primarily driven by higher royalties and an unfavorable exchange rate variance.

We expect the Amapá Iron Ore Project to be modestly profitable in 2011.

SG&A Expenses and Other Expectations

We anticipate SG&A expenses to be approximately $200 million in 2011. We intend to incur the following additional cash outflows:

•

Approximately $50 million to $55 million related to our global exploration activities;

•

Approximately $35 million related to our chromite project in Ontario, Canada; and

•

Approximately $50 million related to Sonoma Coal partner profit sharing.

We anticipate an effective tax rate of approximately 30 percent for the year and depreciation, depletion, and amortization of approximately $360 million.

2011 Capital Budget Update and Other Uses of Cash

Based on the above outlook, we expect to generate more than $2.7 billion in cash from operations in 2011. We expect capital expenditures of approximately $700 million, comprised of approximately $300 million in sustaining capital and approximately $400 million in growth and expansion, including the following projects within our business segments:

North American Iron Ore

•

$125 million related to the previously disclosed extension of our Empire Mine in Michigan to 2014; and

•

$20 million related to increasing production at Wabush to 5.5 million tons by 2013.

North American Coal

•

$45 million related to bringing Lower War Eagle, a high volatile metallurgical coal mine in West Virginia, into production;

•

$16 million related to the previously disclosed mine shaft construction at our Oak Grove Mine in Alabama; and

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•

$14 million related to the previously disclosed long-wall installation at our Pinnacle Mine in West Virginia.

Asia Pacific Iron Ore

•

$146 million related to the previously disclosed infrastructure upgrades at our Koolyanobbing Mine in Western Australia.

Recently Issued Accounting Pronouncements

Refer to NOTE 1 – BUSINESS SUMMARY AND SIGNIFICANT ACCOUNTING POLICIES of the consolidated financial statements for a description of recent accounting pronouncements, including the respective dates of adoption and effects on results of operations and financial condition.

Critical Accounting Estimates

Management's discussion and analysis of financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with GAAP. Preparation of financial statements requires management to make assumptions, estimates and judgments that affect the reported amounts of assets, liabilities, revenues, costs and expenses, and the related disclosures of contingencies. Management bases its estimates on various assumptions and historical experience, which are believed to be reasonable; however, due to the inherent nature of estimates, actual results may differ significantly due to changed conditions or assumptions. On a regular basis, management reviews the accounting policies, assumptions, estimates and judgments to ensure that our financial statements are fairly presented in accordance with GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material. Management believes that the following critical accounting estimates and judgments have a significant impact on our financial statements.

Revenue Recognition

North American Iron Ore Customer Supply Agreements

Most of our North American Iron Ore long-term supply agreements are comprised of a base price with annual price adjustment factors, some of which are subject to annual price collars in order to limit the percentage increase or decrease in prices for our iron ore pellets during any given year. The base price is the primary component of the purchase price for each contract. The inflation-indexed price adjustment factors are integral to the iron ore supply contracts and vary based on the agreement but typically include adjustments based upon changes in international pellet prices, changes in specified Producers Price Indices including those for all commodities, industrial commodities, energy and steel. The pricing adjustments generally operate in the same manner, with each factor typically comprising a portion of the price adjustment, although the weighting of each factor varies based upon the specific terms of each agreement. In most cases, these adjustment factors have not been finalized at the time our product is sold. In these cases, we have historically estimated the adjustment factors at each reporting period based upon the best third-party information available. The estimates are then adjusted to actual when the information has been finalized. During the third quarter of 2010, we revised our approach for estimating the adjustment factors to include 2010 published pricing settlements realized by other companies in the industry.

With respect to international pellet prices, certain long-term supply agreements reference the previous year's settled price, in which case, no estimate is required. However, pricing in some of our supply agreements is based upon the international pellet price for the current year. The period during which we must estimate changes in international pellet prices varies year to year based on the timing of final settlement. Historically, contract negotiations were completed and pricing settlements for the upcoming year were reached during the first quarter of the contract year, in which case an estimate was required only for a short period of time and was adjusted to actual prior to reporting first quarter results. This was the case in 2007. As a result, the price adjustment provisions related to international pellet prices were essentially a fixed component of the purchase price for that contract year based upon the timing of settlement. Several instances occurred in both 2009 and 2008, in which

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contract negotiations were extended with settlement occurring later in the year. Information used in developing the estimate prior to settlement included such factors as previous pricing settlements among other iron ore producers and consumers in the industry, current spot prices, market trends, publications and other industry information. However, based on the timing of settlement, adjustments of our estimate to the actual international pellet price were not material in 2009 or 2008 as a result of having limited shipments to customers with these contract provisions during the first quarter of each respective year.

In 2010, the world's largest iron ore producers moved away from the annual international benchmark pricing mechanism referenced in certain of our customer supply agreements, resulting in a shift in the industry toward shorter-term pricing arrangements linked to the spot market. These changes caused us to assess the impact a change to the historical annual pricing mechanism would have on certain of our larger existing North American Iron Ore customer supply agreements. We reached final pricing settlements with some of our North American Iron Ore customers through the fourth quarter of 2010 for the 2010 contract year. As a result, we recorded certain shipments made throughout the 2010 year on a provisional basis until final settlements were reached. With respect to the North American Iron Ore customers for which final pricing for the 2010 contract year has not yet been settled as of December 31, 2010, we did not record shipments on a provisional basis due to pending arbitrations. Based on the timing of these settlements and the quality of our estimates, adjustments of our provisional pricing estimates were not material during 2010.

The producer price indices remain a provisional component of the sales price throughout the contract year and are estimated each quarter using publicly available forecasts of such indices. The final indices referenced in certain of the North American Iron Ore supply contracts are typically not published by the U.S. Department of Labor until the second quarter of the subsequent year. As a result, we record an adjustment for the difference between the fourth quarter estimate and the final price in the following year. Historically, such adjustments have not been material as they have represented less than half of 1 percent of North American Iron Ore's revenue for each of the three preceding fiscal years ended December 31, 2009, 2008 and 2007.

In addition, certain supply agreements with one customer include provisions for supplemental revenue or refunds based on the customer's average annual steel pricing for the year the product is consumed in the customer's blast furnaces. The supplemental pricing is characterized as an embedded derivative, which is finalized based on a future price, and is marked to fair value as a revenue adjustment each reporting period until the pellets are consumed and the amounts are settled. The fair value of the instrument is determined using a market approach based on an estimate of the annual realized price of hot rolled steel at the steelmaker's facilities. At December 31, 2010, we had a derivative asset of $45.6 million, representing the fair value of the pricing factors, based upon the amount of unconsumed tons and an estimated average hot band steel price related to the period in which the tons are expected to be consumed in the customer's blast furnace at each respective steelmaking facility, subject to final pricing at a future date. This compares with a derivative asset of $63.2 million as of December 31, 2009, based upon the amount of unconsumed tons and the related estimated average hot band steel price.

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The customer's average annual price is not known at the time of sale and the actual price is received on a delayed basis at the end of the year, once the average annual price has been finalized. As a result, we estimate the average price and adjust the estimate to actual in the fourth quarter when the information is provided by the customer at the end of each year. Information used in developing the estimate includes such factors as production and pricing information from the customer, current spot prices, third-party analyst forecasts, publications and other industry information. The accuracy of our estimates typically increases as the year progresses based on additional information in the market becoming available and the customer's ability to more accurately determine the average price it will realize for the year. The following represents the historical accuracy of our pricing estimates related to the derivative as well as the impact on revenue resulting from the difference between the estimated price and the actual price for each quarter during 2010, 2009 and 2008 prior to receiving final information from the customer for tons consumed during each year:

		Hot Band Steel Price - Estimate vs. Actual
		2010												2009												2008
		Final Price				Estimated Price				Impact on Revenue (in millions)				Final Price				Estimated Price				Impact on Revenue (in millions)				Final Price				Estimated Price				Impact on Revenue (in millions)
First Quarter		$	593			$	624			$	(0.8	)		$	528			$	523			$	1.2			$	763			$	645			$	24.9
Second Quarter			593				634				(12.1	)			528				545				(1.3	)			763				773				(5.4	)
Third Quarter			593				609				(7.0	)			528				536				(0.6	)			763				794				(17.6	)
Fourth Quarter			593				593				-				528				528				-				763				763				-

We estimate that a $100 change in the average hot band steel price realized from the December 31, 2010 estimated price recorded for the unconsumed tons remaining at year-end would cause the fair value of the derivative instrument to increase or decrease by approximately $10 million, thereby impacting our consolidated revenues by the same amount.

Provisional Pricing Arrangements

Historically, certain supply agreements primarily with our Asia Pacific Iron Ore customers provided for revenue or refunds based on the ultimate settlement of annual international benchmark pricing for lump and fines. As a result of the derivative accounting treatment applied to the provisions, revenue reflected the estimated benchmark price until final settlement occurred. Therefore, to the extent final prices were higher or lower than what was recorded on a provisional basis, an increase or decrease to revenues was recorded each reporting period until the date of final pricing. Accordingly, in times of rising iron ore prices, our revenues benefited from higher prices received for contracts priced at the current benchmark price and also from an increase related to the final pricing of provisionally priced sales pursuant to contracts entered into in prior periods; in times of falling iron ore prices, the opposite occurred. Pricing estimates were primarily based upon reported price settlements in the industry and worldwide pressures in the market.

As discussed above, in 2010, the world's largest iron ore producers moved away from the annual international benchmark pricing mechanism referenced in certain of our customer supply agreements, resulting in a shift in the industry toward shorter-term pricing arrangements linked to the spot market. As a result, we renegotiated the terms of our supply agreements with our Chinese and Japanese Asia Pacific Iron Ore customers moving to shorter-term pricing mechanisms of various durations based on the average daily spot prices, with certain pricing mechanisms that have a duration of up to a quarter. This change was effective in the first quarter of 2010 for our Chinese customers and the second quarter of 2010 for our Japanese customers. Based on timing of these changes, pricing settlements were finalized with customers during each of the 2010 quarters with the exception of the first quarter of 2010. Therefore, provisional pricing estimates were used during the first quarter of 2010 to reflect an increase of 26 percent over 2009 settled prices for both lump and fines based on provisional quarterly index pricing. The pricing estimates for the first quarter of 2010 reflected the increase in steel demand and spot prices for iron ore and were based upon index-pricing mechanisms previously reported in the industry. In addition, sales to our Japanese customers during the first quarter of 2010 reflected 2009 prices based upon contract years of April 1 to March 31.

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The following represents the historical accuracy of our provisional price estimates, as well as the impact on Product revenues resulting from the difference between the estimated change in price and the actual change in price for the quarters during 2010, 2009 and 2008 prior to settlement. The derivative instrument recorded during the first quarter of 2010 was settled during the second quarter of 2010 upon the move to short-term pricing arrangements with Asia Pacific Iron Ore customers. The timing of the pricing settlements for 2009 and 2008 is described further in the table below.

Provisional Price - Estimate vs. Actual

2010

2009 (1)

2008 (2)

First Quarter

First Quarter

Second & Third Quarter

First Quarter

Customer (geographic location)

Final Settled Price Decrease (lump/ fines)

Estimated Price Decrease (lump/ fines)

Revenue Impact (3) (in millions)

Final Settled Price Decrease (lump/ fines)

Estimated Price Decrease (lump/ fines)

Revenue Impact (3) (in millions)

Estimated Price Decrease (lump/ fines)

Final Settled Price Increase (lump/ fines)

Estimated Price Increase (lump/ fines)

Revenue Impact (3) (in millions )

Japan

N/A

N/A

$     -

-44%/-33%

-30%/-30%

$      (1.3)

N/A

97%/80%

0.0%

$     -

China

69%/69%

26%/26%

36.7

-44%/-33%

-30%/-30%

(17.1)

-44%/-33%

97%/80%

0.0%

65.0

$    36.7

$     (18.4)

$    65.0

(1)

The 2009 benchmark prices referenced in our Asia Pacific Iron Ore contracts settled with Japan in the second quarter of 2009. We agreed to final prices with our customers in China during the fourth quarter of 2009. Prices with our customers in China were settled at the estimated price decreases and therefore no additional revenue impact was realized during 2009.

(2)	In 2008, Cliffs used 2007 prices as a proxy for 2008 prices prior to settlement. The 2008 benchmark prices referenced in our Asia Pacific Iron Ore contracts settled in the second quarter of 2008.

(3)	The impact on product revenue resulting from the difference between the estimated price and the actual price was recorded in the second quarter of each respective year.

Refer to NOTE 3 - DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES, for further information.

Mineral Reserves

We regularly evaluate our economic mineral reserves and update them as required in accordance with SEC Industry Guide 7. The estimated mineral reserves could be affected by future industry conditions, geological conditions and ongoing mine planning. Maintenance of effective production capacity or the mineral reserve could require increases in capital and development expenditures. Generally as mining operations progress, haul lengths and lifts increase. Alternatively, changes in economic conditions, or the expected quality of mineral reserves could decrease capacity or mineral reserves. Technological progress could alleviate such factors, or increase capacity of mineral reserves.

We use our mineral reserve estimates combined with our estimated annual production levels, to determine the mine closure dates utilized in recording the fair value liability for asset retirement obligations. Refer to NOTE 10 – ENVIRONMENTAL AND MINE CLOSURE OBLIGATIONS, for further information. Since the liability represents the present value of the expected future obligation, a significant change in mineral reserves or mine lives would have a substantial effect on the recorded obligation. We also utilize economic mineral reserves for evaluating potential impairments of mine assets and in determining maximum useful lives utilized to calculate depreciation and amortization of long-lived mine assets. Decreases in mineral reserves or mine lives could significantly affect these items.

Asset Retirement Obligations and Environmental Remediation Costs

The accrued mine closure obligations for our active mining operations provide for contractual and legal obligations associated with the eventual closure of the mining operations. Our obligations are determined based on detailed estimates adjusted for factors that a market participant would consider (i.e., inflation, overhead and profit), which are escalated at an assumed rate of inflation to the estimated closure dates, and then discounted

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using the current credit-adjusted risk-free interest rate. The estimate also incorporates incremental increases in the closure cost estimates and changes in estimates of mine lives. The closure date for each location is determined based on the exhaustion date of the remaining iron ore reserves, which is dependent on our estimate of the economically recoverable mineral reserves. The estimated obligations are particularly sensitive to the impact of changes in mine lives given the difference between the inflation and discount rates. Changes in the base estimates of legal and contractual closure costs due to changes in legal or contractual requirements, available technology, inflation, overhead or profit rates would also have a significant impact on the recorded obligations.

We have a formal policy for environmental protection and restoration. Our obligations for known environmental matters at active and closed mining operations and other sites have been recognized based on estimates of the cost of investigation and remediation at each site. If the obligation can only be estimated as a range of possible amounts, with no specific amount being more likely, the minimum of the range is accrued. Management reviews its environmental remediation sites quarterly to determine if additional cost adjustments or disclosures are required. The characteristics of environmental remediation obligations, where information concerning the nature and extent of clean-up activities is not immediately available, and which are subject to changes in regulatory requirements, result in a significant risk of increase to the obligations as they mature. Expected future expenditures are not discounted to present value unless the amount and timing of the cash disbursements can be reasonably estimated. Potential insurance recoveries are not recognized until realized. Refer to NOTE 10 - ENVIRONMENTAL AND MINE CLOSURE OBLIGATIONS, for further information.

Income Taxes

Our income tax expense, deferred tax assets and liabilities and reserves for unrecognized tax benefits reflect management's best assessment of estimated future taxes to be paid. We are subject to income taxes in both the U.S. and numerous foreign jurisdictions. Significant judgments and estimates are required in determining the consolidated income tax expense.

Deferred income taxes arise from temporary differences between tax and financial statement recognition of revenue and expense. In evaluating our ability to recover our deferred tax assets we consider all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations. In projecting future taxable income, we begin with historical results adjusted for the results of discontinued operations and changes in accounting policies and incorporate assumptions including the amount of future state, federal and foreign pretax operating income, the reversal of temporary differences, and the implementation of feasible and prudent tax planning strategies. These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates we are using to manage the underlying businesses. In evaluating the objective evidence that historical results provide, we consider three years of cumulative operating income (loss).

At December 31, 2010, we had a valuation allowance of $172.7 million against our deferred tax assets. Our losses in certain foreign locations in recent periods represented sufficient negative evidence to require a full valuation allowance against certain of our foreign deferred tax assets. We intend to maintain a valuation allowance against our net deferred tax assets until sufficient positive evidence exists to support the realization of such assets.

Changes in tax laws and rates could also affect recorded deferred tax assets and liabilities in the future. Management is not aware of any such changes that would have a material effect on the Company's results of operations, cash flows or financial position.

The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations in a multitude of jurisdictions across our global operations.

Accounting for uncertainty in income taxes recognized in the financial statements requires that a tax benefit from an uncertain tax position be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on technical merits.

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We recognize tax liabilities in accordance with ASC 740, and we adjust these liabilities when our judgment changes as a result of evaluation of new information not previously available. Due to the complexity of some of these uncertainties, the ultimate resolution may result in payment that is materially different from our current estimate of the tax liabilities. These differences will be reflected as increases or decreases to income tax expense in the period in which they are determined.

Goodwill Impairment

In assessing the recoverability of our goodwill, significant assumptions regarding the estimated future cash flows and other factors to determine the fair value of a reporting unit must be made, including among other things, estimates related to pricing, volume and reserves. The fair value of a reporting unit is estimated using a discounted cash flow valuation model. If these estimates or their related assumptions change in the future as a result of changes in strategy or market conditions, we may be required to record impairment charges for these assets in the period such determination was made.

Goodwill is allocated among and evaluated for impairment at the reporting unit level in the fourth quarter of each year. We determined that the fair value of the reporting units for which goodwill has been assigned was in excess of our carrying value as of December 31, 2010, and that we did not have any reporting units that were at risk of failing the first step of the goodwill impairment test. The fair values were substantially in excess of our carrying values for our North American Iron Ore, North American Coal, and Asia Pacific Iron Ore reporting units. The fair value of our Ferroalloys operating unit was not substantially in excess of our carrying values due the fact that this reporting unit is primarily comprised of the assets acquired and liabilities assumed through the Freewest and Spider acquisitions in 2010. Therefore, our carrying values for the Ferroalloys operating unit were recorded at fair value through the completion of these acquisitions.

In addition to the annual impairment test required under U.S. GAAP, we assessed whether events or circumstances occurred that potentially indicate that the carrying amount of these assets may not be recoverable. Based on the assessment performed, we concluded that there were no such events or changes in circumstances during 2010. Consequently, no goodwill impairment charges were recorded in 2010. Refer to NOTE 1 - BUSINESS SUMMARY AND SIGNIFICANT ACCOUNTING POLICIES, for further information regarding our policy on goodwill impairment.

Asset Impairment

In assessing the recoverability of our long-lived assets, significant assumptions regarding the estimated future cash flows and other factors to determine the fair value of the respective assets must be made, as well as the related estimated useful lives. If these estimates or their related assumptions change in the future as a result of changes in strategy or market conditions, we may be required to record impairment charges for these assets in the period such determination was made.

We monitor conditions that indicate that the carrying value of an asset or asset group may be impaired. In order to determine if assets have been impaired, assets are grouped and tested at the lowest level for which identifiable, independent cash flows are available. An impairment loss exists when projected undiscounted cash flows are less than the carrying value of the assets. The measurement of the impairment loss to be recognized is based on the difference between the fair value and the carrying value of the assets. Fair value can be determined using a market approach, income approach or cost approach. The impairment analysis and fair value determination can result in substantially different outcomes based on critical assumptions and estimates including the quantity and quality of remaining economic ore reserves, future iron ore prices and production costs. Refer to NOTE 1 - BUSINESS SUMMARY AND SIGNIFICANT ACCOUNTING POLICIES, for further information regarding our policy on asset impairment.

Employee Retirement Benefit Obligations

We offer defined benefit pension plans, defined contribution pension plans and other postretirement benefit plans, primarily consisting of retiree healthcare benefits, to most employees in North America as part of a total compensation and benefits program. This includes employees of PinnOak, who became employees of the

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Company through the July 2007 acquisition, and employees of CLCC, who became employees of the Company through the July 2010 acquisition. Upon the acquisition of the remaining 73.2 percent interest in Wabush in February 2010, we fully consolidated the Canadian plans into our pension and OPEB obligations. We do not have employee retirement benefit obligations at our Asia Pacific Iron Ore operations.

Following is a summary of our defined benefit pension and OPEB funding and expense for the years 2008 through 2011:

		(In Millions)
		Pension								OPEB
		Funding				Expense				Funding				Expense
2008		$	24.9			$	20.3			$	19.7			$	8.6
2009			18.5				50.8				35.7				25.5
2010			45.6				45.6				38.5				24.2
2011 (Estimated)			72.5				38.0				40.0				26.1

Assumptions used in determining the benefit obligations and the value of plan assets for defined benefit pension plans and postretirement benefit plans (primarily retiree healthcare benefits) that we offer are evaluated periodically by management. Critical assumptions, such as the discount rate used to measure the benefit obligations, the expected long-term rate of return on plan assets, the medical care cost trend, and the rate of compensation increase are reviewed annually.

As of December 31, 2010, we used the following assumptions:

		Pension and Other Benefits
		2010				2009
U.S. plan discount rate			5.11	%			5.66	%
Canadian plan discount rate			5.00				(1	)
Rate of compensation increase			4.00				4.00
U.S. expected return on plan assets			8.50				(1	)
Canadian expected return on plan assets			7.50				(1	)

(1)	The Canadian plans were not consolidated into our pension and OPEB obligations prior to the acquisition of the remaining 73.2 percent interest in Wabush in February 2010.

Additionally, on December 31, 2010, we adopted the IRS 2011 prescribed mortality tables (separate pre-retirement and postretirement) to determine the expected life of our plan participants, replacing the IRS 2010 prescribed mortality tables for our U.S. plans. The assumed mortality remained the same as the previous year for our Canadian plans, UP 1994 with full projection.

Following are sensitivities of potential further changes in these key assumptions on the estimated 2011 pension and OPEB expense and the pension and OPEB benefit obligations as of December 31, 2010:

		Increase in Expense (In Millions)								Increase in Benefit Obligation (In Millions)
		Pension				OPEB				Pension				OPEB
Decrease discount rate .25 percent		$	1.7			$	1.2			$	27.5			$	14.2
Decrease return on assets 1 percent			7.3				1.9				-				-
Increase medical trend rate 1 percent			N/A				8.7				N/A				51.5

Changes in actuarial assumptions, including discount rates, employee retirement rates, mortality, compensation levels, plan asset investment performance, and healthcare costs, are determined based on analyses of actual and expected factors. Changes in actuarial assumptions and/or investment performance of plan assets can have a significant impact on our financial condition due to the magnitude of our retirement obligations. Refer to NOTE 11 - PENSIONS AND OTHER POSTRETIREMENT BENEFITS in Item 8 for further information.

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Forward-Looking Statements

This report contains statements that constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by the use of predictive, future-tense or forward-looking terminology, such as "believes," "anticipates," "expects," "estimates," "intends," "may," "will" or similar terms. These statements speak only as of the date of this report, and we undertake no ongoing obligation, other than that imposed by law, to update these statements. These statements appear in a number of places in this report and relate to, among other things, our intent, belief or current expectations of our directors or our officers with respect to: our future financial condition, results of operations or prospects, estimates of our economic iron ore and coal reserves; our business and growth strategies; and our financing plans and forecasts. You are cautioned that any such forward-looking statements are not guarantees of future performance and involve significant risks and uncertainties, and that actual results may differ materially from those contained in or implied by the forward-looking statements as a result of various factors, some of which are unknown, including, without limitation:

•

the ability to successfully complete the pending acquisition of Consolidated Thompson;

•

the ability to successfully integrate acquired companies into our operations, including without limitation, Consolidated Thompson if it is successfully acquired;

•

uncertainty or weaknesses in global economic conditions, including downward pressure on prices;

•

trends affecting our financial condition, results of operations or future prospects;

•

the ability to reach agreement with our iron ore customers regarding modifications to sales contract pricing escalation provisions to reflect a shorter-term or spot-based pricing mechanism;

•

the outcome of any contractual disputes with our customers or significant energy, material or service providers;

•

the outcome of any arbitration or litigation;

•

changes in sales volume or mix;

•

the impact of price-adjustment factors on our sales contracts;

•

the ability of our customers to meet their obligations to us on a timely basis or at all;

•

our actual economic ore reserves;

•

the success of our business and growth strategies;

•

our ability to successfully identify and consummate any strategic investments;

•

our ability to successfully integrate the operations of our acquired businesses into our operations;

•

events or circumstances that could impair or adversely impact the viability of a mine and the carrying value of associated assets;

•

impacts of increasing governmental regulation including failure to receive or maintain required environmental permits, approvals, modifications or other authorization of, or from, any governmental or regulatory entity;

•

adverse changes in currency values;

•

the success of our cost-savings efforts;

•

our ability to maintain adequate liquidity and successfully implement our financing plans;

•

our ability to maintain appropriate relations with unions and employees;

•

uncertainties associated with unanticipated geological conditions, natural disasters, weather conditions, disruption of energy, equipment failures and other unexpected events;

•

risks related to international operations,;

•

the potential existence of significant deficiencies or material weakness in our internal control over financial reporting; and

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You are cautioned that any such forward-looking statements are not guarantees of future performance and involve significant risks and uncertainties, and that actual results may differ materially from those contained in the forward-looking statements as a result of various factors, some of which are unknown. For additional factors affecting the business of Cliffs Natural Resources Inc., refer to Part I - Item 1A. Risk Factors.

You are urged to carefully consider these risk factors. All forward-looking statements attributable to us are expressly qualified in their entirety by the foregoing cautionary statements.

Item 7A.     Quantitative

and Qualitative Disclosures About Market Risk.

Information regarding our Market Risk is presented under the caption Market Risk , which is included in Item 7 and is incorporated by reference and made a part hereof.

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Item 8.

Financial Statements and Supplementary Data.

Statements of Consolidated Financial Position

Cliffs Natural Resources Inc. and Subsidiaries

		(In Millions)
		December 31,
		2010				2009
ASSETS
CURRENT ASSETS
Cash and cash equivalents		$	1,566.7			$	502.7
Accounts receivable			359.1				103.5
Inventories			269.2				272.5
Supplies and other inventories			148.1				102.7
Deferred and refundable taxes			43.2				61.4
Derivative assets			82.6				51.5
Other current assets			114.8				66.9
TOTAL CURRENT ASSETS			2,583.7				1,161.2
PROPERTY, PLANT AND EQUIPMENT, NET			3,979.2				2,592.6
OTHER ASSETS
Marketable securities			85.9				88.1
Investments in ventures			514.8				315.1
Goodwill			196.5				74.6
Intangible assets, net			175.8				114.8
Long-term receivables			56.1				49.8
Deferred income taxes			140.3				151.1
Deposits and miscellaneous			45.9				92.0
TOTAL OTHER ASSETS			1,215.3				885.5
TOTAL ASSETS		$	7,778.2			$	4,639.3

See notes to consolidated financial statements.

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Statements of Consolidated Financial Position

Cliffs Natural Resources Inc. and Subsidiaries

		(In Millions, Except Share Amounts)
		December 31,
		2010				2009
LIABILITIES
CURRENT LIABILITIES
Accounts payable		$	266.5			$	178.9
Accrued employment costs			129.9				78.4
Income taxes payable			103.4				6.1
State and local taxes payable			38.9				35.1
Below-market sales contracts - current			57.1				30.3
Accrued expenses			136.7				77.4
Deferred revenue			215.6				105.1
Other current liabilities			80.6				59.1
TOTAL CURRENT LIABILITIES			1,028.7				570.4
POSTEMPLOYMENT BENEFIT LIABILITIES
Pensions			284.9				267.3
Other postretirement benefits			243.1				178.5
TOTAL POSTEMPLOYMENT BENEFIT LIABILITIES			528.0				445.8
ENVIRONMENTAL AND MINE CLOSURE OBLIGATIONS			184.9				124.3
DEFERRED INCOME TAXES			63.7				70.8
SENIOR NOTES			1,713.1				325.0
TERM LOAN			-				200.0
BELOW-MARKET SALES CONTRACTS			164.4				153.3
OTHER LIABILITIES			256.7				212.7
TOTAL LIABILITIES			3,939.5				2,102.3
COMMITMENTS AND CONTINGENCIES
EQUITY
CLIFFS SHAREHOLDERS' EQUITY
Preferred stock - no par value
Class A - 3,000,000 shares authorized and unissued
Class B - 4,000,000 shares authorized and unissued
Common Shares - par value $0.125 per share
Authorized - 224,000,000 shares;
Issued - 138,845,469 shares (2009 - 134,623,528 shares);
Outstanding - 135,456,999 shares (2009 - 130,971,470 shares)			17.3				16.8
Capital in excess of par value of shares			896.3				695.4
Retained Earnings			2,924.1				1,973.1
Cost of 3,388,470 common shares in treasury (2009 - 3,652,058 shares)			(37.7	)			(19.9	)
Accumulated other comprehensive income (loss)			45.9				(122.6	)
TOTAL CLIFFS SHAREHOLDERS' EQUITY			3,845.9				2,542.8
NONCONTROLLING INTEREST			(7.2	)			(5.8	)
TOTAL EQUITY			3,838.7				2,537.0
TOTAL LIABILITIES AND EQUITY		$	7,778.2			$	4,639.3

See notes to consolidated financial statements.

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Statements of Consolidated Operations

Cliffs Natural Resources Inc. and Subsidiaries

		(In Millions, Except Per Share Amounts)
		Year Ended December 31,
		2010				2009				2008
REVENUES FROM PRODUCT SALES AND SERVICES
Product		$	4,416.8			$	2,216.2			$	3,294.8
Freight and venture partners' cost reimbursements			265.4				125.8				314.3
			4,682.2				2,342.0				3,609.1
COST OF GOODS SOLD AND OPERATING EXPENSES			(3,158.7	)			(2,033.1	)			(2,449.4	)
SALES MARGIN			1,523.5				308.9				1,159.7
OTHER OPERATING INCOME (EXPENSE)
Royalties and management fee revenue			12.1				4.8				21.7
Selling, general and administrative expenses			(238.0	)			(120.7	)			(188.6	)
Terminated acquisition costs			-				-				(90.1	)
Gain on sale of other assets - net			3.0				13.2				22.8
Casualty recoveries			3.3				-				10.5
Miscellaneous - net			(38.9	)			24.0				2.9
			(258.5	)			(78.7	)			(220.8	)
OPERATING INCOME			1,265.0				230.2				938.9
OTHER INCOME (EXPENSE)
Gain on acquisition of controlling interests			40.7				-				-
Changes in fair value of foreign currency contracts, net			39.8				85.7				(188.2	)
Interest income			9.9				10.8				26.2
Interest expense			(69.7	)			(39.0	)			(39.8	)
Impairment of securities			(1.2	)			-				(25.1	)
Other non-operating income			13.7				2.9				4.3
			33.2				60.4				(222.6	)
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND EQUITY INCOME (LOSS) FROM VENTURES			1,298.2				290.6				716.3
INCOME TAX EXPENSE			(292.0	)			(20.8	)			(144.2	)
EQUITY INCOME (LOSS) FROM VENTURES			13.5				(65.5	)			(35.1	)
NET INCOME			1,019.7				204.3				537.0
LESS: NET INCOME (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTEREST (net of tax of $0.1, $0.3, and $9.1 in 2010, 2009 and 2008)			(0.2	)			(0.8	)			21.2
NET INCOME ATTRIBUTABLE TO CLIFFS SHAREHOLDERS			1,019.9				205.1				515.8
PREFERRED STOCK DIVIDENDS			-				-				(1.1	)
INCOME ATTRIBUTABLE TO CLIFFS COMMON SHAREHOLDERS		$	1,019.9			$	205.1			$	514.7
EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CLIFFS SHAREHOLDERS - BASIC		$	7.54			$	1.64			$	5.07
EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CLIFFS SHAREHOLDERS - DILUTED		$	7.49			$	1.63			$	4.76
AVERAGE NUMBER OF SHARES (IN THOUSANDS)
Basic			135,301				124,998				101,471
Diluted			136,138				125,751				108,288
CASH DIVIDENDS DECLARED PER SHARE			0.51				0.26				0.35

See notes to consolidated financial statements.

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Statements of Consolidated Cash Flows

Cliffs Natural Resources Inc. and Subsidiaries

		(In Millions)
		Year Ended December 31,
		2010				2009				2008
CASH FLOW FROM CONTINUING OPERATIONS
OPERATING ACTIVITIES
Net income		$	1,019.7			$	204.3			$	537.0
Adjustments to reconcile net income to net cash from operating activities:
Depreciation, depletion and amortization			322.3				236.6				201.1
Derivatives and currency hedges			(39.0	)			(204.5	)			58.4
Foreign exchange loss (gains)			39.1				(28.1	)			-
Share-based compensation			12.5				10.1				21.4
Equity (income) loss in ventures (net of tax)			(13.5	)			65.5				35.1
Pensions and other postretirement benefits			8.7				27.3				(32.9	)
Deferred income taxes			15.2				60.8				(88.5	)
Changes in deferred revenue and below-market sales contracts			39.3				(33.4	)			58.0
Impairment of securities			1.2				-				25.1
Gain on acquisition of controlling interests			(40.7	)			-				-
Other			8.9				4.6				(3.8	)
Changes in operating assets and liabilities:
Receivables and other assets			(204.6	)			(24.2	)			(55.4	)
Inventories			61.2				7.7				(44.6	)
Payables and accrued expenses			89.7				(141.0	)			142.3
Net cash from operating activities			1,320.0				185.7				853.2
INVESTING ACTIVITIES
Acquisition of controlling interests, net of cash acquired			(994.5	)			-				-
Purchase of noncontrolling interests			-				-				(589.5	)
Purchase of property, plant and equipment			(266.9	)			(116.3	)			(182.5	)
Investments in ventures			(191.3	)			(81.8	)			(62.7	)
Investment in marketable securities			(6.6	)			(14.9	)			(30.4	)
Redemption of marketable securities			32.5				5.4				17.8
Proceeds from sale of assets			59.1				28.3				41.2
Proceeds from property damage insurance recoveries			-				-				10.5
Net cash used by investing activities			(1,367.7	)			(179.3	)			(795.6	)
FINANCING ACTIVITIES
Net proceeds from issuance of common shares			-				347.3				-
Borrowings under credit facility			450.0				279.7				540.0
Repayments under credit facility			(450.0	)			(276.4	)			(780.0	)
Net proceeds from issuance of senior notes			1,388.1				-				325.0
Repayment of term loan			(200.0	)			-				-
Common stock dividends			(68.9	)			(31.9	)			(36.1	)
Repayment of other borrowings			(16.7	)			(9.7	)			(8.4	)
Contributions by (to) joint ventures, net			(1.4	)			(8.3	)			(10.5	)
Other financing activities			(13.5	)			3.6				2.4
Net cash from financing activities			1,087.6				304.3				32.4
EFFECT OF EXCHANGE RATE CHANGES ON CASH			24.1				13.0				(68.1	)
INCREASE IN CASH AND CASH EQUIVALENTS			1,064.0				323.7				21.9
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR			502.7				179.0				157.1
CASH AND CASH EQUIVALENTS AT END OF YEAR		$	1,566.7			$	502.7			$	179.0

See notes to consolidated financial statements.

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Statements of Consolidated Changes in Equity

Cliffs Natural Resources Inc. and Subsidiaries

		(In Millions)
		Cliffs Shareholders
		Number of Common Shares				Common Shares				Capital In Excess of Par Value of Shares				Retained Earnings				Common Shares in Treasury				Accumulated Other Compre- hensive Income (Loss)				Non- Controlling Interest				Total
January 1, 2008			87.2			$	16.8			$	116.6			$	1,316.2			$	(255.6	)		$	(30.3	)		$	117.8			$	1,281.5
Comprehensive income
Net income			-				-				-				515.8				-				-				21.2				537.0
Other comprehensive income
Pension and OPEB liability			-				-				-				-				-				(188.5	)			(8.0	)			(196.5	)
Unrealized net loss on marketable securities			-				-				-				-				-				(10.3	)			(1.4	)			(11.7	)
Unrealized net loss on foreign currency translation			-				-				-				-				-				(165.1	)			(13.7	)			(178.8	)
Unrealized loss on interest rate swap			-				-				-				-				-				(0.8	)			-				(0.8	)
Unrealized gain on derivative instruments			-				-				-				-				-				0.4				0.8				1.2
Total comprehensive income			-				-				-				-				-				-				(1.1	)			150.4
Equity purchase of noncontrolling interest			4.3				-				141.8				-				23.2				-				-				165.0
Purchase of subsidiary shares from noncontrolling interest			-				-				-				-				-				-				(111.2	)			(111.2	)
Undistributed losses to noncontrolling interest			-				-				-				-				-				-				(2.9	)			(2.9	)
Capital contribution by noncontrolling interest to subsidiary			-				-				-				-				-				-				0.7				0.7
PinnOak settlement			4.0				-				131.5				-				21.5				-				-				153.0
Stock and other incentive plans			-				-				19.2				-				0.8				-				-				20.0
Conversion of preferred stock			18.0				-				33.1				5.1				96.3				-				-				134.5
Preferred stock dividends			-				-				-				(1.1	)			-				-				-				(1.1	)
Common stock dividends			-				-				-				(36.1	)			-				-				-				(36.1	)
December 31, 2008			113.5				16.8				442.2				1,799.9				(113.8	)			(394.6	)			3.3				1,753.8
Comprehensive income
Net income			-				-				-				205.1				-				-				(0.8	)			204.3
Other comprehensive income
Pension and OPEB liability			-				-				-				-				-				24.2				(2.4	)			21.8
Unrealized net gain on marketable securities			-				-				-				-				-				29.5				-				29.5
Unrealized net gain on foreign currency translation			-				-				-				-				-				231.7				-				231.7
Unrealized gain on interest rate swap			-				-				-				-				-				1.7				-				1.7
Reclassification of net gains on derivative financial instruments into net income			-				-				-				-				-				(15.1	)			-				(15.1	)
Total comprehensive income			-				-				-				-				-				-				(3.2	)			473.9
Purchase of subsidiary shares from noncontrolling interest			-				-				-				-				-				-				0.1				0.1
Undistributed losses to noncontrolling interest			-				-				-				-				-				-				(6.7	)			(6.7	)
Capital contribution by noncontrolling interest to subsidiary			-				-				-				-				-				-				0.7				0.7
Issuance of common shares			17.3				-				254.5				-				92.8				-				-				347.3
Purchase of additional noncontrolling interest			-				-				(5.4	)			-				-				-				-				(5.4	)
Stock and other incentive plans			0.2				-				4.1				-				0.9				-				-				5.0
Conversion of preferred stock			-				-				-				-				0.2				-				-				0.2
Common stock dividends			-				-				-				(31.9	)			-				-				-				(31.9	)
December 31, 2009			131.0				16.8				695.4				1,973.1				(19.9	)			(122.6	)			(5.8	)			2,537.0

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Cliffs Natural Resources Inc. and Subsidiaries

		(In Millions)
		Cliffs Shareholders
		Number of Common Shares				Common Shares				Capital In Excess of Par Value of Shares				Retained Earnings				Common Shares in Treasury				Accumulated Other Compre- hensive Income (Loss)				Non- Controlling Interest				Total
Comprehensive income
Net income			-				-				-				1,019.9				-				-				(0.2	)			1,019.7
Other comprehensive income
Pension and OPEB liability			-				-				-				-				-				14.0				0.8				14.8
Unrealized net gain on marketable securities			-				-				-				-				-				4.2				-				4.2
Unrealized net gain on foreign currency translation			-				-				-				-				-				151.6				-				151.6
Reclassification of net gains on derivative financial instruments into net income			-				-				-				-				-				(3.2	)			-				(3.2	)
Unrealized gain on derivative instruments			-				-				-				-				-				1.9				-				1.9
Total comprehensive income																											0.6				1,189.0
Purchase of subsidiary shares from noncontrolling interest			-				-				-				-				-				-				(0.5	)			(0.5	)
Undistributed losses to noncontrolling interest			-				-				-				-				-				-				(4.5	)			(4.5	)
Capital contribution by noncontrolling interest to subsidiary			-				-				-				-				-				-				3.0				3.0
Purchase of additional noncontrolling interest			-				-				(1.6	)			-				-				-				-				(1.6	)
Acquisition of controlling interest			4.2				0.5				172.6				-				-				-				-				173.1
Stock and other incentive plans			0.3				-				19.4				-				(7.3	)			-				-				12.1
Common stock dividends			-				-				-				(68.9	)			-				-				-				(68.9	)
Other			-				-				10.5				-				(10.5	)			-				-				-
December 31, 2010			135.5			$	17.3			$	896.3			$	2,924.1			$	(37.7	)		$	45.9			$	(7.2	)		$	3,838.7

See notes to consolidated financial statements.

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Cliffs Natural Resources Inc. and Subsidiaries

Notes to Consolidated Financial Statements

NOTE 1 - BUSINESS SUMMARY AND SIGNIFICANT ACCOUNTING POLICIES

Business Summary

We are an international mining and natural resources company, the largest producer of iron ore pellets in North America, a major supplier of direct-shipping lump and fines iron ore out of Australia, and a significant producer of metallurgical coal. In North America, we operate six iron ore mines in Michigan, Minnesota and Eastern Canada, five metallurgical coal mines located in West Virginia and Alabama and one thermal coal mine located in West Virginia. Our Asia Pacific operations are comprised of two iron ore mining complexes in Western Australia, serving the Asian iron ore markets with direct-shipping fines and lump ore, and a 45 percent economic interest in Sonoma, a coking and thermal coal mine located in Queensland, Australia. In Latin America, we have a 30 percent interest in Amapá, a Brazilian iron ore project, and in Ontario, Canada, we have recently acquired Ring of Fire properties. Our operations also include our 95 percent controlling interest in renewaFUEL located in Michigan. Our company's operations are organized and managed according to product category and geographic location: North American Iron Ore; North American Coal; Asia Pacific Iron Ore; Asia Pacific Coal; Latin American Iron Ore; Alternative Energies; Ferroalloys; and our Global Exploration Group.

Accounting Policies

We consider the following policies to be beneficial in understanding the judgments that are involved in the preparation of our consolidated financial statements and the uncertainties that could impact our financial condition, results of operations and cash flows.

Use of Estimates

The preparation of financial statements, in conformity with GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from estimates. On an ongoing basis, management reviews estimates. Changes in facts and circumstances may alter such estimates and affect results of operations and financial position in future periods.

Basis of Consolidation

The consolidated financial statements include our accounts and the accounts of our wholly-owned and majority-owned subsidiaries, including the following subsidiaries:

Name		Location		Ownership Interest				Operation
Northshore		Minnesota			100.0	%			Iron Ore
United Taconite		Minnesota			100.0	%			Iron Ore
Wabush		Canada			100.0	%			Iron Ore
Tilden		Michigan			85.0	%			Iron Ore
Empire		Michigan			79.0	%			Iron Ore
Asia Pacific Iron Ore		Western Australia			100.0	%			Iron Ore
Pinnacle		West Virginia			100.0	%			Coal
Oak Grove		Alabama			100.0	%			Coal
CLCC		West Virginia			100.0	%			Coal
renewaFUEL		Michigan			95.0	%			Biomass
Freewest		Canada			100.0	%			Chromite
Spider		Canada			100.0	%			Chromite

Intercompany transactions and balances are eliminated upon consolidation.

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On January 27, 2010, we acquired all of the outstanding shares of Freewest, a Canadian-based mineral exploration company, for C$1.00 per share, thereby increasing our ownership interest in Freewest to 100 percent. The consolidated financial statements as of and for the period ended December 31, 2010 reflect the acquisition of the remaining interest in Freewest since that date. At December 31, 2009, our ownership in Freewest represented approximately 12.4 percent of its outstanding shares; we did not exercise significant influence, and the investment was classified as an available-for-sale security. Refer to NOTE 5 – ACQUISITIONS AND OTHER INVESTMENTS for further information.

On February 1, 2010, we acquired the remaining 73.2 percent interest in Wabush, thereby increasing our ownership interest to 100 percent. The consolidated financial statements as of and for the period ended December 31, 2010 reflect the acquisition of the remaining interest in Wabush since that date. At December 31, 2009, our 26.8 percent ownership interest in Wabush was accounted for as an equity method investment. Refer to NOTE 5 – ACQUISITIONS AND OTHER INVESTMENTS for further information.

During the second quarter of 2010, we commenced a formal cash offer to acquire all of the outstanding common shares of Spider, a Canadian-based mineral exploration company, for C$0.19 per share. On July 6, 2010, all of the conditions to acquire the remaining common shares of Spider had been satisfied or waived and we increased our ownership percentage to 52 percent, representing a majority of the common shares outstanding on a fully-diluted basis. Subsequently, we extended the cash offer to permit additional shares to be tendered and taken up, thereby increasing our ownership percentage in Spider to 85 percent as of July 26, 2010. Effective October 6, 2010, we completed the acquisition of all of the remaining shares of Spider through an amalgamation. Consequently, we own 100 percent of Spider as of December 31, 2010 and have obtained majority ownership of the "Big Daddy" chromite deposit located in Northern Ontario. The consolidated financial statements as of and for the period ended December 31, 2010 reflect our 100 percent ownership interest in Spider. Prior to the acquisition date, our ownership in Spider represented approximately four percent of its issued and outstanding shares; we did not exercise significant influence, and the investment was classified as an available-for-sale security. Refer to NOTE 5 – ACQUISITIONS AND OTHER INVESTMENTS for further information.

On July 30, 2010, we acquired all of the coal operations of privately-owned INR, and since that date, the operations acquired from INR have been conducted through our wholly-owned subsidiary known as CLCC. CLCC is a producer of high-volatile metallurgical and thermal coal located in southern West Virginia. The consolidated financial statements as of and for the period ended December 31, 2010 reflect our 100 percent ownership interest in CLCC since the date of acquisition. Refer to NOTE 5 – ACQUISITIONS AND OTHER INVESTMENTS for further information.

In January 2009, we adopted the amended provisions of FASB ASC 810 related to noncontrolling interests in consolidated financial statements, which established accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. The amendment clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. Our noncontrolling interests primarily relate to majority-owned subsidiaries within our North American Iron Ore business segment. The mining ventures function as captive cost companies, as they supply products only to their owners effectively on a cost basis. Accordingly, the noncontrolling interests' revenue amounts are stated at cost of production and are offset entirely by an equal amount included in cost of goods sold and operating expenses, resulting in no sales margin reflected in noncontrolling interest participants. As a result, the adoption of the amendments to FASB ASC 810 did not have a material impact on our consolidated results of operations with respect to these subsidiaries.

Cash Equivalents

Cash and cash equivalents include cash on hand and in the bank as well as all short-term securities held for the primary purpose of general liquidity. We consider investments in highly liquid debt instruments with an

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Notes to Consolidated Financial Statements - (Continued)

original maturity of three months or less from the date of acquisition to be cash equivalents. We routinely monitor and evaluate counterparty credit risk related to the financial institutions by which our short-term investment securities are held.

Inventories

The following table presents the detail of our Inventories on the Statements of Consolidated Financial Position at December 31, 2010 and 2009:

		(In Millions)
		2010												2009
Segment		Finished Goods				Work-in Process				Total Inventory				Finished Goods				Work-In Process				Total Inventory
North American Iron Ore		$	144.6			$	30.9			$	175.5			$	172.7			$	18.4			$	191.1
North American Coal			16.1				19.8				35.9				14.9				1.4				16.3
Asia Pacific Iron Ore			34.7				20.4				55.1				28.6				31.7				60.3
Other			2.6				0.1				2.7				1.6				3.2				4.8
Total		$	198.0			$	71.2			$	269.2			$	217.8			$	54.7			$	272.5

North American Iron Ore

North American Iron Ore product inventories are stated at the lower of cost or market. Cost of iron ore inventories is determined using the LIFO method. The excess of current cost over LIFO cost of iron ore inventories was $112.4 million and $81.4 million at December 31, 2010 and 2009, respectively. As of December 31, 2010, the product inventory balance for North American Iron Ore declined to $144.6 million, resulting in liquidation of LIFO layers in 2010. The effect of the inventory reduction was a decrease in Cost of good sold and operating expenses of $4.6 million in the Statements of Consolidated Operations for the year ended December 31, 2010. As of December 31, 2009, the product inventory balance for North American Iron Ore increased to $172.7 million, resulting in an additional LIFO layer being added during the year.

We had approximately 0.8 million tons and 1.2 million tons of finished goods stored at ports and customer facilities on the lower Great Lakes to service customers at December 31, 2010 and 2009, respectively. We maintain ownership of the inventories until title has transferred to the customer, usually when payment is made. Maintaining ownership of the iron ore products at ports on the lower Great Lakes reduces risk of non-payment by customers, as we retain title to the product until payment is received from the customer. We track the movement of the inventory and verify the quantities on hand.

North American Coal

North American Coal product inventories are stated at the lower of cost or market. Cost of coal inventories includes labor, supplies and operating overhead and related costs and is calculated using the average production cost. We maintain ownership until coal is loaded into rail cars at the mine for domestic sales and until loaded in the vessels at the terminal for export sales. We recorded lower-of-cost-or-market inventory charges of $26.1 million in Cost of good sold and operating expenses on the Statements of Consolidated Operations for the year ended December 31, 2010. These charges were a result of operational and geological issues at our Pinnacle and Oak Grove mines during the year.

Asia Pacific Iron Ore

Asia Pacific Iron Ore product inventories are stated at the lower of cost or market. Costs, including an appropriate portion of fixed and variable overhead expenses, are assigned to the inventory on hand by the method most appropriate to each particular class of inventory, with the majority being valued on a weighted average basis. We maintain ownership of the inventories until title has transferred to the customer at the F.O.B. point, which is generally when the product is loaded into the vessel.

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Derivative Financial Instruments

We are exposed to certain risks related to the ongoing operations of our business, including those caused by changes in commodity prices, interest rates and foreign currency exchange rates. We have established policies and procedures, including the use of certain derivative instruments, to manage such risks. Refer to NOTE 3 – DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES for further information.

Property, Plant and Equipment

North American Iron Ore

North American Iron Ore properties are stated at cost. Depreciation of plant and equipment is computed principally by the straight-line method based on estimated useful lives, not to exceed the estimated economic iron ore reserves. Northshore, United Taconite and our mines in Michigan use the double declining balance method of depreciation for certain mining equipment. Depreciation is provided over the following estimated useful lives:

Asset Class		Basis		Life
Buildings		Straight line		45 Years
Mining equipment		Straight line		10 to 20 Years
Processing equipment		Straight line		15 to 45 Years
Information technology		Straight line		2 to 7 Years

Depreciation is not curtailed when operations are temporarily idled.

North American Coal

North American Coal properties are stated at cost. Depreciation is provided over the estimated useful lives, not to exceed the mine lives and is calculated by the straight-line method. Depreciation is provided over the following estimated useful lives:

Asset Class		Basis		Life
Buildings		Straight line		30 Years
Mining equipment		Straight line		2 to 22 Years
Processing equipment		Straight line		2 to 30 Years
Information technology		Straight line		2 to 3 Years

Asia Pacific Iron Ore

Our Asia Pacific Iron Ore properties are stated at cost. Depreciation is calculated by the straight-line method or production output basis provided over the following estimated useful lives:

Asset Class		Basis		Life
Plant and equipment		Straight line		5 -10 Years
Plant and equipment and mine assets		Production output		10 Years
Motor vehicles, furniture & equipment		Straight line		3 - 5 Years

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The following table indicates the value of each of the major classes of our consolidated depreciable assets as of December 31, 2010 and 2009:

		(In Millions)
		December 31,
		2010				2009
Land rights and mineral rights		$	3,019.9			$	1,877.3
Office and information technology			60.4				53.7
Buildings			107.6				77.3
Mining equipment			628.5				381.0
Processing equipment			658.8				499.5
Railroad equipment			122.9				92.2
Electric power facilities			54.4				60.0
Port facilities			64.0				52.5
Interest capitalized during construction			19.4				18.9
Land improvements			25.0				22.4
Other			36.0				41.6
Construction in progress			140.0				81.7
			4,936.9				3,258.1
Allowance for depreciation and depletion			(957.7	)			(665.5	)
		$	3,979.2			$	2,592.6

We recorded depreciation expense of $165.4 million, $120.6 million, and $113.5 million on the Statements of Consolidated Operations for the years ended December 31, 2010, 2009, and 2008, respectively.

The costs capitalized and classified as Land rights and mineral rights represent lands where we own the surface and/or mineral rights. The value of the land rights is split between surface only, surface and minerals, and minerals only.

Our North American Coal operation leases coal mining rights from third parties through lease agreements. The lease agreements are for varying terms and extend through the earlier of their lease termination date or until all merchantable and mineable coal has been extracted. Our interest in coal reserves and resources was valued using a discounted cash flow method. The fair value was estimated based upon the present value of the expected future cash flows from coal operations over the life of the reserves.

Our Asia Pacific Iron Ore, Wabush, and United Taconite operation's interest in iron ore reserves and resources was valued using a discounted cash flow method. The fair value was estimated based upon the present value of the expected future cash flows from iron ore operations over the economic lives of the mines.

The net book value of the land rights and mineral rights as of December 31, 2010 and 2009 is as follows:

		(In Millions)
		December 31,
		2010				2009
Land rights		$	36.8			$	29.0
Mineral rights:
Cost		$	2,983.1			$	1,848.3
Less depletion			376.4				243.8
Net mineral rights		$	2,606.7			$	1,604.5

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Accumulated depletion relating to mineral rights, which was recorded using the unit-of-production method, is included in Allowances for depreciation and depletion . We recorded depletion expense of $95.5 million, $68.1 million and $66.6 million on the Statements of Consolidated Operations for the years ended December 31, 2010, 2009 and 2008, respectively.

We review iron ore and coal reserves based on current expectations of revenues and costs, which are subject to change. Iron ore and coal reserves include only proven and probable quantities which can be economically and legally mined and processed utilizing existing technology.

Capitalized Stripping Costs

Stripping costs during the development of a mine, before production begins, are capitalized as a part of the depreciable cost of building, developing and constructing a mine. These capitalized costs are amortized over the productive life of the mine using the units of production method. The productive phase of a mine is deemed to have begun when saleable minerals are extracted (produced) from an ore body, regardless of the level of production. The production phase does not commence with the removal of de minimis saleable mineral material that occurs in conjunction with the removal of overburden or waste material for purposes of obtaining access to an ore body. The stripping costs incurred in the production phase of a mine are variable production costs included in the costs of the inventory produced (extracted) during the period that the stripping costs are incurred.

Stripping costs related to expansion of a mining asset of proven and probable reserves are variable production costs that are included in the costs of the inventory produced during the period that the stripping costs are incurred.

Marketable Securities

Our marketable securities consist of debt and equity instruments and are classified as either held-to-maturity or available-for-sale. Securities investments that we have the intent and ability to hold to maturity are classified as held-to-maturity and recorded at amortized cost. Investments in marketable equity securities that are being held for an indefinite period are classified as available-for-sale. We determine the appropriate classification of debt and equity securities at the time of purchase and re-evaluate such designation as of each balance sheet date. In addition, we review our investments on an ongoing basis for indications of possible impairment. Once identified, the determination of whether the impairment is temporary or other-than-temporary requires significant judgment. The primary factors that we consider in classifying the impairment include the extent and time the fair value of each investment has been below cost, and the existence of a credit loss in relation to our debt securities. If a decline in fair value is judged other than temporary, the basis of the individual security is written down to fair value as a new cost basis, and the amount of the write-down is included as a realized loss. For our held-to-maturity debt securities, if the fair value is less than cost, and we do not expect to recover the entire amortized cost basis of the security, the other-than-temporary impairment is separated into the amount representing the credit loss, which is recognized in earnings, and the amount representing all other factors, which is recognized in Accumulated other comprehensive income (loss). Refer to NOTE 4 - MARKETABLE SECURITIES for additional information.

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Investments in Ventures

The following table presents the detail of our investments in unconsolidated ventures and where those investments are classified on the Statements of Consolidated Financial Position. Parentheses indicate a net liability.

										(In Millions)
Investment		Classification				Interest Percentage				December 31, 2010				December 31, 2009
Amapá			Investments in ventures				30			$	461.3			$	272.4
AusQuest			Investments in ventures				30				24.1				22.7
Cockatoo			Investments in ventures				50				10.5				9.1
Wabush (1)			Other liabilities				100				-				(11.4	)
Hibbing			Other liabilities				23				(5.8	)			(11.6	)
Other			Investments in ventures								18.9				10.9
										$	509.0			$	292.1

(1)

On February 1, 2010, we acquired U.S. Steel Canada's 44.6 percent interest and ArcelorMittal Dofasco's 28.6 percent interest in Wabush, thereby increasing our ownership interest in Wabush from 26.8 percent as of December 31, 2009 to 100 percent as of December 31, 2010. Refer to NOTE 5 - ACQUISITIONS & OTHER INVESTMENTS for further information.

Amapá

Our 30 percent ownership interest in Amapá, in which we do not have control but have the ability to exercise significant influence over operating and financial policies, is accounted for under the equity method. Accordingly, our share of the results from Amapá is reflected as Equity income (loss) from ventures on the Statements of Consolidated Operations. The financial information of Amapá included in our financial statements is for the periods ended November 30, 2010, 2009 and 2008 and as of November 30, 2010 and 2009. The earlier cut-off is to allow for sufficient time needed by Amapá to properly close and prepare complete financial information, including consolidating and eliminating entries, conversion to U.S. GAAP and review by the Company. There were no intervening transactions or events that materially affected Amapá's financial position or results of operations that were not reflected in our year-end financial statements.

AusQuest

On September 11, 2008, we announced a strategic alliance and subscription and option agreement with AusQuest, a diversified Australian exploration company. Under the agreement, we acquired a 30 percent fully diluted interest in AusQuest through a staged issuance of shares and options. Our 30 percent ownership interest in AusQuest, in which we do not have control but have the ability to exercise significant influence over operating and financial policies, is accounted for under the equity method. Accordingly, our share of the results from AusQuest is reflected as Equity income (loss) from ventures on the Statements of Consolidated Operations. The financial information of AusQuest included in our financial statements is for the periods ended November 30, 2010, 2009 and 2008 and as of November 30, 2010 and 2009 since the date of acquisition. The earlier cut-off is to allow for sufficient time needed by AusQuest to properly close and prepare complete financial information, including consolidating and eliminating entries, conversion to U.S. GAAP and review and approval by the Company. There were no intervening transactions or events that materially affected AusQuest's financial position or results of operations that were not reflected in our year-end financial statements.

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Hibbing and Cockatoo Island

Investments in certain joint ventures (Cockatoo Island and Hibbing) in which our ownership is 50 percent or less, or in which we do not have control but have the ability to exercise significant influence over operating and financial policies, are accounted for under the equity method. Our share of equity income (loss) is eliminated against consolidated product inventory upon production, and against cost of goods sold and operating expenses when sold. This effectively reduces our cost for our share of the mining venture's production to its cost, reflecting the cost-based nature of our participation in unconsolidated ventures.

Sonoma

Through various interrelated arrangements, we achieve a 45 percent economic interest in the collective operations of Sonoma, despite the ownership percentages of the individual components of Sonoma. We own 100 percent of CAWO, 8.33 percent of the exploration permits and applications for mining leases for the real estate that is involved in Sonoma ("Mining Assets") and 45 percent of the infrastructure, including the construction of a rail loop and related equipment ("Non-Mining Assets"). The following substantive legal entities exist within the Sonoma structure:

•

CAC, a wholly owned Cliffs subsidiary, is the conduit for Cliffs' investment in Sonoma.

•

CAWO, a wholly owned subsidiary of CAC, owns a facility that prepares the extracted coal for sale (the "Washplant") and receives 40 percent of Sonoma coal production in exchange for providing coal washing services to the remaining Sonoma participants.

•

SMM is the appointed operator of the mine assets, non-mine assets, and the Washplant. We own a 45 percent interest in SMM.

•

Sonoma Sales, a wholly owned subsidiary of QCoal, is the sales agent for the participants of the coal extracted and processed in the Sonoma Project.

The objective of Sonoma is to mine and process coking and thermal coal for the benefit of the participants. Pursuant to the terms of the agreements that comprise the Sonoma Project, at the time of investment in 2007, Cliffs through CAC paid $34.9 million for an 8.33 percent undivided interest in the Mining Assets and a 45 percent undivided interest in the Non-Mining Assets and other expenditures, and paid $85.2 million to construct the Washplant. In 2010, 2009 and 2008, we invested an additional $3.3 million, $8.6 million and $12.8 million, respectively, in the project, for a total investment of approximately $144.8 million.

While the individual components of our investment are disproportionate to the overall economics of the investment, the total investment is the same as if we had acquired a 45 percent interest in the Mining Assets and had committed to funding 45 percent of the cost of developing the Non-Mining Assets and the Washplant. In particular, the terms of the interrelated agreements under which we obtain our 45 percent interest provide that, we, through a wholly owned subsidiary, constructed and hold title to the Washplant. We wash all of the coal produced by the Sonoma Project for a fee based upon a cost to wash plus an arrangement such that we only bear 45 percent of the cost of owning and operating the Washplant. In addition, we have committed to purchasing certain amounts of coal from the other participants such that we take title to 45 percent of the coal mined. In addition, several agreements were entered into which provide for the allocation of mine and Washplant reclamation obligations such that we are responsible for 45 percent of the reclamation costs. Lastly, management agreements were entered into that allocate the costs of operating the mine to each participant based upon their respective ownership interests in SMM, 45 percent in our case. Once the coal is washed, each participant then engages Sonoma Sales to sell their coal to third parties for which Sonoma Sales earns a fee under an agreement with fixed and variable elements.

The legal entities were each evaluated under the guidelines for consolidation of a VIE as follows:

CAWO - CAC owns 100 percent of the legal equity in CAWO; however, CAC is limited in its ability to make significant decisions about CAWO because the significant decisions are made by, or subject to approval of,

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the Operating Committee of the Sonoma Project, of which CAC is only entitled to 45 percent of the vote. As a result, we determined that CAWO is a VIE and that CAC should consolidate CAWO as the primary beneficiary because it absorbs greater than 50 percent of the residual returns and expected losses.

Sonoma Sales - We, including our related parties, do not have voting rights with respect to Sonoma Sales and are not party to any contracts that represent significant variable interests in Sonoma Sales. Therefore, even if Sonoma Sales were a VIE, it has been determined that we are not the primary beneficiary and therefore would not consolidate Sonoma Sales.

SMM - SMM does not have sufficient equity at risk and is therefore a VIE. Through CAC, we have a 45 percent voting interest in SMM and a contractual requirement to reimburse SMM for 45 percent of the costs that it incurs in connection with managing the Sonoma Project. However, we, along with our related parties, do not have any contracts that would cause us to absorb greater than 50 percent of SMM's expected losses, and therefore, we are not considered to be the primary beneficiary of SMM. Thus, we account for our investment in SMM in accordance with the equity method rather than consolidate the entity. The effect of SMM on our financial statements is determined to be minimal.

Mining and Non-Mining Assets - Since we have an undivided interest in these assets and Sonoma is in an extractive industry, we have pro rata consolidated our share of these assets and costs.

Goodwill

Goodwill represents the excess purchase price paid over the fair value of the net assets of acquired companies. We had goodwill of $196.5 million and $74.6 million recorded on the Statements of Consolidated Financial Position at December 31, 2010 and 2009, respectively. In accordance with the provisions of ASC 350, we compare the fair value of the respective reporting unit to its carrying value on an annual basis to determine if there is potential goodwill impairment. If the fair value of the reporting unit is less than its carrying value, an impairment loss is recorded to the extent that the fair value of the goodwill within the reporting unit is less than the carrying value of its goodwill.

We evaluate goodwill for impairment in the fourth quarter of each year or as circumstances occur that potentially indicate that the carrying amount of these assets may not be recoverable. Based on the assessment performed, we concluded that there were no such events or changes in circumstances during 2010. We determined that the fair value of the reporting units was in excess of our carrying value as of December 31, 2010, and that we did not have any reporting units that were at risk of failing the first step of the goodwill impairment test. Consequently, no goodwill impairment charges were recorded in 2010. Refer to NOTE 6 - GOODWILL AND OTHER INTANGIBLE ASSETS AND LIABILITIES for further information.

Asset Impairment

Long-Lived Assets and Intangible Assets

We monitor conditions that may affect the carrying value of our long-lived and intangible assets when events and circumstances indicate that the carrying value of the asset groups may not be recoverable. In order to determine if assets have been impaired, assets are grouped and tested at the lowest level for which identifiable, independent cash flows are available. An impairment loss exists when projected undiscounted cash flows are less than the carrying value of the assets. The measurement of the impairment loss to be recognized is based on the difference between the fair value and the carrying value of the assets. Fair value can be determined using a market approach, income approach or cost approach. We did not record any such impairment charges in 2010, 2009 or 2008.

Equity Investments

We evaluate the loss in value of our equity method investments each reporting period to determine whether the loss is other than temporary. The primary factors that we consider in evaluating the impairment include the

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extent and time the fair value of each investment has been below cost, the financial condition and near-term prospects of the investment, and our intent and ability to hold the investment to recovery. If a decline in fair value is judged other than temporary, the basis of the investment is written down to fair value as a new cost basis, and the amount of the write-down is included as a realized loss.

Our investment in Amapá resulted in equity income of $17.2 million in 2010 compared with an equity loss of $62.2 million in 2009. The investment's equity income in 2010 was a result of nearly break-even operating results during the year combined with the reversal of the debt guarantee, upon repayment of total project debt outstanding, and the reversal of certain accruals. The equity losses in 2009 resulted from start-up costs and production delays resulting in the determination that indicators of impairment may exist relative to our investment in Amapá. Although Amapá's results improved throughout 2010, we continued to perform a quarterly assessment of the potential impairment of our investment, most recently in the fourth quarter of 2010, using a discounted cash flow model to determine the fair value of our investment in relation to its carrying value at each reporting period. Based upon the analyses performed, we have determined that our investment is not impaired as of December 31, 2010. In assessing the recoverability of our investment in Amapá, significant assumptions regarding the estimated future cash flows and other factors to determine the fair value of the investment must be made, including among other things, estimates related to pricing, volume and resources. If these estimates or their related assumptions change in the future as a result of changes in strategy or market conditions, we may be required to record impairment charges for our investment in the period such determination is made. We will continue to evaluate the results of our investment on a quarterly basis.

Fair Value Measurements

Valuation Hierarchy

ASC 820 establishes a three-level valuation hierarchy for classification of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. Inputs refer broadly to the assumptions that market participants would use in pricing an asset or liability. Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources. Unobservable inputs are inputs that reflect our own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The three-tier hierarchy of inputs is summarized below:

•

Level 1 - Valuation is based upon quoted prices (unadjusted) for identical assets or liabilities in active markets.

•

Level 2 - Valuation is based upon quoted prices for similar assets and liabilities in active markets, or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

•

Level 3 - Valuation is based upon other unobservable inputs that are significant to the fair value measurement.

The classification of assets and liabilities within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement in its entirety. Valuation methodologies used for assets and liabilities measured at fair value are as follows:

Cash Equivalents

Where quoted prices are available in an active market, cash equivalents are classified within Level 1 of the valuation hierarchy. Cash equivalents classified in Level 1 at December 31, 2010 and 2009 include money market funds. The valuation of these instruments is determined using a market approach and is based upon unadjusted quoted prices for identical assets in active markets. If quoted market prices are not available, then fair

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values are estimated by using pricing models, quoted prices of securities with similar characteristics, or discounted cash flows. In these instances, the valuation is based upon quoted prices for similar assets and liabilities in active markets, or other inputs that are observable for substantially the full term of the financial instrument, and the related financial instrument is therefore classified within Level 2 of the valuation hierarchy. Level 2 securities include short-term investments for which the value of each investment is a function of the purchase price, purchase yield, and maturity date.

Marketable Securities

Where quoted prices are available in an active market, marketable securities are classified within Level 1 of the valuation hierarchy. Marketable securities classified in Level 1 at December 31, 2010 and 2009 include available-for-sale securities. The valuation of these instruments is determined using a market approach and is based upon unadjusted quoted prices for identical assets in active markets.

Derivative Financial Instruments

Derivative financial instruments valued using financial models that use as their basis readily observable market parameters are classified within Level 2 of the valuation hierarchy. Such derivative financial instruments include substantially all of our foreign currency exchange contracts and derivative financial instruments that are valued based upon published pricing settlements realized by other companies in the industry. Derivative financial instruments that are valued based upon models with significant unobservable market parameters, and that are normally traded less actively, are classified within Level 3 of the valuation hierarchy.

Non-Financial Assets and Liabilities

We adopted the provisions of ASC 820 effective January 1, 2009 with respect to our non-financial assets and liabilities. The initial measurement provisions of ASC 820 have been applied to our asset retirement obligations, guarantees, assets and liabilities acquired through business combinations, and certain other items, and are reflected as such in our consolidated financial statements. Effective January 1, 2009, we also adopted the fair value provision with respect to our pension and other postretirement benefit plan assets. No transition adjustment was necessary upon adoption.

In January 2010, we adopted the amended guidance on fair value to add new disclosures about transfers into and out of Levels 1 and 2. Our policy is to recognize any transfers between levels as of the beginning of the reporting period, including both transfers into and out of levels.

Refer to NOTE 7 - FAIR VALUE OF FINANCIAL INSTRUMENTS and NOTE 11 - PENSIONS AND OTHER POSTRETIREMENT BENEFITS for further information.

Pensions and Other Postretirement Benefits

We offer defined benefit pension plans, defined contribution pension plans and other postretirement benefit plans, primarily consisting of retiree healthcare benefits, to most employees in North America as part of a total compensation and benefits program. This includes employees of PinnOak and CLCC, who became employees of the Company through the July 2007 and July 2010 acquisitions, respectively. Upon the acquisition of the remaining 73.2 percent interest in Wabush in February 2010, we fully consolidated the related Canadian plans into our pension and OPEB obligations. We do not have employee retirement benefit obligations at our Asia Pacific Iron Ore operations.

We recognize the funded status of our postretirement benefit obligations on our December 31, 2010 and 2009 Statements of Consolidated Financial Position based on the market value of plan assets and the actuarial present value of our retirement obligations on that date. For each plan, we determine if the plan assets exceed the benefit obligations or vice-versa. If the plan assets exceed the retirement obligations, the amount of the surplus is

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recorded as an asset; if the retirement obligations exceed the plan assets, the amount of the underfunded obligations are recorded as a liability. Year-end balance sheet adjustments to postretirement assets and obligations are charged to Accumulated other comprehensive income (loss) .

The market value of plan assets is measured at the year-end balance sheet date. The PBO is determined based upon an actuarial estimate of the present value of pension benefits to be paid to current employees and retirees. The APBO represents an actuarial estimate of the present value of OPEB benefits to be paid to current employees and retirees.

The actuarial estimates of the PBO and APBO retirement obligations incorporate various assumptions including the discount rates, the rates of increases in compensation, healthcare cost trend rates, mortality, retirement timing and employee turnover. For the U.S. plans, the discount rate is determined based on the prevailing year-end rates for high-grade corporate bonds with a duration matching the expected cash flow timing of the benefit payments from the various plans. For the Canadian plans, the discount rate is determined by calculating the single level discount rate that, when applied to a particular cash flow pattern, produces the same present value as discounting the cash flow pattern using spot rates generated from a high-quality corporate bond yield curve. The remaining assumptions are based on our estimates of future events incorporating historical trends and future expectations. The amount of net periodic cost that is recorded in the Consolidated Statements of Operations consists of several components including service cost, interest cost, expected return on plan assets, and amortization of previously unrecognized amounts. Service cost represents the value of the benefits earned in the current year by the participants. Interest cost represents the cost associated with the passage of time. In addition, the net periodic cost is affected by the anticipated income from the return on invested assets, as well as the income or expense resulting from the recognition of previously deferred items. Certain items, such as plan amendments, gains and/or losses resulting from differences between actual and assumed results for demographic and economic factors affecting the obligations and assets of the plans, and changes in plan assumptions are subject to deferred recognition for income and expense purposes. The expected return on plan assets is determined utilizing the weighted average of expected returns for plan asset investments in various asset categories based on historical performance, adjusted for current trends. See NOTE 11 - PENSIONS AND OTHER POSTRETIREMENT BENEFITS for further information.

Asset Retirement Obligations

Asset retirement obligations are recognized when incurred and recorded as liabilities at fair value. The fair value of the liability is determined as the discounted value of the expected future cash flow. The asset retirement obligation is accreted over time through periodic charges to earnings. In addition, the asset retirement cost is capitalized as part of the asset's carrying value and amortized over the life of the related asset. Reclamation costs are periodically adjusted to reflect changes in the estimated present value resulting from the passage of time and revisions to the estimates of either the timing or amount of the reclamation costs. We review, on an annual basis, unless otherwise deemed necessary, the asset retirement obligation at each mine site in accordance with the provisions of ASC 410. We perform an in-depth evaluation of the liability every three years in addition to routine annual assessments.

Future remediation costs for inactive mines are accrued based on management's best estimate at the end of each period of the costs expected to be incurred at a site. Such cost estimates include, where applicable, ongoing maintenance and monitoring costs. Changes in estimates at inactive mines are reflected in earnings in the period an estimate is revised. See NOTE 10 - ENVIRONMENTAL AND MINE CLOSURE OBLIGATIONS for further information.

Environmental Remediation Costs

We have a formal policy for environmental protection and restoration. Our mining and exploration activities are subject to various laws and regulations governing protection of the environment. We conduct our operations to protect the public health and environment and believe our operations are in compliance with applicable laws

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and regulations in all material respects. Our environmental liabilities, including obligations for known environmental remediation exposures at active and closed mining operations and other sites, have been recognized based on the estimated cost of investigation and remediation at each site. If the cost can only be estimated as a range of possible amounts with no specific amount being more likely, the minimum of the range is accrued. Future expenditures are not discounted unless the amount and timing of the cash disbursements can be reasonably estimated. It is possible that additional environmental obligations could be incurred, the extent of which cannot be assessed. Potential insurance recoveries have not been reflected in the determination of the liabilities. See NOTE 10 - ENVIRONMENTAL AND MINE CLOSURE OBLIGATIONS for further information.

Revenue Recognition and Cost of Goods Sold and Operating Expenses

North American Iron Ore

Revenue is recognized on the sale of products when title to the product has transferred to the customer in accordance with the specified provisions of each term supply agreement and all applicable criteria for revenue recognition have been satisfied. Most of our North American Iron Ore term supply agreements provide that title and risk of loss transfer to the customer when payment is received.

We recognize revenue based on the gross amount billed to a customer as we earn revenue from the sale of the goods or services. Revenue from product sales also includes reimbursement for freight charges paid on behalf of customers in Freight and Venture Partners' Cost Reimbursements separate from product revenue .

Costs of goods sold and operating expenses represents all direct and indirect costs and expenses applicable to the sales and revenues of our mining operations. Operating expenses within this line item primarily represent the portion of the mining venture costs for which we do not own; that is, the costs attributable to the share of the mine's production owned by the other joint venture partners. The mining ventures function as captive cost companies; they supply product only to their owners effectively on a cost basis. Accordingly, the noncontrolling interests' revenue amounts are stated at cost of production and are offset in entirety by an equal amount included in cost of goods sold and operating expenses resulting in no sales margin reflected in noncontrolling interest participants. As we are responsible for product fulfillment, we retain the risks and rewards of a principal in the transaction and accordingly record revenue under these arrangements on a gross basis.

The following table is a summary of reimbursements in our North American Iron Ore operations for the years ended December 31, 2010, 2009 and 2008:

		(In Millions)
		Year Ended December 31,
		2010				2009				2008
Reimbursements for:
Freight		$	83.6			$	22.4			$	98.5
Venture partners' cost			139.8				71.3				170.8
Total reimbursements		$	223.4			$	93.7			$	269.3

Under certain term supply agreements, we ship the product to ports on the lower Great Lakes or to the customer's facilities prior to the transfer of title. Our rationale for shipping iron ore products to certain customers and retaining title until payment is received for these products is to minimize credit risk exposure. In addition, certain supply agreements with one customer include provisions for supplemental revenue or refunds based on the customer's annual steel pricing for the year the product is consumed in the customer's blast furnaces. We account for this provision as a derivative instrument at the time of sale and record this provision at fair value until the year the product is consumed and the amounts are settled as an adjustment to revenue.

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Where we are joint venture participants in the ownership of a mine, our contracts entitle us to receive royalties and/or management fees, which we earn as the pellets are produced. Revenue is recognized on the sale of services when the services are performed.

North American Coal

We recognize revenue when title passes to the customer. For domestic coal sales, this generally occurs when coal is loaded into rail cars at the mine. For export coal sales, this generally occurs when coal is loaded into the vessels at the terminal. Revenue from product sales in 2010, 2009 and 2008 included reimbursement for freight charges paid on behalf of customers of $42.0 million, $32.1 million and $45.0 million, respectively.

Asia Pacific Iron Ore

Sales revenue is recognized at the F.O.B. point, which is generally when the product is loaded into the vessel.

Deferred Revenue

The terms of one of our North American Iron Ore pellet supply agreements require supplemental payments to be paid by the customer during the period 2009 through 2013, with the option to defer a portion of the 2009 monthly amount in exchange for interest payments until the deferred amount is repaid in 2013. Installment amounts received under this arrangement in excess of sales are classified as Deferred revenue on the Statement of Consolidated Financial Position upon receipt of payment. Revenue is recognized over the life of the supply agreement upon shipment of the pellets. As of December 31, 2010 and 2009, installment amounts received in excess of sales totaled $58.1 million and $23.2 million, respectively, which were recorded as Deferred revenue on the Statement of Consolidated Financial Position.

In 2010 and 2009, certain customers purchased and paid for 2.4 million tons and 0.9 million tons of pellets, respectively, in order to meet minimum contractual purchase requirements for each year under the terms of take-or-pay contracts. The inventory was stored at our facilities in upper lakes stockpiles. At the request of the customers, the ore was not shipped. We considered whether revenue should be recognized on these sales under the "bill and hold" guidance provided by the SEC Staff; however, based upon the assessment performed, revenue recognition on these transactions totaling $155.3 million and $81.9 million, respectively, was deferred on the December 31, 2010 and 2009 Statements of Consolidated Financial Position. As of December 31, 2010, all of the 0.9 million tons that were deferred at the end of 2009 were delivered, resulting in the related revenue being recognized in 2010 upon shipment.

Repairs and Maintenance

Repairs, maintenance and replacement of components are expensed as incurred. The cost of major power plant overhauls is capitalized and depreciated over the estimated useful life, which is the period until the next scheduled overhaul, generally five years. All other planned and unplanned repairs and maintenance costs are expensed when incurred.

Share-Based Compensation

We adopted the fair value recognition provisions of ASC 718 effective January 1, 2006 using the modified prospective transition method. Under restricted stock plans awarded prior to January 1, 2006, we continued to recognize compensation cost for awards to retiree-eligible employees without substantive forfeiture risk over the nominal vesting period. This recognition method differs from the requirements for immediate recognition for awards granted with similar provisions after the January 1, 2006 adoption.

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The fair value of each grant is estimated on the date of grant using a Monte Carlo simulation to forecast relative TSR performance. Consistent with the guidelines of ASC 718, a correlation matrix of historic and projected stock prices was developed for both the Company and its predetermined peer group of mining and metals companies. The fair value assumes that performance goals will be achieved.

The expected term of the grant represents the time from the grant date to the end of the service period for each of the three plan year agreements. We estimated the volatility of our common shares and that of the peer group of mining and metals companies using daily price intervals for all companies. The risk-free interest rate is the rate at the grant date on zero-coupon government bonds, with a term commensurate with the remaining life of the performance plans.

Cash flows resulting from the tax benefits for tax deductions in excess of the compensation expense are classified as financing cash flows. Refer to NOTE 12 - STOCK COMPENSATION PLANS for additional information.

Income Taxes

Income taxes are based on income for financial reporting purposes calculated using tax rates by jurisdiction and reflect a current tax liability or asset for the estimated taxes payable or recoverable on the current year tax return and expected annual changes in deferred taxes. Any interest or penalties on income tax are recognized as a component of income tax expense.

We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

We record net deferred tax assets to the extent we believe these assets will more likely than not be realized. In making such determination, we consider all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial results of operations. In the event we were to determine that we would be able to realize our deferred income tax assets in the future in excess of their net recorded amount, we would make an adjustment to the valuation allowance which would reduce the provision for income taxes.

Accounting for uncertainty in income taxes recognized in the financial statements requires that a tax benefit from an uncertain tax position be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on technical merits. See NOTE 13 - INCOME TAXES for further information.

Earnings Per Share

We present both basic and diluted EPS amounts. Basic EPS are calculated by dividing income attributable to Cliffs common shareholders by the weighted average number of common shares outstanding during the period presented. Diluted EPS are calculated by dividing net income attributable to Cliffs shareholders by the weighted average number of common shares, common share equivalents and convertible preferred stock outstanding during the period, utilizing the treasury share method for employee stock plans. Common share equivalents are excluded from EPS computations in the periods in which they have an anti-dilutive effect. See NOTE 16 - EARNINGS PER SHARE for further information .

Foreign Currency Translation

The financial statements of international subsidiaries are translated into U.S. dollars using the exchange rate at each balance sheet date for assets and liabilities and a weighted average exchange rate for each period for

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revenues, expenses, gains and losses. Where the local currency is the functional currency, translation adjustments are recorded as Accumulated other comprehensive income (loss) . Where the U.S. dollar is the functional currency, translation adjustments are recorded in the Statements of Consolidated Operations. Income taxes are generally not provided for foreign currency translation adjustments.

Retrospective Adjustments

During the second half of 2010, we retrospectively recorded adjustments to the Wabush purchase price allocation back to the date of acquisition that occurred during the first quarter of 2010. Therefore, the financial statements for the three months ended March 31, 2010 have been retrospectively adjusted for these changes, resulting in a decrease to Income From Continuing Operations Before Income Taxes and Equity Income (Loss) from Ventures of $22.0 million and a decrease to Net Income Attributable to Cliffs Shareholders of $16.1 million, respectively, on the Statements of Unaudited Condensed Consolidated Operations. The adjustments resulted in a decrease to basic and diluted earnings per common share of $0.12 per common share, respectively. In addition, Retained Earnings on the Statements of Unaudited Condensed Consolidated Financial Position as of March 31, 2010 has been decreased by $16.1 million for the effect of these retrospective adjustments. Accordingly, such amounts are reflected in the consolidated financial statements as of and for the period ended December 31, 2010. Refer to NOTE 5 - ACQUISITIONS AND OTHER INVESTMENTS and NOTE 21 - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) for additional information.

Recent Accounting Pronouncements

Effective January 1, 2010, we adopted the consolidation guidance for VIE, amended in June of 2009. The amendment was issued in response to perceived shortcomings in the consolidation model that were highlighted by recent market events, including concerns about the ability to structure transactions under the current guidance to avoid consolidation, balanced with the need for more relevant, timely, and reliable information about an enterprise's involvement in a VIE. The amendments include: (1) the elimination of the exemption for qualifying special purpose entities, (2) a new approach for determining who should consolidate a VIE, (3) changes to when it is necessary to reassess who should consolidate a VIE, and (4) additional disclosures of information related to a company's interest in a VIE. The new guidance was effective January 1, 2010 for calendar year-end companies. The adoption of this amendment did not have a material impact on our consolidated financial statements.

In January 2010, the FASB amended the guidance on fair value to add new requirements for disclosures about transfers into and out of Levels 1 and 2 and separate disclosures about purchases, sales, issuances, and settlements relating to Level 3 measurements. The revised guidance also clarifies existing fair value disclosures about the level of disaggregation and about inputs and valuation techniques used to measure fair value. The amendment also revises the guidance on employers' disclosures about postretirement benefit plan assets to require that disclosures be provided by classes of assets instead of by major categories of assets. The new guidance was effective for the first reporting period beginning after December 15, 2009, except for the requirement to provide the Level 3 activity of purchases, sales, issuances, and settlements on a gross basis, which will be effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. We adopted the provisions of the guidance required for the period beginning January 1, 2010; however, adoption of this amendment did not have a material impact on our consolidated financial statements. We will adopt the provisions of the guidance required for the period beginning January 1, 2011, beginning with the interim period ended March 31, 2011.

In February 2010, the FASB issued amended guidance on subsequent events to remove the requirement to disclose the date through which an SEC filer has evaluated subsequent events. The amended guidance was effective upon issuance. We adopted this amendment as of the interim period ended March 31, 2010.

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NOTE 2 - SEGMENT REPORTING

Our company's primary operations are organized and managed according to product category and geographic location: North American Iron Ore, North American Coal, Asia Pacific Iron Ore, Asia Pacific Coal, Latin American Iron Ore, Alternative Energies, Ferroalloys and our Global Exploration Group. The North American Iron Ore segment is comprised of our interests in six North American mines that provide iron ore to the integrated steel industry. The North American Coal segment is comprised of our five metallurgical coal mines and one thermal coal mine that provide metallurgical coal primarily to the integrated steel industry and thermal coal primarily to the energy industry. The Asia Pacific Iron Ore segment is located in Western Australia and provides iron ore to steel producers in China and Japan. There are no intersegment revenues.

The Asia Pacific Coal operating segment is comprised of our 45 percent economic interest in Sonoma, located in Queensland, Australia. The Latin American Iron Ore operating segment is comprised of our 30 percent Amapá interest in Brazil. The Alternative Energies operating segment is comprised of our 95 percent interest in renewaFUEL located in Michigan. The Ferroalloys operating segment is comprised of our recently acquired interests in chromite deposits in Northern Ontario, Canada. Our Global Exploration Group was established in 2009 and is focused on early involvement in exploration activities to identify new world-class projects for future development or projects that add significant value to existing operations. The Asia Pacific Coal, Latin American Iron Ore, Alternative Energies, Ferroalloys and Global Exploration Group operating segments do not meet reportable segment disclosure requirements and therefore are not separately reported.

We evaluate segment performance based on sales margin, defined as revenues less cost of goods sold and operating expenses identifiable to each segment. This measure of operating performance is an effective measurement as we focus on reducing production costs throughout the Company.

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The following table presents a summary of our reportable segments for the years ended December 31, 2010, 2009 and 2008, including a reconciliation of segment sales margin to income from continuing operations before income taxes and equity income (loss) from ventures:

		(In Millions)
		2010								2009								2008
Revenues from product sales and services:
North American Iron Ore		$	2,921.4				62	%		$	1,447.8				62	%		$	2,369.6				66	%
North American Coal			438.2				9	%			207.2				9	%			346.3				10	%
Asia Pacific Iron Ore			1,123.9				24	%			542.1				23	%			769.8				21	%
Other			198.7				5	%			144.9				6	%			123.4				3	%
Total revenues from product sales and services for reportable segments		$	4,682.2				100	%		$	2,342.0				100	%		$	3,609.1				100	%
Sales margin:
North American Iron Ore		$	922.0							$	275.5							$	804.3
North American Coal			(28.6	)							(71.9	)							(46.4	)
Asia Pacific Iron Ore			566.2								87.2								348.6
Other			63.9								18.1								53.2
Sales margin			1,523.5								308.9								1,159.7
Other operating expense			(258.5	)							(78.7	)							(220.8	)
Other income (expense)			33.2								60.4								(222.6	)
Income from continuing operations before income taxes and equity income (loss) from ventures		$	1,298.2							$	290.6							$	716.3
Depreciation, depletion and amortization:
North American Iron Ore		$	103.6							$	74.3							$	66.0
North American Coal			60.4								38.2								51.5
Asia Pacific Iron Ore			133.9								110.6								73.7
Other			24.4								13.5								9.9
Total depreciation, depletion and amortization		$	322.3							$	236.6							$	201.1
Capital additions (1):
North American Iron Ore		$	103.5							$	42.6							$	53.3
North American Coal			89.5								20.8								96.6
Asia Pacific Iron Ore			53.6								96.2								67.8
Other			29.2								8.6								14.9
Total capital additions		$	275.8							$	168.2							$	232.6
Assets:
North American Iron Ore		$	2,166.7							$	1,478.9
North American Coal			1,623.8								765.0
Asia Pacific Iron Ore			1,195.3								1,388.2
Other			1,257.8								300.0
Total segment assets			6,243.6								3,932.1
Corporate			1,534.6								707.2
Total assets		$	7,778.2							$	4,639.3

(1)	Includes capital lease additions.

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Included in the consolidated financial statements are the following amounts relating to geographic locations:

		(In Millions)
		2010				2009				2008
Revenue (1)
United States		$	1,966.4			$	1,049.5			$	1,617.0
China			1,262.0				711.5				774.2
Canada			696.5				236.6				573.6
Japan			311.1				157.4				263.4
Other countries			446.2				187.0				380.9
Total revenue		$	4,682.2			$	2,342.0			$	3,609.1
Long-lived assets
United States		$	2,498.8			$	1,686.2
Australia			973.7				906.4
Canada			506.7				-
Total long-lived assets		$	3,979.2			$	2,592.6

(1)	Revenue is attributed to countries based on the location of the customer and includes both Product sales and services.

Concentrations in Revenue

We have three customers which individually account for more than 10 percent of our consolidated product revenue in 2010. Total revenue from these customers represents approximately $1.8 billion, $1.0 billion and $1.6 billion of our total consolidated product revenue in 2010, 2009 and 2008, respectively, and is attributable to our North American Iron Ore and North American Coal business segments.

The following table represents the percentage of our total revenue contributed by each category of products and services in 2010, 2009 and 2008:

		2010				2009				2008
Revenue Category
Iron ore			81	%			81	%			79	%
Coal			13				14				12
Freight and venture partners' cost reimbursements			6				5				9
Total revenue			100	%			100	%			100	%

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NOTE 3 - DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

The following table presents the fair value of our derivative instruments and the classification of each on the Statements of Consolidated Financial Position as of December 31, 2010 and 2009:

		(In Millions)
		Derivative Assets
		December 31, 2010								December 31, 2009
Derivative Instrument		Balance Sheet Location				Fair   Value				Balance Sheet Location				Fair   Value
Derivatives designated as hedging instruments under ASC 815:
Foreign Exchange Contracts			Derivative assets (current)			$	2.8							$	-
Total derivatives designated as hedging instruments under ASC 815						$	2.8							$	-
Derivatives not designated as hedging instruments under ASC 815:
Foreign Exchange Contracts			Derivative assets (current)			$	34.2				Derivative assets (current)			$	4.2
			Deposits and miscellaneous				2.0				Deposits and miscellaneous				-
Customer Supply Agreements			Derivative assets (current)				45.6				Derivative assets (current)				47.3
			Deposits and miscellaneous				-				Deposits and miscellaneous				15.9
Total derivatives not designated as hedging instruments under ASC 815							81.8							$	67.4
Total derivatives						$	84.6							$	67.4

There were no derivative instruments classified as a liability as of December 31, 2010 and 2009.

Derivatives Designated as Hedging Instruments

Cash Flow Hedges

Foreign Exchange Contracts

We are subject to changes in foreign currency exchange rates as a result of our operations in Australia. Foreign exchange risk arises from our exposure to fluctuations in foreign currency exchange rates because our reporting currency is the U.S. dollar. Our Asia Pacific operations receive funds in U.S. currency for their iron ore and coal sales. We use forward exchange contracts, call options and collar options to hedge our foreign currency exposure for a portion of our sales receipts. U.S. currency is converted to Australian dollars at the currency exchange rate in effect at the time of the transaction. The primary objective for the use of these instruments is to reduce exposure to changes in Australian and U.S. currency exchange rates and to protect against undue adverse movement in these exchange rates. Effective October 1, 2010, we elected hedge accounting for certain types of our foreign exchange contracts entered into subsequent to September 30, 2010. These instruments are subject to formal documentation, intended to achieve qualifying hedge treatment, and are tested at inception and at each reporting period as to effectiveness. Our hedging policy allows no more than 75 percent of anticipated operating

costs for up to 12 months and no more than 50 percent of operating costs for up to 24 months. If and when these hedge contracts are determined not to be highly effective as hedges, the underlying hedged transaction is no longer likely to occur, or the derivative is terminated, hedge accounting is discontinued.

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As of December 31, 2010, we had outstanding exchange rate contracts with a notional amount of $70 million in the form of forward exchange contracts with varying maturity dates ranging from February 2011 to December 2011.

Changes in fair value of highly effective hedges are recorded as a component of Accumulated other comprehensive income (loss) on the Statements of Consolidated Financial Position. Unrealized gains of $1.9 million were recorded as of December 31, 2010 related to these hedge contracts. Any ineffectiveness is recognized immediately in income and as of December 31, 2010, there was no ineffectiveness recorded for these foreign exchange contracts. Of the amounts recorded in Accumulated other comprehensive income (loss), we estimate that $1.9 million will be reclassified to Changes in fair value of foreign currency contracts, net in the next 12 months upon maturity of the related contracts.

The following summarizes the effect of our derivatives designated as hedging instruments on Accumulated other comprehensive income (loss) and the Statements of Consolidated Operations for the years ended December 31, 2010, 2009 and 2008:

		(In Millions)
Derivatives in Cash Flow Hedging Relationships		Amount  of Gain/(Loss) Recognized in OCI on Derivative (Effective Portion)												Location of Gain/(Loss) Reclassified from Accumulated OCI into Income (Effective Portion)		Amount of Gain/(Loss) Reclassified from Accumulated OCI into Income (Effective Portion)												Location of Gain/(Loss) Recognized in Income on Derivative (Ineffective Portion)		Amount  of Gain/(Loss) Recognized in Income on Derivative (Ineffective Portion)
		Year ended December 31,														Year ended December 31,														Year ended December 31,
		2010				2009				2008						2010				2009				2008						2010				2009				2008
Foreign Exchange Contracts (hedge designation)		$	1.9			$	-			$	-			Product Revenue		$	-			$	-			$	-			Miscellaneous -net		$	-			$	-			$	-
Foreign Exchange Contracts (prior to de-designation)			-				-				32.1			Product Revenue			3.2				15.1				35.5			Miscellaneous -net			-				-				(8.6	)
Total		$	1.9			$	-			$	32.1					$	3.2			$	15.1			$	35.5					$	-			$	-			$	(8.6	)

Derivatives Not Designated as Hedging Instruments

Foreign Exchange Contracts

Effective July 1, 2008, we discontinued hedge accounting for foreign exchange contracts entered into for all outstanding contracts at the time and continued to hold such instruments as economic hedges to manage currency risk as described above. We entered into additional foreign exchange contracts during the first nine months of 2010. We did not designate hedge accounting for any of these foreign exchange contracts. As of December 31, 2010, we had outstanding exchange rate contracts with a notional amount of $230 million in the form of call options, collar options, and forward exchange contracts with varying maturity dates ranging from January 2011 to January 2012. This compares with outstanding exchange rate contracts with a notional amount of $108.5 million as of December 31, 2009. Effective October 1, 2010, we re-elected hedge accounting for certain types of our foreign exchange contracts entered into subsequent to September 30, 2010 as discussed above.

As a result of discontinuing hedge accounting, the instruments are prospectively marked to fair value each reporting period through Changes in fair value of foreign currency contracts, net on the Statements of Consolidated Operations. For the year ended December 31, 2010, the change in fair value of our foreign currency contracts resulted in net gains of $39.8 million, based on the Australian to U.S. dollar spot rate of 1.02 at December 31, 2010. For the year ended December 31, 2009, the change in fair value of our foreign currency contracts resulted in net gains of $85.7 million, based on the Australian to U.S. dollar spot rate of 0.90 at December 31, 2009. The amounts that were previously recorded as a component of Accumulated other

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comprehensive income (loss) are reclassified to earnings and a corresponding realized gain or loss is recognized upon maturity of the related contracts. For the year ended December 31, 2010, we reclassified gains of $3.2 million from Accumulated other comprehensive income (loss) related to contracts that matured during the year, and recorded the amounts as Product revenues on the Statements of Consolidated Operations. In 2009, gains of $15.1 million were reclassified to earnings. As of December 31, 2010, approximately $0.7 million of gains remains in Accumulated other comprehensive income (loss) related to the effective cash flow hedge contracts prior to de-designation. We estimate the remaining $0.7 million will be reclassified to Product revenues in the next 12 months upon maturity of the related contracts.

Customer Supply Agreements

Most of our North American Iron Ore long-term supply agreements are comprised of a base price with annual price adjustment factors, some of which are subject to annual price collars in order to limit the percentage increase or decrease in prices for our iron ore pellets during any given year. The price adjustment factors vary based on the agreement but typically include adjustments based upon changes in international pellet prices, changes in specified Producers Price Indices including those for all commodities, industrial commodities, energy and steel. The adjustments generally operate in the same manner, with each factor typically comprising a portion of the price adjustment, although the weighting of each factor varies based upon the specific terms of each agreement. The price adjustment factors have been evaluated to determine if they contain embedded derivatives. The price adjustment factors share the same economic characteristics and risks as the host contract and are integral to the host contract as inflation adjustments; accordingly, they have not been separately valued as derivative instruments.

Certain supply agreements with one North American Iron Ore customer provide for supplemental revenue or refunds based on the customer's average annual steel pricing at the time the product is consumed in the customer's blast furnace. The supplemental pricing is characterized as an embedded derivative and is required to be accounted for separately from the base contract price. The embedded derivative instrument, which is finalized based on a future price, is marked to fair value as a revenue adjustment each reporting period until the pellets are consumed and the amounts are settled. We recognized $120.2 million, $22.2 million and $225.5 million as Product revenues on the Statements of Consolidated Operations for the years ended December 31, 2010, 2009 and 2008, respectively, related to the supplemental payments. Derivative assets, representing the fair value of the pricing factors, were $45.6 million and $63.2 million, respectively, on the December 31, 2010 and 2009 Statements of Consolidated Financial Position.

Provisional Pricing Arrangements

In 2010, the world's largest iron ore producers moved away from the annual international benchmark pricing mechanism referenced in certain of our customer supply agreements, resulting in a shift in the industry toward shorter-term pricing arrangements linked to the spot market. As a result, we renegotiated the terms of our supply agreements with our Asia Pacific Iron Ore customers. Based on timing of these changes, pricing settlements were finalized with customers during each of the 2010 quarters with the exception of the first quarter of 2010. The provisional pricing arrangements related to first quarter shipments were subsequently settled during the second quarter of 2010. In addition, we reached final pricing settlement with some of our North American Iron Ore customers for the 2010 contract year. Prior to final pricing settlements, we recorded certain shipments made during 2010 on a provisional basis until final settlement was reached. The pricing provisions for both our Asia Pacific Iron Ore and North American customers were characterized as freestanding derivatives and were required to be accounted for separately once the products were shipped. The derivative instruments, which were settled and billed once final pricing settlement for the 2010 contract year was reached, were marked to fair value as revenue adjustments each reporting period based upon the estimated forward settlement until prices were actually settled. We recognized $960.7 million as Product revenues in the Statement of Consolidated Operations for the year ended December 31, 2010 under these pricing provisions. As of December 31, 2010, all of these

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revenues have been realized due to the pricing settlements that occurred with our Asia Pacific Iron Ore customers during the second quarter and North American customers through the fourth quarter of 2010. For the year ended December 31, 2009, we recognized a reduction in Product revenues of $28.2 million under provisional pricing arrangements.

Upon the settlement of pricing provisions with some of our North American Iron Ore customers in the fourth quarter of 2010, the derivative instrument was settled and therefore is not reflected on the Statement of Consolidated Financial Position at December 31, 2010. With respect to the North American Iron Ore customers for which final pricing for the 2010 contract year has not yet been settled as of December 31, 2010, we did not record shipments on a provisional basis due to pending arbitrations. In 2009, the derivative instrument was settled in the fourth quarter upon settlement of the pricing provisions with each of our customers, and is therefore not reflected on the Statements of Consolidated Financial Position at December 31, 2009.

The following summarizes the effect of our derivatives that are not designated as hedging instruments, on the Statements of Consolidated Operations for the years ended December 31, 2010, 2009 and 2008:

(In Millions)
Derivative Not Designated as Hedging Instruments		Location of Gain/(Loss) Recognized in Income on Derivative				Amount of  Gain/(Loss) Recognized in Income on Derivative
						Year ended December 31,
						2010				2009				2008
Foreign Exchange Contracts			Product Revenues			$	11.1			$	5.4			$	32.6
Foreign Exchange Contracts			Changes in fair value of foreign currency contracts, net				39.8				85.7				(188.2	)
Foreign Exchange Contracts			Miscellaneous - net				-				-				(8.6	)
Customer Supply Agreements			Product Revenues				120.2				22.2				225.5
Provisional Pricing Arrangements			Product Revenues				960.7				(28.2	)			(7.7	)
United Taconite Purchase Provision			Product Revenues				-				106.5				74.8
Total						$	1,131.8			$	191.6			$	128.4

In the normal course of business, we enter into forward contracts designated as normal purchases, for the purchase of commodities, primarily natural gas and diesel fuel, which are used in our North American Iron Ore operations. Such contracts are in quantities expected to be delivered and used in the production process and are not intended for resale or speculative purposes.

NOTE 4 - MARKETABLE SECURITIES

In July 2010, we sold substantially all of our held-to-maturity portfolio for approximately $15.6 million, resulting in a realized loss of $0.1 million. The majority of our held-to-maturity securities were due to mature by the end of 2010 and the decision to sell was made in order to increase the availability of cash for the funding of certain strategic transactions, including the acquisitions of Spider and CLCC.

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At December 31, 2010 and 2009, we had $85.9 million and $81.0 million, respectively, of marketable securities classified as available for sale. Marketable securities classified as available-for-sale are stated at fair value, with unrealized holding gains and losses included in Accumulated other comprehensive income (loss) . The cost, gross unrealized gains and losses and fair value of securities classified as available-for-sale at December 31, 2010 and 2009 are summarized as follows:

		(In Millions)
		December 31, 2010
		Cost				Gross Unrealized								Fair Value
			Gains				Losses
Equity securities
(without contractual maturity)		$	33.2			$	52.7			$	-			$	85.9
		(In Millions)
		December 31, 2009
		Cost				Gross Unrealized								Fair Value
			Gains				Losses
Equity securities
(without contractual maturity)		$	35.6			$	46.1			$	(0.7	)		$	81.0

KWG

We own 111.7 million shares of KWG common stock, representing 19.4 percent of its outstanding shares. KWG is an exploration stage company that participates in the discovery of chromite deposits in Northern Ontario. KWG holds a 26.5 percent interest in the "Big Daddy" chromite deposit, which we obtained majority ownership over during the second half of 2010. We do not exercise significant influence over KWG as of the reporting date, and the investment is classified as an available-for-sale security. Accordingly, we record unrealized mark-to-market changes in the fair value of the investment through Accumulated other comprehensive income (loss) each reporting period, unless the loss is deemed to be other than temporary .

Pluton Resources

In 2009, Asia Pacific Iron Ore completed the sale of its 50 percent interest in the Irvine Island iron ore project to its joint venture partner, Pluton Resources. The consideration received consisted of a cash payment of approximately $5 million and the issuance of 19.4 million shares of Pluton Resources, all of which resulted in recognition of a gain on sale amounting to $12.1 million. Our interest in Pluton Resources is approximately 10.9 percent at December 31, 2010. We do not exercise significant influence over Pluton as of the reporting date, and the investment is classified as an available-for-sale security. Accordingly, we record unrealized mark-to-market changes in the fair value of the investment through Accumulated other comprehensive income (loss) each reporting period, unless the loss is deemed to be other than temporary .

PolyMet

We own 9.2 million shares of PolyMet common stock, representing 6.0 percent of issued shares as a result of the sale of certain land, crushing and concentrating and other ancillary facilities located at our Cliffs Erie site (formerly owned by LTVSMC) to PolyMet. We have the right to participate in up to 6.0 percent of any future financing, and PolyMet has the first right to acquire or place our shares should we choose to sell. We classify the shares as available-for-sale and record unrealized mark-to-market changes in the fair value of the shares through Accumulated other comprehensive income (loss) each reporting period, unless the loss is deemed to be other than temporary.

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Golden West

During 2008, we acquired 24.3 million shares of Golden West, a Western Australia iron ore exploration company. Golden West owns the Wiluna West exploration ore project in Western Australia, containing a resource of 126 million metric tons of ore. The investment provides Asia Pacific Iron Ore a strategic interest in Golden West and Wiluna West. Our ownership in Golden West represents approximately 14.8 percent of its outstanding shares at December 31, 2010. Acquisition of the shares represented an original investment of approximately $22 million. We do not exercise significant influence, and at December 31, 2010 and 2009, the investment is classified as an available-for-sale security. Accordingly, we record unrealized mark-to-market changes in the fair value of the investment through Accumulated other comprehensive income (loss) each reporting period, unless the loss is deemed to be other than temporary.

Quest

Through our acquisition of the remaining shares of Freewest in January 2010, we acquired 4.2 million shares of Quest, a Canadian-based exploration company focused on the discovery of rare earth deposit opportunities. We sold approximately 3.6 million of our acquired ownership interest in Quest during the second half of 2010 for proceeds of $17.2 million, resulting in a realized gain of $6.3 million recognized as Other non-operating income on the Statements of Consolidated Operations. Our remaining interest in Quest, consisting of 0.6 million shares as of December 31, 2010, is classified as an available-for-sale security and we record unrealized mark-to-market changes in the fair value of the investment through Accumulated other comprehensive income (loss) each reporting period, unless the loss is deemed to be other than temporary.

NOTE 5 - ACQUISITIONS AND OTHER INVESTMENTS

Acquisitions

We allocate the cost of acquisitions to the assets acquired and liabilities assumed based on their estimated fair values. Any excess of cost over the fair value of the net assets acquired is recorded as goodwill.

Wabush

We acquired entities from our former partners that held their respective interests in Wabush on February 1, 2010, thereby increasing our ownership interest to 100 percent. Our full ownership of Wabush has been included in the consolidated financial statements since that date. The acquisition date fair value of the consideration transferred totaled $103 million, which consisted of a cash purchase price of $88 million and a working capital adjustment of $15 million. With Wabush's 5.5 million tons of production capacity, acquisition of the remaining interest has increased our North American Iron Ore equity production capacity by approximately 4.0 million tons and has added more than 50 million tons of additional reserves. Furthermore, acquisition of the remaining interest has provided us additional access to the seaborne iron ore markets serving steelmakers in Europe and Asia.

Prior to the acquisition date, we accounted for our 26.8 percent interest in Wabush as an equity-method investment. We initially recognized an acquisition date fair value of the previous equity interest of $39.7 million, and a gain of $47.0 million as a result of remeasuring our prior equity interest in Wabush held before the business combination. The gain was recognized in the first quarter of 2010 and was included in Gain on acquisition of controlling interests in the Statements of Unaudited Condensed Consolidated Operations for the three months ended March 31, 2010.

In the months subsequent to the initial purchase price allocation, we further refined the fair values of the assets acquired and liabilities assumed. Additionally, we also continued to ensure our existing interest in Wabush was incorporating all of the book basis, including amounts recorded in Accumulated other comprehensive income (loss) . Based on this process the acquisition date fair value of the previous equity interest was adjusted to $38 million. The changes required to finalize the U.S. and Canadian deferred tax valuations and to incorporate

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additional information on assumed asset retirement obligations offset to a net decrease of $1.7 million in the fair value of the equity interest from the initial purchase price allocation. Thus, the gain resulting from the remeasurement of our prior equity interest, net of amounts previously recorded in Accumulated other comprehensive income (loss) of $20.3 million, was adjusted to $25 million for the period ended December 31, 2010.

Under the business combination guidance in ASC 805, prior periods, beginning with the period of acquisition, are required to be revised to reflect changes to the original purchase price allocation. In accordance with this guidance, we have retrospectively recorded the adjustments to the fair value of the acquired assets and assumed liabilities and the resulting Goodwill and Gain on acquisition of controlling interests, made during the second half of 2010, back to the date of acquisition. Accordingly, such amounts are reflected in the Statements of Consolidated Operations for the year ended December 31, 2010, but have been excluded from the three months ended September 30, 2010 and December 31, 2010, respectively. We finalized the purchase price allocation for the acquisition of Wabush during the fourth quarter of 2010. A comparison of the initial and final purchase price allocation has been provided in the following table.

		(In Millions)
		Initial Allocation				Final Allocation				Change
Consideration
Cash		$	88.0			$	88.0			$	-
Working capital adjustments			15.0				15.0				-
Fair value of total consideration transferred			103.0				103.0				-
Fair value of Cliffs' equity interest in Wabush held prior to acquisition of remaining interest			39.7				38.0				(1.7	)
		$	142.7			$	141.0			$	(1.7	)
Recognized amounts of identifiable assets acquired and liabilities assumed
ASSETS:
In-process inventories		$	21.8			$	21.8			$	-
Supplies and other inventories			43.6				43.6				-
Other current assets			13.2				13.2				-
Mineral rights			85.1				84.4				(0.7	)
Plant and equipment			146.3				147.8				1.5
Intangible assets			66.4				66.4				-
Other assets			16.3				19.3				3.0
Total identifiable assets acquired			392.7				396.5				3.8
LIABILITIES:
Current liabilities			(48.1	)			(48.1	)			-
Pension and OPEB obligations			(80.6	)			(80.6	)			-
Mine closure obligations			(39.6	)			(53.4	)			(13.8	)
Below-market sales contracts			(67.7	)			(67.7	)			-
Deferred taxes			(20.5	)			-				20.5
Other liabilities			(8.9	)			(8.8	)			0.1
Total identifiable liabilities assumed			(265.4	)			(258.6	)			6.8
Total identifiable net assets acquired			127.3				137.9				10.6
Goodwill			15.4				3.1				(12.3	)
Total net assets acquired		$	142.7			$	141.0			$	(1.7	)

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The significant changes to the final purchase price allocation from the initial allocation were due primarily to the allocation of deferred taxes between the existing equity interest in Wabush and the acquired portion, and additional asset retirement obligations noted related to the Wabush operations.

Of the $66.4 million of acquired intangible assets, $54.7 million was assigned to the value of a utility contract that provides favorable rates compared with prevailing market rates and will be amortized on a straight-line basis over the five-year remaining life of the contract. The remaining $11.7 million was assigned to the value of an easement agreement that is anticipated to provide a fee to Wabush for rail traffic moving over Wabush lands and will be amortized over a 30-year period.

The $3.1 million of goodwill resulting from the acquisition was assigned to our North American Iron Ore business segment. The goodwill recognized is primarily attributable to the mine's port access and proximity to the seaborne iron ore markets. None of the goodwill is expected to be deductible for income tax purposes.

Refer to NOTE 6 - GOODWILL AND OTHER INTANGIBLE ASSETS AND LIABILITIES for further information.

Freewest

During 2009, we acquired 29 million shares, or 12.4 percent, of Freewest, a Canadian-based mineral exploration company focused on acquiring, exploring and developing high-quality chromite, gold and base-metal properties in Canada. On January 27, 2010, we acquired all of the remaining outstanding shares of Freewest for C$1.00 per share, including its interest in the Ring of Fire properties in Northern Ontario Canada, which comprise three premier chromite deposits. As a result of the transaction, our ownership interest in Freewest increased from 12.4 percent as of December 31, 2009 to 100 percent as of the acquisition date. Our full ownership of Freewest has been included in the consolidated financial statements since the acquisition date. The acquisition of Freewest is consistent with our strategy to broaden our geographic and mineral diversification and allows us to apply our expertise in open-pit mining and mineral processing to a chromite ore resource base that could form the foundation of North America's only ferrochrome production operation. The planned mine is expected to produce 1 million to 2 million metric tons of high-grade chromite ore annually, which would be further processed into 400 thousand to 800 thousand metric tons of ferrochrome. Total purchase consideration for the acquisition was approximately $185.9 million, comprised of the issuance of 0.0201 of our common shares for each Freewest share, representing a total of 4.2 million common shares or $173.1 million, and $12.8 million in cash. The acquisition date fair value of the consideration transferred was determined based upon the closing market price of our common shares on the acquisition date.

Prior to the acquisition date, we accounted for our 12.4 percent interest in Freewest as an available-for-sale equity security. The acquisition date fair value of the previous equity interest was $27.4 million, which was determined based upon the closing market price of the 29 million previously owned shares on the acquisition date. We recognized a gain of $13.6 million in the first quarter of 2010 as a result of remeasuring our ownership interest in Freewest held prior to the business acquisition. The gain is included in Gain on acquisition of controlling interests in the Statements of Consolidated Operations for the year ended December 31, 2010.

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The following table summarizes the consideration paid for Freewest and the fair values of the assets acquired and liabilities assumed at the acquisition date. We finalized the purchase price allocation in the fourth quarter of 2010. Under the business combination guidance in ASC 805, prior periods, beginning with the period of acquisition, are required to be revised to reflect changes to the original purchase price allocation. In accordance with this guidance, we have retrospectively recorded the adjustments to the fair value of the acquired assets and assumed liabilities and the resulting Goodwill , made during the fourth quarter of 2010, back to the date of acquisition. We adjusted the initial purchase price allocation for the acquisition of Freewest in the fourth quarter of 2010 as follows:

		(In Millions)
		Initial Allocation				Final Allocation				Change
Consideration
Equity instruments (4.2 million Cliffs common shares)		$	173.1			$	173.1			$	-
Cash			12.8				12.8				-
Fair value of total consideration transferred			185.9				185.9				-
Fair value of Cliffs' ownership interest in Freewest held prior to acquisition of remaining interest			27.4				27.4				-
		$	213.3			$	213.3			$	-
Recognized amounts of identifiable assets acquired and liabilities assumed
ASSETS:
Cash		$	7.7			$	7.7			$	-
Other current assets			1.4				1.4				-
Mineral rights			252.8				244.0				(8.8	)
Marketable securities			12.1				12.1				-
Total identifiable assets acquired			274.0				265.2				(8.8	)
LIABILITIES:
Accounts payable			(3.3	)			(3.3	)			-
Long-term deferred tax liabilities			(57.4	)			(54.3	)			3.1
Total identifiable liabilities assumed			(60.7	)			(57.6	)			3.1
Total identifiable net assets acquired			213.3				207.6				(5.7	)
Goodwill			-				5.7				5.7
Total net assets acquired		$	213.3			$	213.3			$	-

The significant changes to the final purchase price allocation from the initial allocation were primarily due to changes to the fair value adjustment for mineral rights that resulted from the finalization of certain assumptions used in the valuation models utilized to determine the fair values.

The $5.7 million of goodwill resulting from the finalization of the purchase price allocation was assigned to our Ferroalloys business segment. The goodwill recognized is primarily attributable to obtaining a controlling interest in Freewest. None of the goodwill is expected to be deductible for income tax purposes. Refer to NOTE 6 - GOODWILL AND OTHER INTANGIBLE ASSETS AND LIABILITIES for further information.

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Spider

During the second quarter of 2010, we commenced a formal cash offer to acquire all of the outstanding common shares of Spider, a Canadian-based mineral exploration company, for C$0.19 per share. As of June 30, 2010, we held 27.4 million shares of Spider, representing approximately four percent of its issued and outstanding shares. On July 6, 2010, all of the conditions to acquire the remaining common shares of Spider had been satisfied or waived, and we consequently acquired all of the common shares that were validly tendered as of that date. When combined with our prior ownership interest, the additional shares acquired increased our ownership percentage to 52 percent on the date of acquisition, representing a majority of the common shares outstanding on a fully-diluted basis. Our 52 percent ownership of Spider was included in the consolidated financial statements since the July 6, 2010 acquisition date, and Spider was included as a component of our Ferroalloys operating segment. The acquisition date fair value of the consideration transferred totaled a cash purchase price of $56.9 million. Subsequent to the acquisition date, we extended the cash offer to permit additional shares to be tendered and taken up, thereby increasing our ownership percentage in Spider to 85 percent as of July 26, 2010. Effective October 6, 2010, we completed the acquisition of the remaining shares of Spider through an amalgamation, bringing our ownership percentage to 100 percent as of December 31, 2010. As noted above, through our acquisition of Freewest during the first quarter of 2010, we acquired an interest in the Ring of Fire properties in Northern Ontario, which comprise three premier chromite deposits. The Spider acquisition allowed us to obtain majority ownership of the "Big Daddy" chromite deposit, based on Spider's ownership percentage in this deposit of 26.5 percent.

Prior to the July 6, 2010 acquisition date, we accounted for our four percent interest in Spider as an available-for-sale equity security. The acquisition date fair value of the previous equity interest was $4.9 million, which was determined based upon the closing market price of the 27.4 million previously owned shares on the acquisition date.

The acquisition date fair value of the 48 percent noncontrolling interest in Spider was estimated to be $51.9 million, which was determined based upon the closing market price of the 290.5 million shares of noncontrolling interest on the acquisition date.

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The following table summarizes the consideration paid for Spider and the fair values of the assets acquired and liabilities assumed at the acquisition date. We finalized the purchase price allocation in the fourth quarter of 2010. Under the business combination guidance in ASC 805, prior periods, beginning with the period of acquisition, are required to be revised to reflect changes to the original purchase price allocation. In accordance with this guidance, we have retrospectively recorded the adjustments to the fair value of the acquired assets and assumed liabilities and the resulting Goodwill , made during the fourth quarter of 2010, back to the date of acquisition. We adjusted the initial purchase price allocation for the acquisition of Spider in the fourth quarter of 2010 as follows:

		(In Millions)
		Initial Allocation				Final Allocation				Change
Consideration
Cash		$	56.9			$	56.9			$	-
Fair value of total consideration transferred			56.9				56.9				-
Fair value of Cliffs' ownership interest in Spider held prior to acquisition of remaining interest			4.9				4.9				-
		$	61.8			$	61.8			$	-
Recognized amounts of identifiable assets acquired and liabilities assumed
ASSETS:
Cash		$	9.0			$	9.0			$	-
Other current assets			4.5				4.5				-
Mineral rights			31.0				35.3				4.3
Total identifiable assets acquired			44.5				48.8				4.3
LIABILITIES:
Other current liabilities			(5.2	)			(5.2	)			-
Long-term deferred tax liabilities			(2.7	)			(5.1	)			(2.4	)
Total identifiable liabilities assumed			(7.9	)			(10.3	)			(2.4	)
Total identifiable net assets acquired			36.6				38.5				1.9
Goodwill			77.1				75.2				(1.9	)
Noncontrolling interest in Spider			(51.9	)			(51.9	)			-
Total net assets acquired		$	61.8			$	61.8			$	-

The significant changes to the final purchase price allocation from the initial allocation were primarily due to changes to the fair value adjustment for mineral rights that resulted from the finalization of certain assumptions used in the valuation models utilized to determine the fair values.

The $75.2 million of goodwill resulting from the acquisition was assigned to our Ferroalloys business segment. The goodwill recognized is primarily attributable to obtaining majority ownership of the "Big Daddy" chromite deposit. When combined with the interest we acquired in the Ring of Fire properties through our acquisition of Freewest, we now control three premier chromite deposits in Northern Ontario, Canada. None of the goodwill is expected to be deductible for income tax purposes. Refer to NOTE 6 - GOODWILL AND OTHER INTANGIBLE ASSETS AND LIABILITIES for further information.

CLCC

On July 30, 2010, we acquired the coal operations of privately-owned INR, and since that date, the operations acquired from INR have been conducted through our wholly-owned subsidiary known as CLCC. Our

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full ownership of CLCC has been included in the consolidated financial statements since the acquisition date, and the subsidiary is reported as a component of our North American Coal segment. The acquisition date fair value of the consideration transferred totaled $775.9 million, which consisted of a cash purchase price of $757 million and a working capital adjustment of $18.9 million.

CLCC is a producer of high-volatile metallurgical and thermal coal located in southern West Virginia. CLCC's operations include two underground continuous mining method metallurgical coal mines and one open surface thermal coal mine. The acquisition includes a metallurgical and thermal coal mining complex with a coal preparation and processing facility as well as a large, long-life reserve base with an estimated 59 million tons of metallurgical coal and 62 million tons of thermal coal. This reserve base increases our total global reserve base to over 166 million tons of metallurgical coal and over 67 million tons of thermal coal. This acquisition represents an opportunity for us to add complementary high-quality coal products and provides certain advantages, including among other things, long-life mine assets, operational flexibility, and new equipment. When combined with our current coal production in West Virginia, Alabama and Queensland, Australia, we estimate 2011 global equity production capacity of approximately 9 million tons at a split of approximately 7 million tons of metallurgical coal and 2 million tons of thermal coal.

The following table summarizes the consideration paid for CLCC and the estimated fair values of the assets acquired and liabilities assumed at the acquisition date. We are in the process of completing certain valuations of the assets acquired and liabilities assumed related to the acquisition, most notably, tangible assets, deferred taxes and goodwill, and the final allocation will be made when completed. Accordingly, the provisional measurements noted below are preliminary and subject to modification in the future.

		(In Millions)
		Initial Allocation				Revised Allocation				Change
Consideration
Cash		$	757.0			$	757.0			$	-
Working capital adjustments			17.5				18.9				(1.4	)
Fair value of total consideration transferred		$	774.5			$	775.9			$	(1.4	)
Recognized amounts of identifiable assets acquired and liabilities assumed
ASSETS:
Product inventories		$	20.0			$	20.0			$	-
Other current assets			11.8				11.8				-
Land and mineral rights			640.3				640.3				-
Plant and equipment			111.1				111.1				-
Deferred taxes			16.5				16.0				0.5
Intangible assets			7.5				7.5				-
Other non-current assets			0.8				0.8				-
Total identifiable assets acquired			808.0				807.5				0.5
LIABILITIES:
Current liabilities			(22.8	)			(24.1	)			1.3
Mine closure obligations			(2.8	)			(2.8	)			-
Below-market sales contracts			(32.6	)			(32.6	)			-
Total identifiable liabilities assumed			(58.2	)			(59.5	)			1.3
Total identifiable net assets acquired			749.8				748.0				1.8
Preliminary goodwill			24.7				27.9				(3.2	)
Total net assets acquired		$	774.5			$	775.9			$	(1.4	)

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Of the $7.5 million of acquired intangible assets, $5.4 million was assigned to the value of in-place permits and will be amortized on a straight-line basis over the life of the mine. The remaining $2.1 million was assigned to the value of favorable mineral leases and will be amortized over the corresponding mine life.

The $27.9 million of preliminary goodwill resulting from the acquisition was assigned to our North American Coal business segment. The preliminary goodwill recognized is primarily attributable to the addition of complementary high-quality coal products to our existing operations and operational flexibility. None of the preliminary goodwill is expected to be deductible for income tax purposes . Refer to NOTE 6 - GOODWILL AND OTHER INTANGIBLE ASSETS AND LIABILITIES for further information.

As our fair value estimates remain materially unchanged from the third quarter of 2010, there were no significant changes to the purchase price allocation from the initial allocation reported for the period ended September 30, 2010. We expect to finalize the purchase price allocation for the acquisition of CLCC in the first half of 2011.

With regard to each of the acquisitions discussed above, pro forma results of operations have not been presented because the effects of these business combinations, individually and in the aggregate, were not material to our consolidated results of operations.

NOTE 6 - GOODWILL AND OTHER INTANGIBLE ASSETS AND LIABILITIES

Goodwill

The following table summarizes changes in the carrying amount of goodwill allocated by reporting unit during 2010 and 2009:

		(In Millions)
		December 31, 2010																				December 31, 2009
		North American Iron Ore				North American Coal				Asia Pacific Iron Ore				Other				Total				North American Iron Ore				Asia Pacific Iron Ore				Total
Beginning Balance		$	2.0			$	-			$	72.6			$	-			$	74.6			$	2.0			$	-			$	2.0
Arising in business combinations			3.1				27.9				-				80.9				111.9				-				68.3				68.3
Impact of foreign currency translation			-				-				10.0				-				10.0				-				4.3				4.3
Ending Balance		$	5.1			$	27.9			$	82.6			$	80.9			$	196.5			$	2.0			$	72.6			$	74.6

The increase in the balance of goodwill as of December 31, 2010 includes the assignment to goodwill of $80.9 million related to the finalization of the purchase price allocation for the acquisition of a controlling interest in Freewest and Spider and the assignment to preliminary goodwill of $27.9 million related to the acquisition of CLCC. In addition, the goodwill balance as December 31, 2010 includes the assignment of $3.1 million to goodwill based on the finalization of the purchase price allocation for the acquisition of the remaining interest in Wabush. The balance of $196.5 million and $74.6 million as of December 31, 2010 and 2009, respectively, is presented as Goodwill on the Statements of Consolidated Financial Position. Refer to NOTE 5 - ACQUISITIONS AND OTHER INVESTMENTS for additional information.

Goodwill is not subject to amortization and is tested for impairment annually or when events or circumstances indicate that impairment may have occurred.

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Other Intangible Assets and Liabilities

Following is a summary of intangible assets and liabilities at December 31, 2010 and 2009:

				(In Millions)
	December 31, 2010												December 31, 2009
		Classification		Gross Carrying Amount				Accumulated Amortization				Net Carrying Amount				Gross Carrying Amount				Accumulated Amortization				Net Carrying Amount
Definite lived intangible assets:
Permits		Intangible assets, net		$	132.4			$	(16.3	)		$	116.1			$	120.3			$	(8.2	)		$	112.1
Utility contracts		Intangible assets, net			54.7				(10.2	)			44.5				-				-				-
Easements		Intangible assets, net			11.7				(0.4	)			11.3				-				-				-
Leases		Intangible assets, net			5.2				(2.9	)			2.3				3.1				(2.8	)			0.3
Unpatented technology		Intangible assets, net			4.0				(2.4	)			1.6				4.0				(1.6	)			2.4
Total intangible assets				$	208.0			$	(32.2	)		$	175.8			$	127.4			$	(12.6	)		$	114.8
Below-market sales contracts		Below-market sales contracts - current		$	(77.0	)		$	19.9			$	(57.1	)		$	(30.3	)		$	-			$	(30.3	)
Below-market sales contracts		Below-Market Sales Contracts			(252.3	)			87.9				(164.4	)			(198.7	)			45.4				(153.3	)
Total below-market sales contracts				$	(329.3	)		$	107.8			$	(221.5	)		$	(229.0	)		$	45.4			$	(183.6	)

The intangible assets are subject to periodic amortization on a straight-line basis over their estimated useful lives as follows:

Intangible Asset		Useful Life (years)
Permits		15 - 28
Utility contracts		5
Easements		30
Leases		1.5 - 4.5
Unpatented technology		5

Amortization expense relating to intangible assets was $19.6 million, $9.8 million and $2.8 million, respectively, for the years ended December 31, 2010, 2009 and 2008, and is recognized in Cost of goods sold and operating expenses on the Statements of Consolidated Operations. The estimated amortization expense relating to intangible assets for each of the five succeeding fiscal years is as follows:

		(In Millions)
		Amount
Year Ending December 31
2011		$	18.2
2012			18.2
2013			17.3
2014			17.3
2015			6.2
Total		$	77.2

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The below-market sales contracts are classified as a liability and recognized over the terms of the underlying contracts, which range from 3.5 to 8.5 years. For the years ended December 31, 2010, 2009 and 2008, we recognized $62.4 million, $30.3 million and $15.1 million, respectively, in Product revenues related to the below-market sales contracts. The following amounts will be recognized in Product revenues for each of the five succeeding fiscal years:

		(In Millions)
		Amount
Year Ending December 31
2011		$	58.3
2012			48.8
2013			45.3
2014			23.0
2015			23.0
Total		$	198.4

NOTE 7 - FAIR VALUE OF FINANCIAL INSTRUMENTS

The following represents the assets and liabilities of the Company measured at fair value at December 31, 2010 and 2009:

		(In Millions)
		December 31, 2010
Description		Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)				Total
Assets:
Cash equivalents		$	1,307.2			$	-			$	-			$	1,307.2
Derivative assets			-				-				45.6				45.6
U.S. marketable securities			22.0				-				-				22.0
International marketable securities			63.9				-				-				63.9
Foreign exchange contracts			-				39.0				-				39.0
Total		$	1,393.1			$	39.0			$	45.6			$	1,477.7

		(In Millions)
		December 31, 2009
Description		Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1)				Significant  Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)				Total
Assets:
Cash equivalents		$	376.0			$	-			$	-			$	376.0
Derivative assets			-				-				63.2				63.2
U.S. marketable securities			28.2				-				-				28.2
International marketable securities			52.8				-				-				52.8
Foreign exchange contracts			-				4.2				-				4.2
Total		$	457.0			$	4.2			$	63.2			$	524.4

There were no financial instruments measured at fair value that were in a liability position at December 31, 2010 and 2009.

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Financial assets classified in Level 1 at December 31, 2010 and 2009 include money market funds and available-for-sale marketable securities. The valuation of these instruments is determined using a market approach, taking into account current interest rates, creditworthiness, and liquidity risks in relation to current market conditions, and is based upon unadjusted quoted prices for identical assets in active markets.

The valuation of financial assets and liabilities classified in Level 2 is determined using a market approach based upon quoted prices for similar assets and liabilities in active markets, or other inputs that are observable for substantially the full term of the financial instrument. Level 2 securities primarily include derivative financial instruments valued using financial models that use as their basis readily observable market parameters. At December 31, 2010 and 2009, such derivative financial instruments include substantially all of our foreign exchange hedge contracts. The fair value of the foreign exchange hedge contracts is based on forward market prices and represents the estimated amount we would receive or pay to terminate these agreements at the reporting date, taking into account creditworthiness, nonperformance risk, and liquidity risks associated with current market conditions.

The Level 2 derivative assets in 2010 also consisted of freestanding derivatives related to certain supply agreements with our North American Iron Ore customers. As a result of a recent shift in the industry toward shorter-term pricing arrangements that are linked to the spot market and elimination of the annual benchmark system, we have been negotiating the terms of certain of our customer supply agreements and recorded certain shipments made during 2010 on a provisional basis until final settlement was reached with some of our customers through the fourth quarter of 2010. The pricing provisions were characterized as freestanding derivatives and were required to be accounted for separately once the product was shipped. The derivative instrument, which was settled and billed once final pricing settlements were reached, was marked to fair value as a revenue adjustment each reporting period. During the third quarter of 2010, we revised the inputs used to determine the fair value of these derivatives to include 2010 published pricing settlements realized by other companies in the industry. Prior to this change, the fair value was primarily determined based on significant unobservable inputs to develop the forward price expectation of the final price settlement for 2010. Based on these changes to the determination of the fair value, we transferred $161.8 million of derivative assets from a Level 3 classification to a Level 2 classification within the fair value hierarchy during the third quarter of 2010. The fair value of our derivatives was determined using a market approach and takes into account current market conditions and other risks, including nonperformance risk. The derivative instrument was settled in the fourth quarter of 2010, upon settlement of the pricing provisions with some of our North American Iron Ore customers, and is therefore not reflected in the Statement of Consolidated Financial Position at December 31, 2010. With respect to the North American Iron Ore customers for which final pricing for the 2010 contract year has not yet been settled as of December 31, 2010, we did not record shipments on a provisional basis due pending arbitrations.

The derivative financial asset classified within Level 3 at December 31, 2010 and 2009 is an embedded derivative instrument included in certain supply agreements with one of our North American Iron Ore customers. The agreements include provisions for supplemental revenue or refunds based on the customer's annual steel pricing at the time the product is consumed in the customer's blast furnaces. We account for this provision as a derivative instrument at the time of sale and mark this provision to fair value as a revenue adjustment each reporting period until the product is consumed and the amounts are settled. The fair value of the instrument is determined using a market approach based on an estimate of the annual realized price of hot rolled steel at the steelmaker's facilities, and takes into consideration current market conditions and nonperformance risk.

Substantially all of the financial assets and liabilities are carried at fair value or contracted amounts that approximate fair value. We had no financial assets and liabilities measured at fair value on a non-recurring basis at December 31, 2010 and 2009.

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We recognize any transfers between levels as of the beginning of the reporting period, including both transfers into and out of levels. There were no transfers between Level 1 and Level 2 of the fair value hierarchy as of December 31, 2010. As noted above, there was a transfer from Level 3 to Level 2 during the third quarter of 2010, as reflected in the table below. The following represents a reconciliation of the changes in fair value of financial instruments measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the years ended December 31, 2010 and 2009.

		(In Millions)
		Derivative Assets (Level 3)
		Year Ended December 31,
		2010				2009
Beginning balance - January 1		$	63.2			$	76.6
Total gains (losses)
Included in earnings			851.7				22.2
Included in other comprehensive income			-				-
Settlements			(707.5	)			(35.6	)
Transfers out of Level 3			(161.8	)			-
Ending balance - December 31		$	45.6			$	63.2
Total gains (losses) for the period included in earnings attributable to the change in unrealized gains or losses on assets and liabilities still held at the reporting date		$	120.2			$	22.2

Gains and losses included in earnings are reported in Product revenue on the Statements of Consolidated Operations for the years ended December 31, 2010 and 2009.

The carrying amount and fair value of our long-term receivables and long-term debt at December 31, 2010 and 2009 were as follows:

		(In Millions)
		December 31, 2010								December 31, 2009
		Carrying Value				Fair Value				Carrying Value				Fair Value
Long-term receivables:
Customer supplemental payments		$	22.3			$	19.5			$	21.4			$	17.5
ArcelorMittal USA - Ispat receivable			32.8				38.9				38.3				45.7
Other			8.1				8.1				-				-
Total long-term receivables (1)		$	63.2			$	66.5			$	59.7			$	63.2
Long-term debt:
Senior notes - $1 billion		$	990.3			$	972.5			$	-			$	-
Senior notes - $400 million			397.8				422.8				-				-
Senior notes - $325 million			325.0				355.6				325.0				332.9
Term loan			-				-				200.0				200.0
Customer borrowings			4.0				4.0				4.6				4.6
Total long-term debt		$	1,717.1			$	1,754.9			$	529.6			$	537.5

(1)	Includes current portion.

The terms of one of our North American Iron Ore pellet supply agreements require supplemental payments to be paid by the customer during the period 2009 through 2013, with the option to defer a portion of the 2009 monthly amount up to $22.3 million in exchange for interest payments until the deferred amount is repaid in

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2013. Interest is payable by the customer quarterly and began in September 2009 at the higher of 9 percent or the prime rate plus 350 basis points. As of December 31, 2010, we have a receivable of $22.3 million recorded in Long-term receivables on the Statement of Consolidated Financial Position reflecting the terms of this deferred payment arrangement. This compares with a receivable of $21.4 million recorded as of December 31, 2009. The fair value of the receivable of $19.5 million and $17.5 million at December 31, 2010 and 2009, respectively, is based on a discount rate of 4.4 percent, which represents the estimated credit-adjusted risk-free interest rate for the period the receivable is outstanding.

In 2002, we entered into an agreement with Ispat that restructured the ownership of the Empire mine and increased our ownership from 46.7 percent to 79 percent in exchange for the assumption of all mine liabilities. Under the terms of the agreement, we indemnified Ispat from obligations of Empire in exchange for certain future payments to Empire and to us by Ispat of $120 million, recorded at a present value of $32.8 million and $38.3 million at December 31, 2010 and 2009, respectively. The fair value of the receivable of $38.9 million and $45.7 million at December 31, 2010 and 2009, respectively, is based on a discount rate of 3.7 percent, which represents the estimated credit-adjusted risk-free interest rate for the period the receivable is outstanding.

The fair value of long-term debt was determined using quoted market prices or discounted cash flows based upon current borrowing rates. The term loan and revolving loan are variable rate interest and approximate fair value. See NOTE 8 - DEBT AND CREDIT FACILITIES for further information.

NOTE 8 - DEBT AND CREDIT FACILITIES

The following represents a summary of our long-term debt as of December 31, 2010 and 2009:

		($ in Millions)
		December 31, 2010
Debt Instrument		Type		Average Annual Interest Rate				Final Maturity				Face Amount				Total Long-Term Debt
$1 Billion Senior Notes:
$500 Million 4.80% 2020 Senior Notes		Fixed			4.80	%			2020			$	500.0			$	499.0	(4)
$500 Million 6.25% 2040 Senior Notes		Fixed			6.25	%			2040				500.0				491.3	(4)
$400 Million Senior Notes		Fixed			5.90	%			2020				400.0				397.8	(3)
$325 Million Private Placement Senior Notes:
Series 2008A - Tranche A		Fixed			6.31	%			2013				270.0				270.0
Series 2008A - Tranche B		Fixed			6.59	%			2015				55.0				55.0
$600 Million Credit Facility: (1)
Revolving loan		Variable			-	%			2012				600.0				-	(2)
Total												$	2,325.0			$	1,713.1
		December 31, 2009
Debt Instrument		Type		Average Annual Interest Rate				Final Maturity				Face Amount				Total Long-Term Debt
$325 Million Private Placement Senior Notes:
Series 2008A - Tranche A		Fixed			6.31	%			2013			$	270.0			$	270.0
Series 2008A - Tranche B		Fixed			6.59	%			2015				55.0				55.0
$800 Million Credit Facility:
Term loan		Variable			1.43	%			2012				200.0				200.0
Revolving loan		Variable			-	%			2012				600.0				-	(2)
Total												$	1,125.0			$	525.0

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(1)	The $200 million term loan was repaid in full on March 31, 2010.

(2)	As of December 31, 2010 and 2009, no revolving loans were drawn under the credit facility; however, the principal amount of letter of credit obligations totaled $64.7 million and $31.4 million, respectively, reducing available borrowing capacity to $535.3 million and $568.6 million, respectively.

(3)	As of December 31, 2010, the $400 million senior notes were recorded at par value of $400 million less unamortized discounts of $2.2 million, based on an imputed interest rate of 5.98 percent.

(4)

As of December 31, 2010, the $500 million 4.80 percent 2020 senior notes and the $500 million 6.25 percent 2040 senior notes were recorded at par values of $500 million less unamortized discounts of $1.0 million and $8.7 million, respectively, based on imputed interest rates of 4.83 percent and 6.38 percent, respectively.

$1 Billion Senior Notes Offering

On September 20, 2010, we completed a $1 billion public offering of senior notes consisting of two tranches: a 10-year tranche of $500 million aggregate principal amount at 4.80 percent due October 1, 2020, and a 30-year tranche of $500 million aggregate principal amount at 6.25 percent due October 1, 2040. Interest is fixed and is payable on April 1 and October 1 of each year, beginning on April 1, 2011, for both series of senior notes until maturity. The senior notes are unsecured obligations and rank equally with all of our other existing and future senior unsecured and unsubordinated indebtedness. There are no subsidiary guarantees of the interest and principal amounts.

A portion of the net proceeds from the senior notes offering was used for the repayment of the $350 million borrowings outstanding under our credit facility, which we repaid on September 22, 2010. Other uses of the net proceeds may include general corporate purposes, including funding of capital expenditures and acquisitions. Pending other uses, we may also invest the net proceeds from the offering in short-term marketable securities.

The senior notes may be redeemed any time at our option after 30 days but within no more than 60 days of notice to the holders of the applicable series of notes. The senior notes are redeemable at a redemption price equal to the greater of (1) 100 percent of the principal amount of the notes to be redeemed or (2) the sum of the present values of the remaining scheduled payments of principal and interest on the notes to be redeemed, discounted to the redemption date on a semi-annual basis at the treasury rate plus 35 basis points with respect to the 2020 senior notes and 40 basis points with respect to the 2040 senior notes, plus, in each case, accrued and unpaid interest to the date of redemption. In addition, if a change of control triggering event occurs with respect to the notes, we will be required to offer to purchase the notes at a purchase price equal to 101 percent of the principal amount, plus accrued and unpaid interest to the date of purchase.

The terms of the senior notes contain certain customary covenants; however, there are no financial covenants.

$400 Million Senior Notes Offering

On March 17, 2010, we completed a $400 million public offering of senior notes due March 15, 2020. Interest at a fixed rate of 5.90 percent is payable on March 15 and September 15 of each year, beginning on September 15, 2010, until maturity on March 15, 2020. The senior notes are unsecured obligations and rank equally with all of our other existing and future senior unsecured and unsubordinated indebtedness. There are no subsidiary guarantees of the interest and principal amounts.

A portion of the net proceeds from the senior notes offering was used for the repayment of our $200 million term loan under our credit facility, which we repaid on March 31, 2010, as well as the repayment of our share of Amapá's remaining debt outstanding of $100.8 million on May 27, 2010. In addition, we used the remainder of the net proceeds to help fund the acquisitions of Spider and CLCC during the third quarter of 2010.

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The senior notes may be redeemed any time at our option after 30 days but within no more than 60 days of notice to the note holders. The senior notes are redeemable at a redemption price equal to the greater of (1) 100 percent of the principal amount of the notes to be redeemed or (2) the sum of the present values of the remaining scheduled payments of principal and interest on the notes to be redeemed, discounted to the redemption date on a semi-annual basis, plus accrued and unpaid interest to the date of redemption. In addition, if a change of control triggering event occurs, we will be required to offer to purchase the notes at a purchase price equal to 101 percent of the principal amount, plus accrued and unpaid interest to the date of purchase.

The terms of the senior notes contain certain customary covenants; however, there are no financial covenants.

$325 Million Private Placement Senior Notes

On June 25, 2008, we entered into a $325 million private placement consisting of $270 million of 6.31 percent Five-Year Senior Notes due June 15, 2013, and $55 million of 6.59 percent Seven-Year Senior Notes due June 15, 2015. Interest is paid on the notes for both tranches on June 15 and December 15 until their respective maturities. The notes are unsecured obligations with interest and principal amounts guaranteed by certain of our domestic subsidiaries. The notes and guarantees were not required to be registered under the Securities Act of 1933, as amended, and were placed with qualified institutional investors. We used the proceeds to repay senior unsecured indebtedness and for general corporate purposes.

The terms of the private placement senior notes contain customary covenants that require compliance with certain financial covenants based on: (1) debt to earnings ratio (Total Funded Debt to Consolidated EBITDA, as those terms are defined in the agreement, for the preceding four quarters cannot exceed 3.25 to 1.0 on the last day of any fiscal quarter) and (2) interest coverage ratio (Consolidated EBITDA to Interest Expense, as those terms are defined in the agreement, for the preceding four quarters must not be less than 2.5 to 1.0 on the last day of any fiscal quarter). As of December 31, 2010 and 2009, we were in compliance with the financial covenants in the note purchase agreement.

Credit Facility

On August 17, 2007, we entered into a five-year unsecured credit facility with a syndicate of 13 financial institutions. Effective October 29, 2009, we amended the terms of our $800 million credit facility. The amendment resulted in, among other things, an increase in the sub-limit for letters of credit from $50 million to $150 million, the addition of multi-currency letters of credit, and more liberally defined financial covenants and debt restrictions. An increase of 50 basis points to the annual LIBOR margin resulted from this amendment. The $200 million term loan was repaid in full on March 31, 2010. As of December 31, 2010, the facility provides $600 million in borrowing capacity, comprised of revolving loans, swing loans and letters of credit.

Loans are drawn with a choice of interest rates and maturities, subject to the terms of the agreement. Pursuant to the amendment described above, interest rates are either (1) a range from LIBOR plus 0.95 percent to LIBOR plus 1.625 percent based on debt and earnings levels, or (2) the highest of the Federal Funds Rate plus 0.50 percent, the prime rate plus a range of 0 to 0.625 percent, or the one-month LIBOR rate plus 1.0 percent based on debt and earnings levels.

The credit facility has two financial covenants based on: (1) debt to earnings ratio (Total Funded Debt to Consolidated EBITDA, as those terms are defined in the agreement, for the preceding four quarters cannot exceed 3.25 to 1.0 on the last day of any fiscal quarter) and (2) interest coverage ratio (Consolidated EBITDA to Interest Expense, as those terms are defined in the agreement, for the preceding four quarters must not be less than 2.5 to 1.0 on the last day of any fiscal quarter). Prior to the October 29, 2009 credit facility amendment the interest coverage ratio was calculated based on Consolidated EBIT to Interest Expense for the preceding four quarters and could not be less than 3.0 to 1.0 on the last day of any fiscal quarter. The amendment provides more liberally defined financial covenants. As of December 31, 2010 and 2009, we were in compliance with the financial covenants in the credit agreement.

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Short-term Facilities

On March 31, 2010, Asia Pacific Iron Ore entered into a new A$40 million ($40.7 million) bank contingent instrument facility and cash advance facility to replace the existing A$40 million multi-option facility, which was extended through June 30, 2010 and subsequently renewed until June 30, 2011. The facility, which is renewable annually at the bank's discretion, provides A$40 million in credit for contingent instruments, such as performance bonds and the ability to request a cash advance facility to be provided at the discretion of the bank. As of December 31, 2010, the outstanding bank guarantees under this facility totaled A$24 million ($24.4 million), thereby reducing borrowing capacity to A$16 million ($16.3 million). We have provided a guarantee of the facility, along with certain of our Australian subsidiaries. The facility agreement contains customary covenants that require compliance with certain financial covenants: (1) debt to earnings ratio and (2) interest coverage ratio, both based on the financial performance of the Company. As of December 31, 2010, we were in compliance with these financial covenants.

Latin America

At December 31, 2009, Amapá had total project debt outstanding of approximately $530 million, for which we provided a several guarantee on our 30 percent share. During 2010, Amapá repaid its total project debt outstanding. Repayment of our share of the total project debt outstanding consisted of $54.2 million and $100.8 million repaid on February 17, 2010 and May 27, 2010, respectively. Upon repayment, our estimate of the aggregate fair value of the outstanding guarantee of $6.7 million was reversed through Equity income (loss) from ventures in the Statements of Consolidated Operations for the year ended December 31, 2010. The fair value was estimated using a discounted cash flow model based upon the spread between guaranteed and non-guaranteed debt over the period the debt was expected to be outstanding.

Debt Maturities

Maturities of long-term debt instruments based on the principal amounts outstanding at December 31, 2010, total $270 million in 2013, $55 million in 2015 and $1.4 billion thereafter.

Refer to NOTE 7 - FAIR VALUE OF FINANCIAL INSTRUMENTS for further information.

NOTE 9 - LEASE OBLIGATIONS

We lease certain mining, production and other equipment under operating and capital leases. The leases are for varying lengths, generally at market interest rates and contain purchase and/or renewal options at the end of the terms. Our operating lease expense was $24.2 million, $25.5 million and $20.8 million in 2010, 2009 and 2008, respectively. Capital lease assets were $283.2 million and $167.1 million at December 31, 2010 and 2009, respectively. Corresponding accumulated amortization of capital leases included in respective allowances for depreciation were $92.7 million and $41.5 million at December 31, 2010 and 2009, respectively.

In December 2010, our North American Coal segment entered into a sale-leaseback arrangement. Under the arrangement, we sold the new longwall plow system at our Pinnacle mine in West Virginia and leased it back for a period of five years. The sale-leaseback arrangement was specific to the assets at the time of the agreement and does not include the longwall plow system assets pending delivery. The leaseback has been accounted for as a capital lease. We recorded assets and liabilities under the capital lease of $57.3 million, reflecting the lower of the present value of the minimum lease payments or the fair value of the asset.

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Future minimum payments under capital leases and non-cancellable operating leases at December 31, 2010 are as follows:

		(In Millions)
		Capital Leases				Operating Leases
2011		$	46.5			$	21.3
2012			43.5				17.1
2013			37.6				17.0
2014			37.1				12.4
2015			41.3				5.7
2016 and thereafter			47.7				8.0
Total minimum lease payments			253.7			$	81.5
Amounts representing interest			51.8
Present value of net minimum lease payments		$	201.9	(1)

(1)	The total is comprised of $33.7 million and $168.2 million classified as Other current liabilities and Other liabilities , respectively, on the Statements of Consolidated Financial Position at December 31, 2010.

Total minimum capital lease payments of $253.7 million include $166.4 million for our Asia Pacific Iron Ore segment, $64.1 million for our North American Coal segment, $21.9 million for our North American Iron Ore segment and $1.3 million for our Corporate segment, respectively. Total minimum operating lease payments of $81.5 million include $52.3 million for our North American Iron Ore segment, $18.4 million for our Corporate segment, and $10.8 million for our Asia Pacific Iron Ore, North American Coal and Other segments.

NOTE 10 - ENVIRONMENTAL AND MINE CLOSURE OBLIGATIONS

We had environmental and mine closure liabilities of $199.1 million and $132.3 million at December 31, 2010 and 2009, respectively. Payments in 2010 were $10.6 million compared with $1.6 million in 2009. The following is a summary of the obligations at December 31, 2010 and 2009:

		(In Millions)
		December 31,
		2010				2009
Environmental		$	13.7			$	14.5
Mine closure
LTVSMC			17.1				13.9
Operating mines:
North American Iron Ore			112.0				56.9
North American Coal			34.7				30.3
Asia Pacific Iron Ore			15.4				11.4
Other			6.2				5.3
Total mine closure			185.4				117.8
Total environmental and mine closure obligations			199.1				132.3
Less current portion			14.2				8.0
Long term environmental and mine closure obligations		$	184.9			$	124.3

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Environmental

Our mining and exploration activities are subject to various laws and regulations governing the protection of the environment. We conduct our operations to protect the public health and environment and believe our operations are in compliance with applicable laws and regulations in all material respects. Our environmental liabilities of $13.7 million and $14.5 million at December 31, 2010 and 2009, respectively, including obligations for known environmental remediation exposures at various active and closed mining operations and other sites, have been recognized based on the estimated cost of investigation and remediation at each site. If the cost can only be estimated as a range of possible amounts with no specific amount being more likely, the minimum of the range is accrued. Future expenditures are not discounted unless the amount and timing of the cash disbursements are readily known. Potential insurance recoveries have not been reflected. Additional environmental obligations could be incurred, the extent of which cannot be assessed.

As discussed in further detail below, the environmental liability recorded at December 31, 2010 and 2009 is primarily comprised of remediation obligations related to the Rio Tinto mine site in Nevada where we are named as a PRP.

The Rio Tinto Mine Site

The Rio Tinto Mine Site is a historic underground copper mine located near Mountain City, Nevada, where tailings were placed in Mill Creek, a tributary to the Owyhee River. Site investigation and remediation work is being conducted in accordance with a Consent Order between the Nevada DEP and the RTWG composed of Cliffs, Atlantic Richfield Company, Teck Cominco American Incorporated, and E. I. du Pont de Nemours and Company. The Consent Order provides for technical review by the U.S. Department of the Interior Bureau of Indian Affairs, the U.S. Fish & Wildlife Service, U.S. Department of Agriculture Forest Service, the NDEP and the Shoshone-Paiute Tribes of the Duck Valley Reservation (collectively, "Rio Tinto Trustees"). The Consent Order is currently projected to continue with the objective of supporting the selection of the final remedy for the site. Costs are shared pursuant to the terms of a Participation Agreement between the parties of the RTWG, who have reserved the right to renegotiate any future participation or cost sharing following the completion of the Consent Order.

The Rio Tinto Trustees have made available for public comment their plans for the assessment of NRD. The RTWG commented on the plans and also are in discussions with the Rio Tinto Trustees informally about those plans. The notice of plan availability is a step in the damage assessment process. The studies presented in the plan may lead to a NRD claim under CERCLA. There is no monetized NRD claim at this time.

The focus of the RTWG has been on development of alternatives for remediation of the mine site. A draft of the alternative studies was reviewed with NDEP, the EPA and the Rio Tinto Trustees, and such alternatives have been reduced to the following: (1) tailings stabilization and long-term water treatment; and (2) removal of the tailings. As of December 31, 2010, the estimated costs of the available remediation alternatives currently range from approximately $10.0 million to $30.5 million in total for all potentially responsible parties. In recognition of the potential for an NRD claim, the parties are actively pursuing a global settlement that would include the EPA and encompass both the remedial action and the NRD issues.

On May 29, 2009, the RTWG entered into a Rio Tinto Mine Site Work and Cost Allocation Agreement (the "Allocation Agreement") to resolve differences over the allocation of any negotiated remedy. The Allocation Agreement contemplates that the RTWG will enter into an insured fixed-price cleanup or IFC, pursuant to which a contractor would assume responsibility for the implementation and funding of the remedy in exchange for a fixed price. We are obligated to fund 32.5 percent of the IFC. In the event an IFC is not implemented, the RTWG has agreed on allocation percentages in the Allocation Agreement, with Cliffs being committed to fund 32.5 percent of any remedy. We have an environmental liability of $9.2 million and $9.5 million on the Statements of Consolidated Financial Position as of December 31, 2010 and 2009, respectively, related to this issue. We

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believe our current reserve is adequate to fund our anticipated portion of the IFC. While a global settlement with the EPA has not been finalized, we expect an agreement will be reached in 2011.

Mine Closure

Our mine closure obligation of $185.4 million and $117.8 million at December 31, 2010 and 2009, respectively, includes our five consolidated North American operating iron ore mines, our six operating North American coal mines, our Asia Pacific operating iron ore mines, the coal mine at Sonoma and a closed operation formerly known as LTVSMC.

Management periodically performs an assessment of the obligation to determine the adequacy of the liability in relation to the closure activities still required at the LTVSMC site. The LTVSMC closure liability was $17.1 million and $13.9 million at December 31, 2010 and 2009, respectively.

The accrued closure obligation for our active mining operations provides for contractual and legal obligations associated with the eventual closure of the mining operations. We performed a detailed assessment of our asset retirement obligations related to our active mining locations most recently in 2008 in accordance with our Company's accounting policy, which requires us to perform an in-depth evaluation of the liability every three years in addition to routine annual assessments. We determined the obligations based on detailed estimates adjusted for factors that a market participant would consider (i.e., inflation, overhead and profit), escalated at an assumed 3.5 percent rate of inflation to the estimated closure dates, and then discounted using the current credit-adjusted risk-free interest rate based on the corresponding life of mine. The estimate also incorporates incremental increases in the closure cost estimates and changes in estimates of mine lives. The closure date for each location was determined based on the exhaustion date of the remaining iron ore reserves. The accretion of the liability and amortization of the related asset is recognized over the estimated mine lives for each location. The following represents a rollforward of our asset retirement obligation liability related to our active mining locations for the years ended December 31, 2010 and 2009:

		(In Millions)
		December 31,
		2010				2009
Asset retirement obligation at beginning of period		$	103.9			$	86.8
Accretion expense			13.1				6.8
Exchange rate changes			2.5				3.6
Revision in estimated cash flows			1.0				6.7
Payments			(8.4	)			-
Acquired through business combinations			56.2				-
Asset retirement obligation at end of period		$	168.3			$	103.9

NOTE 11 - PENSIONS AND OTHER POSTRETIREMENT BENEFITS

We offer defined benefit pension plans, defined contribution pension plans and other postretirement benefit plans, primarily consisting of retiree healthcare benefits, to most employees in North America as part of a total compensation and benefits program. This includes employees of PinnOak and CLCC, who became employees of the Company through the July 2007 and July 2010 acquisitions, respectively. Upon the acquisition of the remaining 73.2 percent interest in Wabush in February 2010, we fully consolidated the related Canadian plans into our pension and OPEB obligations. We do not have employee retirement benefit obligations at our Asia Pacific Iron Ore operations. The defined benefit pension plans are largely noncontributory and benefits are generally based on employees' years of service and average earnings for a defined period prior to retirement or a minimum formula.

On October 6, 2008, the USW ratified a four-year labor contract, which replaced the labor agreement that expired on September 1, 2008. The agreement covers approximately 2,300 USW-represented workers at our

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Empire and Tilden mines in Michigan, and our United Taconite and Hibbing mines in Minnesota. The changes enhanced the minimum pension formula by increasing the benefit dollar multipliers and renewed the lump sum special payments for certain employees retiring in the near future. The changes also included renewal of payments to surviving spouses of certain retirees.

In addition, we currently provide various levels of retirement health care and OPEB to most full-time employees who meet certain length of service and age requirements (a portion of which are pursuant to collective bargaining agreements). Most plans require retiree contributions and have deductibles, co-pay requirements, and benefit limits. Most bargaining unit plans require retiree contributions and co-pays for major medical and prescription drug coverage. There is an annual limit on our cost for medical coverage under the U.S. salaried plans. The annual limit applies to each covered participant and equals $7,000 for coverage prior to age 65 and $3,000 for coverage after age 65, with the retiree's participation adjusted based on the age at which retiree's benefits commence. For participants at our Northshore operation, the annual limit ranges from $4,020 to $4,500 for coverage prior to age 65, and equals $2,000 for coverage after age 65. Covered participants pay an amount for coverage equal to the excess of (i) the average cost of coverage for all covered participants, over (ii) the participant's individual limit, but in no event will the participant's cost be less than 15 percent of the average cost of coverage for all covered participants. For Northshore participants, the minimum participant cost is a fixed dollar amount. We do not provide OPEB for most U.S. salaried employees hired after January 1, 1993. OPEB are provided through programs administered by insurance companies whose charges are based on benefits paid.

Our North American Coal segment is required under an agreement with the UMWA to pay amounts into the UMWA pension trusts based principally on hours worked by UMWA-represented employees. This includes employees of PinnOak, who became employees of the Company through the July 2007 acquisition. These multi-employer pension trusts provide benefits to eligible retirees through a defined benefit plan. The UMWA 1993 Benefit Plan is a defined contribution plan that was created as the result of negotiations for the NBCWA of 1993. The plan provides healthcare insurance to orphan UMWA retirees who are not eligible to participate in the UMWA Combined Benefit Fund or the 1992 Benefit Fund (two multi-employer benefit plans created under the Coal Industry Retiree Health Benefit Act of 1992) or whose last employer signed the 1993 or later NBCWA and who subsequently goes out of business. Contributions to the trust were at rates of $6.42 and $5.27 per hour worked in 2010 and 2009, respectively, and amounted to $10.3 million in 2010 and $6.1 million in 2009.

Pursuant to the four-year labor agreements reached with the USW for U.S. employees, effective January 1, 2009, negotiated plan changes removed the cap on our share of future bargaining unit retirees' healthcare premiums and provided a maximum on the amount retirees will contribute for health care benefits during the term of the agreement. The agreements also provide that we and our partners fund an estimated $90 million into bargaining unit pension plans and VEBAs during the term of the contracts.

In December 2003, The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 was enacted. This act introduced a prescription drug benefit under Medicare Part D as well as a federal subsidy to sponsors of retiree healthcare benefit plans that provide a benefit that is at least actuarially equivalent to Medicare Part D. Our measures of the accumulated postretirement benefit obligation and net periodic postretirement benefit cost as of December 31, 2004, and for periods thereafter reflect amounts associated with the subsidy. As a result, OPEB expense for 2010, 2009 and 2008 reflects estimated cost reductions of $3.7 million, $3.8 million and $2.8 million, respectively. We elected to adopt the retroactive transition method for recognizing the OPEB cost reduction in 2004. The following table summarizes the annual costs related to the retirement plans for 2010, 2009 and 2008:

		(In Millions)
		2010				2009				2008
Defined benefit pension plans		$	45.6			$	50.8			$	20.3
Defined contribution pension plans			4.2				2.1				7.2
Other postretirement benefits			24.2				25.5				8.6
Total		$	74.0			$	78.4			$	36.1

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The following tables and information provide additional disclosures for our consolidated plans.

Obligations and Funded Status

The following tables and information provide additional disclosures for the years ended December 31, 2010 and 2009:

		(In Millions)
		Pension Benefits								Other Benefits
Change in benefit obligations:		2010				2009				2010				2009
Benefit obligations - beginning of year		$	750.8			$	706.6			$	333.0			$	307.4
Service cost (excluding expenses)			18.5				14.3				7.5				5.4
Interest cost			52.9				42.6				22.0				18.9
Plan amendments			3.7				3.0				-				-
Actuarial loss			57.5				38.6				43.6				19.5
Benefits paid			(67.0	)			(54.3	)			(28.2	)			(22.8	)
Participant contributions			-				-				6.2				3.7
Federal subsidy on benefits paid			-				-				0.9				0.9
Exchange rate gain			10.2				-				2.9				-
Acquired through business combinations			195.7				-				52.3				-
Benefit obligations - end of year		$	1,022.3			$	750.8			$	440.2			$	333.0
Change in plan assets:
Fair value of plan assets - beginning of year		$	483.4			$	456.0			$	136.7			$	91.6
Actual return on plan assets			87.1				63.0				20.1				27.8
Participant contributions			-				-				1.6				-
Employer contributions			45.6				18.5				23.7				17.4
Asset transfers			-				0.2				-				-
Benefits paid			(67.0	)			(54.3	)			(7.9	)			(0.1	)
Exchange rate gain			8.9				-				-				-
Acquired through business combinations			176.3				-				-				-
Fair value of plan assets - end of year		$	734.3			$	483.4			$	174.2			$	136.7
Funded status at December 31:
Fair value of plan assets		$	734.3			$	483.4			$	174.2			$	136.7
Benefit obligations			(1,022.3	)			(750.8	)			(440.2	)			(333.0	)
Funded status (plan assets less benefit obligations)		$	(288.0	)		$	(267.4	)		$	(266.0	)		$	(196.3	)
Amount recognized at December 31		$	(288.0	)		$	(267.4	)		$	(266.0	)		$	(196.3	)
Amounts recognized in Statements of Financial Position:
Current liabilities		$	(3.1	)		$	(0.1	)		$	(22.9	)		$	(17.8	)
Noncurrent liabilities			(284.9	)			(267.3	)			(243.1	)			(178.5	)
Net amount recognized		$	(288.0	)		$	(267.4	)		$	(266.0	)		$	(196.3	)
Amounts recognized in accumulated other comprehensive income:
Net actuarial loss		$	269.3			$	313.7			$	152.3			$	120.9
Prior service cost			24.2				23.9				11.8				13.5
Transition asset			-				-				(5.7	)			(9.1	)
Net amount recognized		$	293.5			$	337.6			$	158.4			$	125.3
The estimated amounts that will be amortized from accumulated other comprehensive income into net periodic benefit cost in 2011:
Net actuarial loss		$	19.7							$	9.6
Prior service cost			4.4								3.7
Transition asset			-								(3.0	)
Net amount recognized		$	24.1							$	10.3

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		(In Millions)
		2010
		Pension Plans																				Other Benefits
		Salaried				Hourly				Mining				SERP				Total				Salaried				Hourly				Total
Fair value of plan assets		$	275.3			$	456.7			$	2.3			$	-			$	734.3			$	-			$	174.2			$	174.2
Benefit obligation			(373.8	)			(635.3	)			(4.4	)			(8.8	)			(1,022.3	)			(63.7	)			(376.5	)			(440.2	)
Funded status		$	(98.5	)		$	(178.6	)		$	(2.1	)		$	(8.8	)		$	(288.0	)		$	(63.7	)		$	(202.3	)		$	(266.0	)
		2009
		Pension Plans																				Other Benefits
		Salaried				Hourly				Mining				SERP				Total				Salaried				Hourly				Total
Fair value of plan assets		$	177.4			$	305.0			$	1.0			$	-			$	483.4			$	-			$	136.7			$	136.7
Benefit obligation			(261.3	)			(480.1	)			(3.6	)			(5.8	)			(750.8	)			(50.4	)			(282.6	)			(333.0	)
Funded status		$	(83.9	)		$	(175.1	)		$	(2.6	)		$	(5.8	)		$	(267.4	)		$	(50.4	)		$	(145.9	)		$	(196.3	)

The accumulated benefit obligation for all defined benefit pension plans was $997.2 million and $733.1 million at December 31, 2010 and 2009, respectively.

Components of Net Periodic Benefit Cost

		(In Millions)
		Pension Benefits												Other Benefits
		2010				2009				2008				2010				2009				2008
Service cost		$	18.5			$	14.3			$	12.6			$	7.5			$	5.4			$	3.4
Interest cost			52.9				42.6				41.4				22.0				18.9				16.3
Expected return on plan assets			(53.3	)			(37.1	)			(48.3	)			(12.9	)			(9.1	)			(10.4	)
Amortization:
Net asset			-				-				-				(3.0	)			(3.0	)			(3.0	)
Prior service costs (credits)			4.4				4.2				4.0				1.7				1.8				(3.8	)
Net actuarial loss			23.1				26.8				10.6				8.9				11.5				6.1
Net periodic benefit cost		$	45.6			$	50.8			$	20.3			$	24.2			$	25.5			$	8.6
Acquired through business combinations			17.7				-				-				2.4				-				-
Current year actuarial (gain)/loss			(3.1	)			12.1				178.2				34.6				2.2				66.6
Amortization of net loss			(23.1	)			(26.8	)			(10.6	)			(8.9	)			(11.5	)			(6.1	)
Current year prior service cost			3.7				3.0				6.7				-				-				33.7
Amortization of prior service (cost) credit			(4.4	)			(4.2	)			(4.0	)			(1.7	)			(1.8	)			3.8
Amortization of transition asset			-				-				-				3.0				3.0				3.0
Total recognized in other comprehensive income		$	(9.2	)		$	(15.9	)		$	170.3			$	29.4			$	(8.1	)		$	101.0
Total recognized in net periodic cost and other comprehensive income		$	36.4			$	34.9			$	190.6			$	53.6			$	17.4			$	109.6

Additional Information

		Pension Benefits												Other Benefits
		2010				2009				2008				2010				2009				2008
Effect of change in mine ownership & noncontrolling interest		$	49.9			$	50.9			$	50.4			$	10.7			$	10.1			$	8.6
Actual return on plan assets			87.1				63.0				(118.2	)			20.1				27.8				(39.8	)

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Assumptions

For our U.S. plans we used a discount rate as of December 31, 2010 of 5.11 percent, compared with a discount rate of 5.66 percent as of December 31, 2009. The U.S. discount rates are determined by matching the projected cash flows used to determine the PBO and APBO to a projected yield curve of over 450 Aa graded bonds in the 10th to 90th percentiles. These bonds are either noncallable or callable with make-whole provisions. The duration matching produced rates ranging from 4.93 percent to 5.29 percent for our plans. Based upon these results, we selected a December 31, 2010 discount rate of 5.11 percent for our plans.

For our Canadian plans we used a discount rate as of December 31, 2010 of 5.00 percent. The Canadian discount rates are determined by calculating the single level discount rate that, when applied to a particular cash flow pattern, produces the same present value as discounting the cash flow pattern using spot rates generated from a high-quality corporate bond yield curve. Based on the cash flow patterns and liability duration for the Canadian pension and postretirement welfare plans, which are dependent on the demographic profile of each plan, we selected a discount rate of 5.00 percent for our plans as of December 31, 2010.

Weighted-average assumptions used to determine benefit obligations at December 31 were:

		Pension Benefits								Other Benefits
		2010				2009				2010				2009
U.S. plan discount rate			5.11	%			5.66	%			5.11	%			5.66	%
Canadian plan discount rate			5.00				(1	)			5.00				(1	)
Rate of compensation increase			4.00				4.00				4.00				4.00

(1)	The Canadian plans were not consolidated into our pension and OPEB obligations prior to the acquisition of the remaining 73.2 percent interest in Wabush in February 2010.

Weighted-average assumptions used to determine net benefit cost for the years 2010, 2009 and 2008 were:

		Pension Benefits												Other Benefits
		2010				2009				2008				2010				2009				2008
U.S. plan discount rate			5.66	%			6.00	%			6.00/7.00	%			5.66	%			6.00	%			6.00	%
Canadian plan discount rate			5.75/5.50	(2)			(1	)			(1	)			6.00/5.75	(3)			(1	)			(1	)
U.S. expected return on plan assets			8.50				8.50				8.50				8.50				8.50				8.50
Canadian expected return on plan assets			7.50				(1	)			(1	)			7.50				(1	)			(1	)
Rate of compensation increase			4.00				4.00				4.13				4.00				4.00				4.50

(1)	The Canadian plans were not consolidated into our pension and OPEB obligations prior to the acquisition of the remaining 73.2 percent interest in Wabush in February 2010.

(2)	5.75% from January 1, 2010 through January 31, 2010, and 5.50% from February 1, 2010 through December 31, 2010.

(3)	6.00% from January 1, 2010 through January 31, 2010, and 5.75% from February 1, 2010 through December 31, 2010.

Assumed health care cost trend rates at December 31 were:

		2010				2009
U.S. plan health care cost trend rate assumed for next year			8.00	%			8.00	%
Canadian plan health care cost trend rate assumed for next year			8.50				(1	)
Ultimate health care cost trend rate			5.00				5.00
U.S. plan year that the ultimate rate is reached			2017				2016
Canadian plan year that the ultimate rate is reached			2018				(1	)

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(1)	The Canadian plans were not consolidated into our pension and OPEB obligations prior to the acquisition of the remaining 73.2 percent interest in Wabush in February 2010.

Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. A change of one percentage point in assumed health care cost trend rates would have the following effects:

		(In Millions)
		Increase				Decrease
Effect on total of service and interest cost		$	4.5			$	(3.6	)
Effect on postretirement benefit obligation			51.5				(41.8	)

Plan Assets

The Company's financial objectives with respect to our pension and VEBA plan assets are to fully fund the actuarial accrued liability for each of the plans, to maximize investment returns within reasonable and prudent levels of risk, and to maintain sufficient liquidity to meet benefit obligations on a timely basis.

Our investment objective is to outperform the expected Return on Asset ("ROA") assumption used in the plans' actuarial reports over a full market cycle, which is considered a period during which the U.S. economy experiences the effects of both an upturn and a downturn in the level of economic activity. In general, these periods tend to last between three and five years. The expected ROA takes into account historical returns and estimated future long-term returns based on capital market assumptions applied to the asset allocation strategy.

The asset allocation strategy is determined through a detailed analysis of assets and liabilities by plan which defines the overall risk that is acceptable with regard to the expected level and variability of portfolio returns, surplus (assets compared to liabilities), contributions, and pension expense.

The asset allocation process involves simulating the effect of financial market performance for various asset allocation scenarios and factoring in the current funded status and likely future funded status levels by taking into account expected growth or decline in the contributions over time. The modeling is then adjusted by simulating unexpected changes in inflation and interest rates. The process also includes quantifying the effect of investment performance and simulated changes to future levels of contributions, determining the appropriate asset mix with the highest likelihood of meeting financial objectives, and regularly reviewing our asset allocation strategy.

The asset allocation strategy varies by plan. The following table reflects the actual asset allocations for pension and VEBA plan assets as of December 31, 2010 and 2009, as well as the 2011 weighted average target asset allocations as of December 31, 2010. Equity investments include securities in large-cap, mid-cap and small-cap companies located in the U.S. and worldwide. Fixed income investments primarily include corporate bonds and government debt securities. Alternative investments include hedge funds, private equity, structured credit and real estate.

		Pension Assets												VEBA Assets
Asset Category		2011 Target Allocation				Percentage of Plan Assets at December 31,								2011 Target Allocation				Percentage of Plan Assets at December 31,
		2010				2009					2010				2009
Equity securities			42.0	%			42.0	%			37.5	%			41.0	%			44.4	%			46.4	%
Fixed income			31.0				30.6				29.9				34.8				37.4				38.3
Hedge funds			15.9				14.4				14.8				17.9				13.8				10.7
Private equity			5.2				5.0				6.6				6.3				4.3				4.4
Structured credit			3.7				5.4				8.1				-				-				-
Real estate			2.2				2.1				3.0				-				-				-
Cash			-				0.5				0.1				-				0.1				0.2
Total			100.0	%			100.0	%			100.0	%			100.0	%			100.0	%			100.0	%

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Pension

The fair values of our pension plan assets at December 31, 2010 and 2009 by asset category are as follows:

		(In Millions)
		December 31, 2010
Asset Category		Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)				Total
Equity securities:
U.S. large-cap		$	122.4			$	-			$	-			$	122.4
U.S. small/mid-cap			21.7				-				-				21.7
International			164.5				-				-				164.5
Fixed income			224.7				-				-				224.7
Hedge funds			-				-				105.8				105.8
Private equity			11.8				-				25.0				36.8
Structured credit			-				-				39.7				39.7
Real estate			-				-				15.5				15.5
Cash			3.2				-				-				3.2
Total		$	548.3			$	-			$	186.0			$	734.3

		(In Millions)
		December 31, 2009
Asset Category		Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1)				Significant  Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)				Total
Equity securities:
U.S. large-cap		$	88.1			$	-			$	-			$	88.1
U.S. small/mid-cap			35.1				-				-				35.1
International			57.8				-				-				57.8
Fixed income			144.8				-				-				144.8
Hedge funds			-				-				71.4				71.4
Private equity			13.6				-				18.2				31.8
Structured credit			-				-				39.1				39.1
Real estate			-				-				14.4				14.4
Cash			0.9				-				-				0.9
Total		$	340.3			$	-			$	143.1			$	483.4

Following is a description of the inputs and valuation methodologies used to measure the fair value of our plan assets.

Equity Securities

Equity securities classified as Level 1 investments include U.S. large, small and mid-cap investments and international equity. These investments are comprised of securities listed on an exchange, market or automated quotation system for which quotations are readily available. The valuation of these securities is determined using a market approach, and is based upon unadjusted quoted prices for identical assets in active markets.

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Fixed Income

Fixed income securities classified as Level 1 investments include bonds and government debt securities. These investments are comprised of securities listed on an exchange, market or automated quotation system for which quotations are readily available. The valuation of these securities is determined using a market approach, and is based upon unadjusted quoted prices for identical assets in active markets.

Hedge Funds

Hedge funds are alternative investments comprised of direct or indirect investment in offshore hedge funds of funds with an investment objective to achieve an attractive risk-adjusted return with moderate volatility and moderate directional market exposure over a full market cycle. The valuation techniques used to measure fair value attempt to maximize the use of observable inputs and minimize the use of unobservable inputs. Considerable judgment is required to interpret the factors used to develop estimates of fair value. Valuations of the underlying investment funds are obtained and reviewed. The securities that are valued by the funds are interests in the investment funds and not the underlying holdings of such investment funds. Thus, the inputs used to value the investments in each of the underlying funds may differ from the inputs used to value the underlying holdings of such funds.

In determining the fair value of a security, the fund managers may consider any information that is deemed relevant, which may include one or more of the following factors regarding the portfolio security, if appropriate: type of security or asset; cost at the date of purchase; size of holding; last trade price; most recent valuation; fundamental analytical data relating to the investment in the security; nature and duration of any restriction on the disposition of the security; evaluation of the factors that influence the market in which the security is purchased or sold; financial statements of the issuer; discount from market value of unrestricted securities of the same class at the time of purchase; special reports prepared by analysts; information as to any transactions or offers with respect to the security; existence of merger proposals or tender offers affecting the security; price and extent of public trading in similar securities of the issuer or compatible companies and other relevant matters; changes in interest rates; observations from financial institutions; domestic or foreign government actions or pronouncements; other recent events; existence of shelf registration for restricted securities; existence of any undertaking to register the security; and other acceptable methods of valuing portfolio securities.

Hedge fund investments are valued monthly and recorded on a one-month lag. For alternative investment values reported on a lag, current market information is reviewed for any material changes in values at the reporting date. Share repurchases for the SEI Opportunity Collective Fund are available quarterly with notice of 65 business days. For the SEI Special Situations Fund, redemption requests are considered quarterly subject to notice of 95 days; however, share repurchases are not permitted for a two-year lock-up period following investment, which will expire in April 2012 for the plans' initial investments.

Private Equity Funds

Private equity funds are alternative investments that represent direct or indirect investments in partnerships, venture funds or a diversified pool of private investment vehicles (fund of funds).

Investment commitments are made in private equity funds of funds based on an asset allocation strategy, and capital calls are made over the life of the funds to fund the commitments. Until commitments are funded, the committed amount is reserved and invested in a selection of public equity mutual funds, including U.S. large, small and mid-cap investments and international equity, designed to approximate overall equity market returns. As of December 31, 2010, remaining commitments total $18.3 million, of which $14.3 million is reserved for both our pension and other benefits. Refer to the valuation methodologies for equity securities above for further information.

The valuation of investments in private equity funds of funds is initially performed by the underlying fund managers. In determining the fair value, the fund managers may consider any information that is deemed relevant, which may include: type of security or asset; cost at the date of purchase; size of holding; last trade

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price; most recent valuation; fundamental analytical data relating to the investment in the security; nature and duration of any restriction on the disposition of the security; evaluation of the factors that influence the market in which the security is purchased or sold; financial statements of the issuer; discount from market value of unrestricted securities of the same class at the time of purchase; special reports prepared by analysts; information as to any transactions or offers with respect to the security; existence of merger proposals or tender offers affecting the security; price and extent of public trading in similar securities of the issuer or compatible companies and other relevant matters; changes in interest rates; observations from financial institutions; domestic or foreign government actions or pronouncements; other recent events; existence of shelf registration for restricted securities; existence of any undertaking to register the security; and other acceptable methods of valuing portfolio securities.

The valuations are obtained from the underlying fund managers, and the valuation methodology and process is reviewed for consistent application and adherence to policies. Considerable judgment is required to interpret the factors used to develop estimates of fair value.

Private equity investments are valued quarterly and recorded on a one-quarter lag. For alternative investment values reported on a lag, current market information is reviewed for any material changes in values at the reporting date. Capital distributions for the funds do not occur on a regular frequency. Liquidation of these investments would require sale of the partnership interest.

Structured Credit

Structured credit investments are alternative investments comprised of collateralized debt obligations and other structured credit investments that are priced based on valuations provided by independent, third-party pricing agents, if available. Such values generally reflect the last reported sales price if the security is actively traded. The third-party pricing agents may also value structured credit investments at an evaluated bid price by employing methodologies that utilize actual market transactions, broker-supplied valuations, or other methodologies designed to identify the market value of such securities. Such methodologies generally consider such factors as security prices, yields, maturities, call features, ratings and developments relating to specific securities in arriving at valuations. Securities listed on a securities exchange, market or automated quotation system for which quotations are readily available are valued at the last quoted sale price on the primary exchange or market on which they are traded. Debt obligations with remaining maturities of 60 days or less may be valued at amortized cost, which approximates fair value.

Structured credit investments are valued monthly and recorded on a one-month lag. For alternative investment values reported on a lag, current market information is reviewed for any material changes in values at the reporting date. Redemption requests are considered quarterly subject to notice of 90 days.

Real Estate

The real estate portfolio is an alternative investment comprised of three funds with strategic categories of real estate investments. All real estate holdings are externally appraised at least annually, and appraisals are conducted by reputable, independent appraisal firms that are members of the Appraisal Institute. All external appraisals are performed in accordance with the Uniform Standards of Professional Appraisal Practices. The property valuations and assumptions of each property are reviewed quarterly by the investment advisor and values are adjusted if there has been a significant change in circumstances relating to the property since the last external appraisal. The valuation methodology utilized in determining the fair value is consistent with the best practices prevailing within the real estate appraisal and real estate investment management industries, including the Real Estate Information Standards, and standards promulgated by the National Council of Real Estate Investment Fiduciaries, the National Association of Real Estate Investment Fiduciaries, and the National Association of Real Estate Managers. In addition, the investment advisor may cause additional appraisals to be performed. Two of the funds' fair values are updated monthly, and there is no lag in reported values. Redemption requests for these two funds are considered on a quarterly basis, subject to notice of 45 days.

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Effective October 1, 2009, one of the real estate funds began an orderly wind-down over the next three to four years. The decision to wind down the fund was driven primarily by real estate market factors that adversely affected the availability of new investor capital. Third-party appraisals of this fund's assets will be eliminated; however, internal valuation updates for all assets and liabilities of the fund will be prepared quarterly. The fund's asset values are recorded on a one-quarter lag, and current market information is reviewed for any material changes in values at the reporting date. Distributions from sales of properties will be made on pro-rata basis. Repurchase requests will not be honored during the wind-down period.

The following represents the effect of fair value measurements using significant unobservable inputs (Level 3) on changes in plan assets for the years ended December 31, 2010 and 2009:

		(In Millions)
		Year Ended December 31, 2010
		Hedge Funds				Private Equity Funds				Structured Credit Fund				Real Estate				Total
Beginning balance - January 1, 2010		$	71.4			$	18.2			$	39.1			$	14.4			$	143.1
Acquired through business combination			17.0				-				-				-				17.0
Actual return on plan assets:
Relating to assets still held at the reporting date			2.4				3.4				0.5				1.5				7.8
Relating to assets sold during the period			-				0.1				-				-				0.1
Purchases, sales and settlements			15.0				3.3				0.1				(0.4	)			18.0
Transfers in (out) of Level 3			-				-				-				-				-
Ending balance - December 31, 2010		$	105.8			$	25.0			$	39.7			$	15.5			$	186.0

		(In Millions)
		Year Ended December 31, 2009
		Hedge Funds				Private Equity Funds				Structured Credit Fund				Real Estate				Total
Beginning balance - January 1, 2009		$	69.3			$	21.0			$	15.9			$	23.5			$	129.7
Actual return on plan assets:
Relating to assets still held at the reporting date			2.1				(5.6	)			23.2				(9.5	)			10.2
Relating to assets sold during the period			-				(0.5	)			-				0.6				0.1
Purchases, sales and settlements			-				3.3				-				(0.2	)			3.1
Transfers in (out) of Level 3			-				-				-				-				-
Ending balance - December 31, 2009		$	71.4			$	18.2			$	39.1			$	14.4			$	143.1

The expected return on plan assets takes into account the weighted average of expected returns for each asset category. Expected returns are determined based on historical performance, adjusted for current trends. The expected return is net of investment expenses.

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VEBA

Assets for other benefits include VEBA trusts pursuant to bargaining agreements that are available to fund retired employees' life insurance obligations and medical benefits. The fair values of our other benefit plan assets at December 31, 2010 and 2009 by asset category are as follows:

		(In Millions)
		December 31, 2010
Asset Category		Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)				Total
Equity securities:
U.S. large-cap		$	38.5			$	-			$	-			$	38.5
U.S. small/mid-cap			11.7				-				-				11.7
International			27.2				-				-				27.2
Fixed income			65.2				-				-				65.2
Hedge funds			-				-				24.0				24.0
Private equity			2.5				-				4.9				7.4
Cash			0.2				-				-				0.2
Total		$	145.3			$	-			$	28.9			$	174.2

		(In Millions)
		December 31, 2009
Asset Category		Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)				Total
Equity securities:
U.S. large-cap		$	32.8			$	-			$	-			$	32.8
U.S. small/mid-cap			12.6				-				-				12.6
International			18.1				-				-				18.1
Fixed income			52.4				-				-				52.4
Hedge funds			-				-				14.6				14.6
Private equity			2.9				-				3.1				6.0
Cash			0.2				-				-				0.2
Total		$	119.0			$	-			$	17.7			$	136.7

Refer to the pension asset discussion above for further information regarding the inputs and valuation methodologies used to measure the fair value of each respective category of plan assets.

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The following represents the effect of fair value measurements using significant unobservable inputs (Level 3) on changes in plan assets for the year ended December 31, 2010 and 2009:

		(In Millions)
		Year Ended December 31, 2010												Year Ended December 31, 2009
		Hedge Funds				Private Equity Funds				Total				Hedge Funds				Private Equity Funds				Total
Beginning balance - January 1		$	14.6			$	3.1			$	17.7			$	13.6			$	3.0			$	16.6
Actual return on plan assets:
Relating to assets still held at the reporting date			0.1				1.0				1.1				0.5				(0.9	)			(0.4	)
Relating to assets sold during the period			-				-				-				-				-				-
Purchases, sales and settlements			9.3				0.8				10.1				0.5				1.0				1.5
Transfers in (out) of Level 3			-				-				-				-				-				-
Ending balance - December 31		$	24.0			$	4.9			$	28.9			$	14.6			$	3.1			$	17.7

The expected return on plan assets takes into account the weighted average of expected returns for each asset category. Expected returns are determined based on historical performance, adjusted for current trends. The expected return is net of investment expenses.

Contributions

Annual contributions to the pension plans are made within income tax deductibility restrictions in accordance with statutory regulations. In the event of plan termination, the plan sponsors could be required to fund additional shutdown and early retirement obligations that are not included in the pension obligations.

		(In Millions)
Company Contributions		Pension Benefits				Other Benefits
		VEBA				Direct Payments				Total
2009			18.5				17.4				18.3				35.7
2010			45.6				17.4				21.1				38.5
2011 (Expected)*			72.5				17.4				22.6				40.0

*	Pursuant to the bargaining agreement, benefits can be paid from VEBA trusts that are at least 70 percent funded (no VEBA trusts are 70 percent funded at December 31, 2010).

VEBA plans are not subject to minimum regulatory funding requirements. Amounts contributed are pursuant to bargaining agreements.

Contributions by participants to the other benefit plans were $6.2 million and $3.7 million for years ended December 31, 2010 and 2009, respectively.

Estimated Cost for 2011

For 2011, we estimate net periodic benefit cost as follows:

		(In Millions)
Defined benefit pension plans		$	38.0
Other postretirement benefits			26.1
Total		$	64.1

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Estimated Future Benefit Payments

		(In Millions)
		Pension Benefits				Other Benefits
		Gross Company Benefits				Less Medicare Subsidy				Net Company Payments
2011		$	69.7			$	23.6			$	1.0			$	22.6
2012			72.7				25.0				1.0				24.0
2013			71.7				26.2				1.2				25.0
2014			73.5				27.7				1.2				26.5
2015			75.6				29.1				1.4				27.7
2016-2020			392.0				156.7				9.4				147.3

Other Potential Benefit Obligations

While the foregoing reflects our obligation, our total exposure in the event of non-performance is potentially greater. Following is a summary comparison of the total obligation:

		(In Millions)
		December 31, 2010
		Defined Benefit Pensions				Other Benefits
Fair value of plan assets		$	734.3			$	174.2
Benefit obligation			1,022.3				440.2
Underfunded status of plan		$	(288.0	)		$	(266.0	)
Additional shutdown and early retirement benefits		$	43.7			$	39.8

NOTE 12 - STOCK COMPENSATION PLANS

At December 31, 2010, we have two share-based compensation plans, which are described below. The compensation cost that has been charged against income for those plans was $15.5 million, $12.2 million, and $22.5 million in 2010, 2009 and 2008, respectively, which was recorded primarily in Selling, general and administrative expenses on the Statements of Consolidated Operations. The total income tax benefit recognized in the Statements of Consolidated Operations for share-based compensation arrangements was $5.4 million, $4.3 million and $7.9 million for 2010, 2009 and 2008, respectively. Cash flows resulting from the tax benefits for tax deductions in excess of the compensation expense are classified as financing cash flows. Accordingly, we classified $3.3 million, $3.5 million and $3.5 million in excess tax benefits as cash from financing activities rather than cash from operating activities on our Statements of Consolidated Cash Flows for the years ended December 31, 2010, 2009 and 2008, respectively.

Employees' Plans

On May 11, 2010, our shareholders approved and adopted an amendment and restatement of the ICE Plan to increase the authorized number of shares available for issuance under the plan and to provide an annual limitation on the number of shares available to grant to any one participant in any fiscal year of 500,000 common shares. As of December 31, 2010, our ICE Plan authorized up to 11,000,000 of our common shares to be issued as stock options, SARs, restricted shares, restricted share units, retention units, deferred shares, and performance shares or performance units. Any of the foregoing awards may be made subject to attainment of performance goals over a performance period of one or more years. In addition, no participant in any fiscal year can be

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granted in the aggregate a number of shares having a fair market value on the date of grant equal to more than $5 million. Each stock option and SAR will reduce the common shares available under the ICE Plan by one common share. Each other award will reduce the common shares available under the ICE Plan by two common shares. The performance shares are intended to meet the requirements of Internal Revenue Code section 162(m) for deduction while the retention units are not.

For the outstanding plan year agreements, each performance share, if earned, entitles the holder to receive a number of common shares within the range between a threshold and maximum number of shares, with the actual number of common shares earned dependent upon whether the Company achieves certain objectives and performance goals as established by the Compensation and Organization Committee ("Committee") of the Board of Directors. The restricted share units are subject to continued employment, are retention based, will vest at the end of the performance period for the performance shares, and are payable in shares for the 2008, 2009 and 2010 plan years at a time determined by the Committee at its discretion.

The performance share grants vest over a period of three years and are intended to be paid out in common shares. Performance is measured on the basis of two factors: 1) relative TSR for the period, as measured against a predetermined peer group of mining and metals companies, and 2) three-year cumulative free cash flow. Awards are intended to be paid out in common shares. The final payout for all three plan year agreements vary from zero to 150 percent of the performance shares awarded.

Upon the occurrence of a change in control, all performance shares, restricted share units, restricted stock and retention units granted to a participant will vest and become nonforfeitable and will be paid out in cash.

Following is a summary of our Performance Share Award Agreements currently outstanding:

Performance Share Plan Year		Performance Shares Outstanding				Forfeitures (1)				Grant Date				Performance Period
2010			209,853				23,317				March 8, 2010				1/1/2010-12/31/2012
2010			12,480	(2)			-				March 8, 2010				1/1/2010-12/31/2012
2010			480				-				April 6, 2010				1/1/2010-12/31/2012
2010			590				-				April 12, 2010				1/1/2010-12/31/2012
2010			2,130				-				April 26, 2010				1/1/2010-12/31/2012
2010			12,080				-				May 3, 2010				1/1/2010-12/31/2012
2010			550				-				June 14, 2010				1/1/2010-12/31/2012
2010			670				-				August 16, 2010				1/1/2010-12/31/2012
2009			353,268				40,722				March 9, 2009				1/1/2009-12/31/2011
2009			3,825				-				August 31, 2009				1/1/2009-12/31/2011
2009			44,673	(2)			-				December 17, 2009				1/1/2009-12/31/2011
2008			141,619				11,111				March 10, 2008				1/1/2008-12/31/2010
2008			350				-				August 29, 2008				1/1/2008-12/31/2010

(1)	The 2010 and 2009 awards are based on assumed forfeitures. The 2008 awards reflect actual forfeitures.

(2)

Represents the target payout as of December 31, 2010 related to the 67,009 shares awarded on December 17, 2009 and the 18,720 shares awarded on March 8, 2010 based upon the Committee's ability to exercise negative discretion. For accounting purposes, a grant date has not yet been determined for this award.

Throughout 2010, the Committee approved grants under our shareholder approved ICE Plan for the performance period 2010-2012. A total of 420,700 shares were granted, consisting of performance shares and units, restricted share units, retention units and restricted stock.

The performance shares awarded under the ICE Plan to the Company's Chief Executive Officer on December 17, 2009 and March 8, 2010 of 67,009 shares and 18,720 shares, respectively, met the aggregate value

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added performance objective under the award terms as of December 31, 2010. The number of shares paid out under these particular awards at the end of each incentive period will be determined by the Committee based upon the achievement of certain other performance factors evaluated solely at the Committee's discretion may be reduced from the 67,009 shares and 18,720 shares granted. Based on the Committee's ability to exercise negative discretion, the targeted payout for the awards was 44,673 shares and 12,480 shares, respectively, as of December 31, 2010. These other performance factors are in addition to the aggregate value added performance objective. As a result of this uncertainty, a grant date has not yet been determined for this award for purposes of measuring and recognizing compensation cost.

Nonemployee Directors

The Directors' Plan authorizes us to issue up to 800,000 common shares to nonemployee Directors. Under the Share Ownership Guidelines in effect for 2010 ("Guidelines") a Director is required by the end of a four-year period to own either (i) a total of at least 8,000 common shares, or (ii) hold common shares with a market value of at least $100,000. If, as of December 1, annually, the nonemployee Director does not meet the Guidelines, the nonemployee Director must take a portion of the annual retainer in common shares with a market value of $20,000 ("Required Retainer") until such time as the nonemployee Director reaches the ownership required by the Guidelines. Once the nonemployee Director meets the Guidelines, the nonemployee Director may elect to receive the Required Retainer in cash.

The Directors' Plan also provides for an Annual Equity Grant ("Equity Grant"). The Equity Grant is awarded at our Annual Meeting each year to all nonemployee Directors elected or re-elected by the shareholders. The value of the Equity Grant is payable in restricted shares with a three-year vesting period from the date of grant. The closing market price of our common shares on our Annual Meeting Date is divided into the Equity Grant to determine the number of restricted shares awarded. Effective May 1, 2008, nonemployee Directors receive an annual retainer fee of $50,000 and an annual equity award of $75,000. Effective July 1, 2009, the Directors' annual retainer fee was reduced by 10 percent in conjunction with the Company's compensation reductions across the organization. Such reductions were reinstated to their previous levels effective January 1, 2010. The Directors' Plan offers the nonemployee Director the opportunity to defer all or a portion of the Directors' annual retainer, chair retainers, meeting fees, and the Equity Grant into the Directors' Plan. A Director who is 69 or older at the Equity Grant date will receive common shares with no restrictions.

For the last three years, Equity Grant shares have been awarded to elected or re-elected Directors as follows:

Year of Grant		Unrestricted Equity Grant Shares				Restricted Equity Grant Shares				Deferred Equity Grant Shares
2008			804				4,824				804
2009			7,788				15,118				2,596
2010			3,963				7,926				1,321

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Other Information

We adopted the fair value recognition provisions of ASC 718 effective January 1, 2006 using the modified prospective transition method. Under existing restricted stock plans awarded prior to January 1, 2006, we continue to recognize compensation cost for awards to retiree-eligible employees without substantive forfeiture risk over the nominal vesting period. This recognition method differs from the requirements for immediate recognition for awards granted with similar provisions after the January 1, 2006 adoption. The following table summarizes the share-based compensation expense that we recorded for continuing operations in 2010, 2009 and 2008:

		(In Millions, except EPS)
		2010				2009				2008
Cost of goods sold and operating expenses		$	2.8			$	1.2			$	2.1
Selling, general and administrative expenses			12.7				11.0				20.4
Reduction of operating income from continuing operations before income taxes and equity loss from ventures			15.5				12.2				22.5
Income tax benefit			(5.4	)			(4.3	)			(7.9	)
Reduction of net income attributable to Cliffs shareholders		$	10.1			$	7.9			$	14.6
Reduction of earnings per share attributable to Cliffs shareholders:
Basic		$	0.07			$	0.06			$	0.14
Diluted		$	0.07			$	0.06			$	0.13

Determination of Fair Value

The fair value of each grant is estimated on the date of grant using a Monte Carlo simulation to forecast relative TSR performance. A correlation matrix of historic and projected stock prices was developed for both the Company and its predetermined peer group of mining and metals companies. The fair value assumes that performance goals will be achieved.

The expected term of the grant represents the time from the grant date to the end of the service period for each of the three plan year agreements. We estimated the volatility of our common stock and that of the peer group of mining and metals companies using daily price intervals for all companies. The risk-free interest rate is the rate at the grant date on zero-coupon government bonds, with a term commensurate with the remaining life of the performance plans.

The following assumptions were utilized to estimate the fair value for the 2010 performance share grants:

Period (1)		Grant Date Market Price		Average Expected Term (Years)				Expected Volatility				Risk-Free Interest Rate				Dividend Yield				Fair Value		Fair Value (Percent  of Grant Date Market Price)
First Quarter		$60.17			2.82				94.6	%			1.28	%			0.59	%		$36.28			60.30	%
Second Quarter		$56.12 - $74.02			2.82				94.6	%			1.28	%			0.59	%		$33.84 - $44.63			60.30	%
Third Quarter		$60.47			2.82				94.6	%			1.28	%			0.59	%		$36.46			60.30	%

(1)	Performance shares were granted during the first quarter of 2010 on March 8, 2010 and during the second quarter of 2010 on April 6, April 12, April 26, May 3, June 14, and during the third quarter of 2010 on August 16, 2010.

The fair value of the restricted share units is determined based on the closing price of the Company's shares on the grant date. The restricted share units granted under the ICE Plan vest over a period of three years.

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Stock options, restricted stock, deferred stock allocation and performance share activity under our Incentive Equity Plans and Directors' Plans are as follows:

		2010								2009								2008
		Shares				Weighted- Average Exercise Price				Shares				Weighted- Average Exercise Price				Shares				Weighted- Average Exercise Price
Stock options:
Options outstanding at beginning of year			-				-				2,500			$	5.42				11,800			$	5.42
Granted during the year			-								-								-
Exercised			-				-				(2,500	)			5.42				(9,300	)			6.47
Cancelled or expired			-								-								-
Options outstanding at end of year			-				-				-				-				2,500				5.42
Options exercisable at end of year			-				-				-				-				2,500				5.42
Restricted awards:
Outstanding and restricted at beginning of year			290,702								315,684								514,714
Granted during the year			133,666								184,904								62,672
Vested			(50,156	)							(201,486	)							(261,702	)
Cancelled			(2,500	)							(8,400	)							-
Outstanding and restricted at end of year			371,712								290,702								315,684
Performance shares:
Outstanding at beginning of year			823,393								594,115								723,544
Granted during the year			376,524								555,046								194,881
Vested			(343,321	)							(312,336	)							(236,520	)
Forfeited/cancelled			(13,358	)							(13,432	)							(87,790	)
Outstanding at end of year			843,238								823,393								594,115
Vested or expected to vest at December 31, 2010			782,568
Directors' retainer and voluntary shares:
Outstanding at beginning of year			4,596								2,183								1,100
Granted during the year			2,075								4,602								2,772
Vested			(4,162	)							(2,189	)							(1,689	)
Outstanding at end of year			2,509								4,596								2,183
Reserved for future grants or awards at end of year:
Employee plans			7,265,391
Directors' plans			125,943
Total			7,391,334

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A summary of our outstanding share-based awards as of December 31, 2010 is shown below:

		Shares				Weighted Average Grant Date Fair Value
Outstanding, beginning of year			1,118,691			$	13.60
Granted			397,891			$	46.40
Vested			(283,265	)		$	36.46
Forfeited/expired			(15,858	)		$	21.28
Outstanding, end of year			1,217,459			$	26.03

The total compensation cost related to outstanding awards not yet recognized is $18.7 million at December 31, 2010. The weighted average remaining period for the awards outstanding at December 31, 2010 is approximately 1.4 years.

NOTE 13 - INCOME TAXES

Income from continuing operations before income taxes and equity loss from ventures includes the following components:

		(In Millions)
		2010				2009				2008
United States		$	597.3			$	130.7			$	566.6
Foreign			700.9				159.9				149.7
		$	1,298.2			$	290.6			$	716.3

The components of the provision (benefit) for income taxes on continuing operations consist of the following:

		(In Millions)
		2010				2009				2008
Current provision (benefit):
United States federal		$	108.1			$	(46.2	)		$	151.4
United States state & local			2.6				3.4				3.7
Foreign			166.1				2.8				77.6
			276.8				(40.0	)			232.7
Deferred provision (benefit):
United States federal			61.1				13.2				(54.1	)
United States state & local			5.2				(6.1	)			(4.1	)
Foreign			(51.1	)			53.7				(30.3	)
			15.2				60.8				(88.5	)
Total provision on continuing operations		$	292.0			$	20.8			$	144.2

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Reconciliation of our income tax attributable to continuing operations computed at the U.S. federal statutory rate is as follows:

		(In Millions)
		2010				2009				2008
Tax at U.S. statutory rate of 35 percent		$	454.3			$	101.7			$	250.6
Increase (decrease) due to:
Impact of tax law change			16.1				-				-
Percentage depletion in excess of cost depletion			(103.1	)			(66.2	)			(101.1	)
Tax effect of foreign operations			(89.1	)			(44.3	)			(6.5	)
Legal entity restructuring			(87.4	)			-				-
State taxes, net			3.1				(2.1	)			(0.7	)
Manufacturer's deduction			-				(0.1	)			(6.9	)
Valuation allowance			83.3				39.0				(0.8	)
Other items - net			14.8				(7.2	)			9.6
Income tax expense		$	292.0			$	20.8			$	144.2

The components of income taxes for other than continuing operations consisted of the following:

		(In Millions)
		2010				2009				2008
Other comprehensive (income) loss:
Minimum pension/OPEB liability		$	14.0			$	(4.7	)		$	(99.8	)
Mark-to-market adjustments			1.7				(12.3	)			(1.4	)
			15.7				(17.0	)			(101.2	)
Paid in capital - stock based compensation			(4.0	)			3.5				(3.5	)

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Significant components of our deferred tax assets and liabilities as of December 31, 2010 and 2009 are as follows:

		(In Millions)
		2010				2009
Deferred tax assets:
Pensions		$	108.5			$	114.7
Postretirement benefits other than pensions			92.0				75.0
Alternative minimum tax credit carryforwards			153.4				74.3
Capital loss carryforwards			1.3				1.2
Development			0.9				0.1
Asset retirement obligations			42.0				27.1
Operating loss carryforwards			134.2				112.4
Product inventories			21.0				22.8
Properties			38.7				16.2
Lease liabilities			36.9				36.2
Other liabilities			85.4				64.4
Total deferred tax assets before valuation allowance			714.3				544.4
Deferred tax asset valuation allowance			172.7				89.4
Net deferred tax assets			541.6				455.0
Deferred tax liabilities:
Properties			222.6				90.1
Investment in ventures			72.7				143.9
Intangible assets			14.8				13.1
Income tax uncertainties			37.5				38.7
Financial derivatives			11.7				-
Deferred revenue			45.3				-
Other assets			58.3				26.8
Total deferred tax liabilities			462.9				312.6
Net deferred tax assets		$	78.7			$	142.4

The deferred tax amounts are classified on the Statements of Consolidated Financial Position as current or long-term in accordance with the asset or liability to which they relate. Following is a summary:

		(In Millions)
		2010				2009
Deferred tax assets:
United States
Current		$	2.1			$	41.1
Long-term			134.5				140.3
Total United States			136.6				181.4
Foreign
Current			-				21.0
Long-term			5.8				10.8
Total deferred tax assets			142.4				213.2
Deferred tax liabilities:
Foreign
Long-term			63.7				70.8
Total deferred tax liabilities			63.7				70.8
Net deferred tax assets		$	78.7			$	142.4

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The PPACA and the Reconciliation Act were signed into law in March 2010. As a result of these two acts, tax benefits available to employers that receive the Medicare Part D subsidy related to qualified postretirement drug benefit are reduced beginning in years ending after December 31, 2012. The income tax effect related to the acts for the year ended December 31, 2010 was a reduction of $16.1 million to deferred tax asset related to the postretirement prescription drug benefits computed after the elimination of the deduction for the Medicare Part D subsidy beginning in taxable years ending after December 31, 2012.

We completed a legal entity restructuring during 2010 that resulted in a change to deferred tax liabilities of $78.0 million on certain foreign investments to a deferred tax asset of $9.4 million for tax basis in excess of book basis on foreign investments as of December 31, 2010. A valuation allowance of $9.4 million was recorded against this asset due to the uncertainty of realization.

At December 31, 2010 and 2009, we had $153.4 million and $74.3 million, respectively, of deferred tax assets related to U.S. alternative minimum tax credits that can be carried forward indefinitely.

We had gross U.S. federal, state and foreign net operating loss carry forwards of $87.6 million, $338.9 million and $234.4 million, respectively, at December 31, 2010. We had U.S. federal, state and foreign net operating loss carry forwards at December 31, 2009 of $149.3 million, $192.9 million and $206.0 million, respectively. The federal net operating losses expire in 2029. State net operating losses will begin to expire in 2022, and the foreign net operating loss can be carried forward indefinitely. We had foreign tax credit carryforwards of $5.8 million at December 31, 2010 and zero at December 31, 2009. The foreign tax credit carryforwards will begin to expire in 2020.

We had a $83.3 million change in the valuation allowance of certain deferred tax assets where management believes that realization of the related deferred tax assets is not more likely than not. Of this amount, $61.5 million increase relates to ordinary losses of certain foreign operations for which future utilization is currently uncertain, $11.0 million decrease relates to the release of valuation allowance on Wabush deferred tax assets, $5.8 million increase relates to foreign tax credits and $27.0 million increase relates to certain foreign assets where tax basis exceeds book basis.

At December 31, 2010, cumulative undistributed earnings of foreign subsidiaries included in consolidated retained earnings amounted to $968.8 million. These earnings are indefinitely reinvested in international operations. Accordingly, no provision has been made for deferred taxes related to a future repatriation of these earnings, nor is it practicable to estimate the amount of income taxes that would have to be provided if we were to conclude that such earnings will be remitted in the foreseeable future.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

		(In Millions)
		2010				2009				2008
Unrecognized tax benefits balance as of January 1		$	75.2			$	53.7			$	15.2
Increases for tax positions in prior years			1.9				23.8				19.9
Increases for tax positions in current year			-				2.5				24.9
Increase (decrease) due to foreign exchange			0.7				4.7				(1.6	)
Settlements			-				(9.1	)			(4.7	)
Lapses in statutes of limitations			-				(0.4	)			-
Other			2.0				-				-
Unrecognized tax benefits balance as of December 31		$	79.8			$	75.2			$	53.7

At December 31, 2010 and 2009, we had $79.8 million and $75.2 million, respectively, of unrecognized tax benefits recorded in Other liabilities on the Statements of Consolidated Financial Position. If the $79.8 million were recognized, $79.1 million would impact the effective tax rate. It is reasonably possible that unrecognized tax benefits will significantly decrease in the range of $40 million to $50 million within the next 12 months due

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to expected settlements with the taxing authorities or expiration of the statute of limitations. We recognized potential accrued interest and penalties of $2.1 million and $3.4 million related to unrecognized tax benefits in income tax expense in 2010 and 2009, respectively. At December 31, 2010 and 2009, we had $11.6 million and $15.2 million, respectively, of accrued interest and penalties related to the unrecognized tax benefits recorded in Other liabilities on the Statements of Consolidated Financial Position.

Tax years that remain subject to examination are years 2007 and forward for the U.S., 1993 and forward for Canada, and 1994 and forward for Australia.

NOTE 14 - CAPITAL STOCK

Dividends

On May 11, 2010, our Board of Directors increased our quarterly common share dividend from $0.0875 to $0.14 per share. The increased cash dividend was paid on June 1, 2010, September 1, 2010, and December 1, 2010 to shareholders on record as of May 14, 2010, August 13, 2010, and November 19, 2010, respectively.

Shareholder Rights Plan

On October 8, 2008, our Board of Directors adopted a shareholder rights plan. Under the rights plan, the rights initially traded together with the common shares and were not exercisable. In the absence of further action by our Board of Directors, the rights would have become exercisable and allowed the holder to acquire common shares at a discounted price if a person or group acquired 10 percent or more of the outstanding common shares (or any additional common shares in the case of a person or group that already beneficially owned 10 percent or more of our outstanding common shares on October 13, 2008) without the prior approval of our Board of Directors. Rights held by persons who exceeded the applicable threshold would have been void. Under certain circumstances, the rights would have entitled the holder to buy shares in an acquiring entity at a discounted price.

The rights plan also included an exchange option. In general, if the rights would have become exercisable, our Board of Directors could have, at its option, effected an exchange of part or all of the rights (other than rights that would have become void) at a ratio of one common share for each right, subject to adjustment in certain circumstances. The rights were redeemable at any time prior to the time that they would have become exercisable for $0.001 per right, subject to adjustment in certain circumstances. Unless earlier amended, redeemed or exchanged, the rights would have expired on October 29, 2011. On March 9, 2010, our Board of Directors approved the redemption of the rights accompanying our common shares. The redemption of the rights effectively terminated the Shareholders Rights Plan. The redemption price of $0.001 per right was paid as part of the common share dividend on June 1, 2010 to shareholders of record as of May 14, 2010. Accordingly, $0.001 of the $0.14 quarterly dividend was allocated to pay the redemption price of the rights.

The issuance of the rights was not a taxable event, did not affect our reported financial condition or results of operations, including our earnings per share, and did not change the manner in which our common shares were being traded.

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NOTE 15 - ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The components of Accumulated other comprehensive income (loss) within Cliffs shareholders' equity and related tax effects allocated to each are shown below as of December 31, 2010, 2009 and 2008:

		(In Millions)
		Pre-tax Amount				Tax Benefit (Provision)				After-tax Amount
As of December 31, 2008:
Postretirement benefit liability		$	(480.8	)		$	137.5			$	(343.3	)
Foreign currency translation adjustments			(68.6	)			-				(68.6	)
Unrealized net gain on derivative financial instruments			27.3				(8.2	)			19.1
Unrealized loss on interest rate swap			(2.6	)			0.9				(1.7	)
Unrealized loss on securities			(0.2	)			0.1				(0.1	)
		$	(524.9	)		$	130.3			$	(394.6	)
As of December 31, 2009:
Postretirement benefit liability		$	(451.9	)		$	132.8			$	(319.1	)
Foreign currency translation adjustments			163.1				-				163.1
Unrealized net gain on derivative financial instruments			5.7				(1.7	)			4.0
Unrealized gain on securities			43.1				(13.7	)			29.4
		$	(240.0	)		$	117.4			$	(122.6	)
As of December 31, 2010:
Postretirement benefit liability		$	(452.0	)		$	146.9			$	(305.1	)
Foreign currency translation adjustments			329.9				(15.2	)			314.7
Unrealized net gain on derivative financial instruments			3.9				(1.2	)			2.7
Unrealized gain on securities			46.9				(13.3	)			33.6
		$	(71.3	)		$	117.2			$	45.9

The following table reflects the changes in Accumulated other comprehensive income (loss) related to Cliffs shareholders' equity for 2010, 2009 and 2008:

		(In Millions)
	Postretirement Benefit Liability				Unrealized Net Gain (Loss) on Securities				Foreign Currency Translation				Unrealized Loss on Interest Rate Swap				Unrealized Net Gain (Loss) on Derivative Financial Instruments				Accumulated Other Comprehensive Income (Loss)
Balance December 31, 2007		$	(154.8	)		$	10.2			$	96.5			$	(0.9	)		$	18.7			$	(30.3	)
Change during 2008			(188.5	)			(10.3	)			(165.1	)			(0.8	)			0.4				(364.3	)
Balance December 31, 2008			(343.3	)			(0.1	)			(68.6	)			(1.7	)			19.1				(394.6	)
Change during 2009			24.2				29.5				231.7				1.7				(15.1	)			272.0
Balance December 31, 2009			(319.1	)			29.4				163.1				-				4.0				(122.6	)
Change during 2010			14.0				4.2				151.6				-				(1.3	)			168.5
Balance December 31, 2010		$	(305.1	)		$	33.6			$	314.7			$	-			$	2.7			$	45.9

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NOTE 16 - EARNINGS PER SHARE

The following table summarizes the computation of basic and diluted earnings per share attributable to Cliffs shareholders:

		(In Millions, Except per Share)
		2010								2009								2008
		Amount				Per Share				Amount				Per Share				Amount				Per Share
Net Income attributable to Cliffs shareholders		$	1,019.9			$	7.54			$	205.1			$	1.64			$	515.8			$	5.08
Preferred dividends			-				-				-				-				(1.1	)			(.01	)
Income attributable to Cliffs common shareholders - basic			1,019.9			$	7.54				205.1			$	1.64				514.7			$	5.07
Dilutive effect preferred dividend			-								-								1.1
Income attributable to Cliffs common shareholders plus assumed conversions - diluted		$	1,019.9			$	7.49			$	205.1			$	1.63			$	515.8			$	4.76
Average number of shares (in thousands)
Basic			135,301								124,998								101,471
Employee stock plans			837								753								1,485
Convertible preferred stock			-								-								5,332
Diluted			136,138								125,751								108,288

NOTE 17 - COMMITMENTS AND CONTINGENCIES

We have total contractual obligations and binding commitments of approximately $5.7 billion as of December 31, 2010 compared with $2.7 billion as of December 31, 2009, primarily related to purchase commitments, principal and interest payments on long-term debt, lease obligations, pension and OPEB funding minimums, and mine closure obligations. Such future commitments total approximately $1.0 billion in 2011, $0.4 billion in 2012, $0.6 billion in 2013, $0.3 billion in 2014, $0.3 billion in 2015 and $3.1 billion thereafter.

Purchase Commitments

During the third quarter of 2010, our Board of Directors approved a capital project at our Koolyanobbing Operation in Western Australia. The project is expected to increase the production capacity at the Koolyanobbing Operation to approximately 11 million metric tons annually. The improvements consist of enhancements to the existing rail infrastructure and upgrades to various other existing operational constraints. The expansion project requires a capital investment of approximately $254 million, of which approximately $122 million has been committed, that will be required to meet the timing of the proposed expansion. As of December 31, 2010, $22 million in capital expenditures had been expended related to this commitment. Of the committed capital, expenditures of approximately $90 million and $10 million are scheduled to be made in both 2011 and 2012, respectively.

In the third quarter of 2010, we incurred capital commitments related to an expansion project at our Empire and Tilden mines in Michigan's Upper Peninsula. As of December 31, 2010, the project has been approved for capital investments on equipment of approximately $111 million, of which $110 million has been committed, and is expected to allow the Empire mine to produce at three million tons annually through 2014 and increase Tilden mine production by an additional two million tons annually. As of December 31, 2010, capital expenditures related to this purchase were approximately $9 million. Of the committed capital, expenditures of approximately $96 million and $5 million are scheduled to be made in 2011 and 2012, respectively.

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In 2010, we incurred a capital commitment for the construction of a new portal closer to the coal face at our Oak Grove mine in Alabama. The portal requires a capital investment of approximately $29 million, of which $25 million has been committed, and will significantly decrease transit time to and from the coal face, resulting in among other things, improved safety, greater operational efficiency, increased productivity, lower employment costs and improved employee morale. As of December 31, 2010, capital expenditures related to this purchase were approximately $9 million. Remaining expenditures of approximately $16 million are scheduled to be made in 2011.

In 2008, we incurred a capital commitment for the purchase of a new longwall plow system for our Pinnacle mine in West Virginia. The system, which requires a capital investment of approximately $90 million, will replace the current longwall plow system in an effort to reduce maintenance costs and increase production at the mine. As of December 31, 2010, capital expenditures related to this purchase were approximately $76 million. Remaining expenditures of approximately $14 million are scheduled to be made in 2011. The remaining expenditures are related to the longwall plow system assets pending delivery.

Contingencies

Litigation

We are currently a party to various claims and legal proceedings incidental to our operations. If management believes that a loss arising from these matters is probable and can reasonably be estimated, we record the amount of the loss, or the minimum estimated liability when the loss is estimated using a range, and no point within the range is more probable than another. As additional information becomes available, any potential liability related to these matters is assessed and the estimates are revised, if necessary. Based on currently available information, management believes that the ultimate outcome of these matters, individually and in the aggregate, will not have a material adverse effect on our financial position or results of operations. However, litigation is subject to inherent uncertainties, and unfavorable rulings could occur. An unfavorable ruling could include monetary damages or an injunction. If an unfavorable ruling were to occur, there exists the possibility of a material adverse impact on the financial position and results of operations of the period in which the ruling occurs, or future periods. However, we believe that any pending litigation will not result in a material liability in relation to our consolidated financial statements.

Environmental Matters

We had environmental liabilities of $13.7 million and $14.5 million at December 31, 2010 and 2009 respectively, including obligations for known environmental remediation exposures at active and closed mining operations and other sites. These amounts have been recognized based on the estimated cost of investigation and remediation at each site, and include site studies, design and implementation of remediation plans, legal and consulting fees, and post-remediation monitoring and related activities. If the cost can only be estimated as a range of possible amounts with no specific amount being more likely, the minimum of the range is accrued. Future expenditures are not discounted unless the amount and timing of the cash disbursements are readily known. Potential insurance recoveries have not been reflected. Additional environmental obligations could be incurred, the extent of which cannot be assessed. The amount of our ultimate liability with respect to these matters may be affected by several uncertainties, primarily the ultimate cost of required remediation and the extent to which other responsible parties contribute. Refer to NOTE 10 – ENVIRONMENTAL AND MINE CLOSURE OBLIGATIONS for further information.

Tax Matters

The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax regulations. We recognize liabilities for anticipated tax audit issues based on our estimate of whether, and the extent to which, additional taxes will be due. If we ultimately determine that payment of these amounts is

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unnecessary, we reverse the liability and recognize a tax benefit during the period in which we determine that the liability is no longer necessary. We also recognize tax benefits to the extent that it is more likely than not that our positions will be sustained when challenged by the taxing authorities. To the extent we prevail in matters for which liabilities have been established, or are required to pay amounts in excess of our liabilities, our effective tax rate in a given period could be materially affected. An unfavorable tax settlement would require use of our cash and result in an increase in our effective tax rate in the year of resolution. A favorable tax settlement would be recognized as a reduction in our effective tax rate in the year of resolution. Refer to NOTE 13 – INCOME TAXES for further information.

NOTE 18 - CASH FLOW INFORMATION

A reconciliation of capital additions to cash paid for capital expenditures for the years ended December 31, 2010, 2009 and 2008 is as follows:

		(In Millions)
		2010				2009				2008
Capital additions		$	275.8			$	168.2			$	232.6
Cash paid for capital expenditures (1)			209.6				116.3				182.5
Difference		$	66.2			$	51.9			$	50.1
Non-cash accruals		$	8.9			$	3.0			$	25.7
Capital leases			57.3				48.9				24.4
Total		$	66.2			$	51.9			$	50.1

(1)	Cash paid for capital expenditures for 2010 has been shown net of cash proceeds of $57.3 million from the Pinnacle longwall sale-leaseback that was completed in December of 2010. The adjustment was necessary in 2010 due to the timing of the cash payments related to the longwall.

Cash payments for interest and income taxes in 2010, 2009 and 2008 are as follows:

		(In Millions)
	2010				2009				2008
Taxes paid on income		$	208.3			$	64.8			$	175.5
Interest paid on debt obligations			34.2				25.3				26.3

Non-cash investing activities as of December 31, 2010 include the issuance of 4.2 million of our common shares valued at $173.1 million as part of the purchase consideration for the acquisition of the remaining interest in Freewest. Non-cash items as of December 31, 2010 also include gains of $38.6 million primarily related to the remeasurement of our previous ownership interest in Freewest and Wabush held prior to each business acquisition. Refer to NOTE 5 – ACQUISITIONS AND OTHER INVESTMENTS for further information.

NOTE 19 - RELATED PARTIES

We co-own three of our six North American iron ore mines with various joint venture partners that are integrated steel producers or their subsidiaries. We are the manager of each of the mines we co-own and rely on our joint venture partners to make their required capital contributions and to pay for their share of the iron ore pellets that we produce. The joint venture partners are also our customers. The following is a summary of the mine ownership of these three North American iron ore mines at December 31, 2010:

Mine		Percent ownership
	Cliffs Natural Resources				ArcelorMittal				U. S. Steel Canada
Empire			79.0				21.0				0.0
Tilden			85.0				0.0				15.0
Hibbing			23.0				62.3				14.7

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ArcelorMittal has a unilateral right to put its interest in the Empire Mine to us, but has not exercised this right to date.

Product revenues to related parties were as follows:

		(In Millions)
		2010				2009				2008
Product revenues to related parties		$	1,165.5			$	593.8			$	1,020.5
Total product revenues			4,416.8				2,216.2				3,294.8
Related party product revenue as a percent of total product revenue			26.4	%			26.8	%			31.0	%

Accounts receivable from related parties were $6.8 million and $1.8 million at December 31, 2010 and 2009, respectively.

In 2002, we entered into an agreement with Ispat that restructured the ownership of the Empire mine and increased our ownership from 46.7 percent to 79 percent in exchange for assumption of all mine liabilities. Under the terms of the agreement, we indemnified Ispat from obligations of Empire in exchange for certain future payments to Empire and to us by Ispat of $120.0 million, recorded at a present value of $32.8 million and $38.3 million at December 31, 2010 and 2009, respectively. Of these amounts, $22.8 million and $28.3 million were classified as Long-term receivable at December 31, 2010 and 2009, respectively, with the balances current, over the 12-year life of the supply agreement.

Supply agreements with one of our customers include provisions for supplemental revenue or refunds based on the customer's annual steel pricing for the year the product is consumed in the customer's blast furnace. The supplemental pricing is characterized as an embedded derivative. Refer to NOTE 3 - DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES for further information.

NOTE 20 - SUBSEQUENT EVENTS

Algoma Payment

On January 6, 2011, we obtained a $129 million payment from Algoma to true-up the portion of revenue from 2010 pellet sales that was previously disputed throughout 2010. On December 17, 2010, we prevailed in the previously disclosed arbitration with Algoma. The binding decision by the American Arbitration Association redefined world prices for blast furnace pellets, a factor used in determining annual price increases or decreases under the supply agreement. The revised definition entitled us to use an increase in excess of 95 percent over 2009 prices for seaborne blast furnace pellets in the agreement's pricing formula. Despite this cash payment, Algoma is maintaining a court application to vacate the arbitration award which we are vigorously contesting.

Consolidated Thompson Acquisition

On January 11, 2011, we entered into a definitive arrangement agreement with Consolidated Thompson to acquire all of its common shares in an all-cash transaction including net debt, valued at approximately C$4.9 billion, or C$17.25 per share. The proposed acquisition reflects our strategy to build scale by owning expandable and exportable steelmaking raw material assets serving international markets. We have currently entered into a $3.7 billion bridge financing commitment to provide for the financing of the arrangement and we have hedged a portion of the purchase price on the open market by entering into exchange rate contracts and options. The hedge contracts are considered economic hedges which do not qualify for hedge accounting. Completion of the transaction is subject to customary closing conditions, including approval by Consolidated Thompson shareholders and government and regulatory approvals.

We have evaluated subsequent events through the date of financial statement issuance.

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NOTE 21 - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

The sum of quarterly EPS may not equal EPS for the year due to discrete quarterly calculations.

		(In Millions, Except Per Common Share)
	2010
	Quarters
	First				Second				Third				Fourth				Year
Revenues from product sales and services		$	727.7			$	1,184.3			$	1,346.0			$	1,424.2			$	4,682.2
Sales margin			150.0				414.7				476.5				482.3				1,523.5
Net income attributable to Cliffs shareholders			77.4				260.7				297.4				384.4				1,019.9
Earnings per common share attributable to Cliffs shareholders:
Basic		$	0.57			$	1.93			$	2.20			$	2.84			$	7.54
Diluted			0.57				1.92				2.18				2.82				7.49

		2009
	Quarters
	First				Second				Third				Fourth				Year
Revenues from product sales and services		$	464.8			$	390.3			$	666.4			$	820.5			$	2,342.0
Sales margin			42.4				(11.7	)			103.2				175.0				308.9
Net income (loss) attributable to Cliffs shareholders			(7.4	)			45.5				58.8				108.2				205.1
Earnings (loss) per common share attributable to Cliffs shareholders:
Basic		$	(0.07	)		$	0.36			$	0.45			$	0.83			$	1.64
Diluted			(0.07	)			0.36				0.45				0.82				1.63

As a result of acquiring the remaining ownership interests in Freewest and Wabush during the first quarter of 2010, our first quarter results were impacted by realized gains of $38.6 million primarily related to the increase in fair value of our previous ownership interest in each investment held prior to the business acquisitions. The fair value of our previous 12.4 percent interest in Freewest was $27.4 million on January 27, 2010, the date of acquisition, resulting in a gain of $13.6 million being recognized in 2010. The fair value of our previous 26.8 percent equity interest in Wabush was $38 million on February 1, 2010, resulting in a gain of $25.0 million also being recognized in 2010.

In the months subsequent to the initial purchase price allocation for Wabush, we further refined the fair values of the assets acquired and liabilities assumed. Additionally, we continued to ensure our existing interest in Wabush was incorporating all of the book basis, including amounts recorded in Accumulated other comprehensive income (loss) . Based on this process the acquisition date fair value of the previous equity interest was adjusted to $38 million in the final purchase price allocation. The gain resulting from the remeasurement of our prior equity interest, net of amounts previously recorded in Accumulated other comprehensive income (loss) of $20.3 million, was adjusted to $25 million. Under the business combination guidance in ASC 805, prior periods, beginning with the period of acquisition, are required to be revised to reflect changes to the original purchase price allocation. In accordance with this guidance, we retrospectively recorded the adjustments to the fair value of the acquired assets and assumed liabilities and the resulting Goodwill and Gain on acquisition of controlling interests back to the date of acquisition. Accordingly, such amounts were excluded from the fourth quarter results and have been retrospectively adjusted back to the first quarter results in the table above. Refer to NOTE 5 – ACQUISITIONS AND OTHER INVESTMENTS for further information.

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Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of

Cliffs Natural Resources Inc.

Cleveland, Ohio

We have audited the internal control over financial reporting of Cliffs Natural Resources Inc. and subsidiaries (the "Company") as of December 31, 2010 based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. As described in Management's Report on Internal Controls Over Financial Reporting , management excluded from its assessment the internal control over financial reporting at Cliffs Logan County Coal, which was acquired on July 30, 2010 and whose financial statements constitute 11 percent of total assets and 2 percent of revenues from product sales and services of the consolidated financial statement amounts as of and for the year ended December 31, 2010. Accordingly, our audit did not include the internal control over financial reporting at Cliffs Logan County Coal. The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Controls Over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or persons performing similar functions, and effected by the company's board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2010, based on the criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and financial statement schedule as of and for the year ended December 31, 2010 of the Company and our report dated February 17, 2011 expressed an unqualified opinion on those financial statements and financial statement schedule.

/s/ DELOITTE & TOUCHE LLP

Cleveland, Ohio

February 17, 2011

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Cliffs Natural Resources Inc.

Cleveland, Ohio

We have audited the accompanying consolidated financial position of Cliffs Natural Resources Inc. and subsidiaries (the "Company") as of December 31, 2010 and 2009, and the related statements of consolidated operations, cash flows, and changes in equity for each of the three years in the period ended December 31, 2010. Our audits also included the financial statement schedule listed in the Index at Item 15. These financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on the financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Cliffs Natural Resources Inc. and subsidiaries as of December 31, 2010 and 2009, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2010, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting as of December 31, 2010, based on the criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 17, 2011 expressed an unqualified opinion on the Company's internal control over financial reporting.

/s/ DELOITTE & TOUCHE LLP

Cleveland, Ohio

February 17, 2011

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Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

Item 9A.

Controls and Procedures.

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure based solely on the definition of "disclosure controls and procedures" in Rule 13a-15(e) promulgated under the Exchange Act. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As of the end of the period covered by this report, we carried out an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level.

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Management's Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined under Rule 13a-15(f) promulgated under the Exchange Act .

Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company's consolidated financial statements for external purposes in accordance with generally accepted accounting principles.

Internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit the preparation of the consolidated financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with appropriate authorizations of management and directors of the Company, and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the consolidated financial statements.

On July 30, 2010, we completed our acquisition of 100 percent of the coal operations of privately-owned INR, and have been consolidating operations through our wholly-owned subsidiary known as CLCC. As permitted by SEC guidance, we excluded CLCC from management's assessment of internal control over financial reporting as of December 31, 2010. CLCC constituted approximately 11 percent of total assets, and 2 percent of revenues from product sales and services as of December 31, 2010. CLCC will be included in management's assessment of the internal control over financial reporting for the Company as of December 31, 2011.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management conducted an assessment of the Company's internal control over financial reporting as of December 31, 2010 using the framework specified in Internal Control - Integrated Framework , published by the Committee of Sponsoring Organizations of the Treadway Commission. Based on such assessment, management has concluded that the Company's internal control over financial reporting was effective as of December 31, 2010.

The effectiveness of the Company's internal control over financial reporting as of December 31, 2010 has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report that appears herein.

February 17, 2011

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act during the year ended December 31, 2010 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B.

Other Information.

Mine Safety and Health Administration Safety Data

We are committed to protecting the occupational health and well-being of each of our employees. Safety is one of our company's core values, and we strive to ensure that safe production is the first priority for all employees. Our internal objective is to achieve zero injuries and incidents across the company, by focusing on proactively identifying needed prevention activities, establishing standards, and evaluating performance to

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mitigate any potential loss to people, equipment, production, and the environment. We have implemented intensive employee training that is geared toward maintaining a high level of awareness and knowledge of safety and health issues in the work environment through the development and coordination of requisite information, skills, and attitudes. We believe that through these policies, our company has developed an effective safety management system.

The operation of our mines is subject to regulation by MSHA under the FMSH Act. MSHA inspects our mines on a regular basis and issues various citations and orders when it believes a violation has occurred under the FMSH Act. We present information below regarding certain mining safety and health citations which MSHA has issued with respect to our mining operations. In evaluating this information, consideration should be given to factors such as: (i) the number of citations and orders will vary depending on the size of the mine, (ii) the number of citations issued will vary from inspector to inspector and mine to mine, and (iii) citations and orders can be contested and appealed, and in that process, are often reduced in severity and amount, and are sometimes dismissed.

Under the recently enacted Dodd-Frank Act, each operator of a coal or other mine is required to include certain mine safety results within its periodic reports filed with the SEC. As required by the reporting requirements included in §1503(a) of the Dodd-Frank Act, we present the following items regarding certain mining safety and health matters for each of our mine locations that are covered under the scope of the Dodd-Frank Act.

(A)

The total number of violations of mandatory health or safety standards that could significantly and substantially contribute to the cause and effect of a coal or other mine safety or health hazard under section 104 of the FMSH Act (30 U.S.C. 814) for which the operator received a citation from MSHA;

(B)

The total number of orders issued under section 104(b) of the FMSH Act (30 U.S.C. 814(b));

(C)

The total number of citations and orders for unwarrantable failure of the mine operator to comply with mandatory health or safety standards under section 104(d) of the FMSH Act (30 U.S.C. 814(d));

(D)

The total number of imminent danger orders issued under section 107(a) of the FMSH Act (30 U.S.C. 817(a));

(E)

The total dollar value of proposed assessments from MSHA under the FMSH Act (30 U.S.C. 801 et seq.); and

(F)

Any pending legal action currently before the Federal Mine Safety and Health Review Commission involving such coal or other mine.

Our mine locations did not receive any flagrant violations under Section 110(b)(2) of the FMSH Act and no written notices of a pattern of violations, or the potential to have a pattern of such violations, under section 104(e) of the FMSH Act were received during the year ended December 31, 2010. In addition, there were no mining-related fatalities at any of our mine locations during these same periods.

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Following is a summary of the information listed above for the three months and year ended December 31, 2010.

Mine Location		Operation		Three months ended December 31, 2010
		(A)				(B)				(C)				(D)				(E)				(F)
		Section 104				Section 104(b)				Section 104(d)				Section 107(a)				Proposed Assessments (2)				Pending Legal Action
Pinnacle		Coal			37				4				7				0			$	40,893			None
Green Ridge		Coal			0				0				0				0				100			None
Oak Grove		Coal			38				0				6				1	(3)			26,682			1
Dingess-Chilton (1)		Coal			12				0				0				0				6,228			None
Powellton (1)		Coal			21				0				1				0				30,510			None
Saunders Prep (1)		Coal			3				0				0				0				1,194			None
Tony Fork (1)		Coal			0				0				0				0				-			None
Elk Lick Tipple (1)		Coal			1				0				0				0				324			None
Lower War Eagle (1)		Coal			0				0				0				0				-			None
Elk Lick Chilton (1)		Coal			0				0				0				0				-			None
Tilden		Iron Ore			23				0				0				0				39,579			None
Empire		Iron Ore			16				1				2				0				34,290			None
NorthShore		Iron Ore			10				0				0				0				-			None
Hibbing Taconite		Iron Ore			6				0				0				0				-			None
United Taconite		Iron Ore			12				0				0				0				-			None

Mine Location		Operation		Year ended December 31, 2010
		(A)				(B)				(C)				(D)				(E)				(F)
		Section 104				Section 104(b)				Section 104(d)				Section 107(a)				Proposed Assessments (2)				Pending Legal Action
Pinnacle		Coal			147				4				14				4			$	221,545			None
Green Ridge		Coal			2				0				0				0				1,856			None
Oak Grove		Coal			187				5				24				2	(3)			844,916			1
Dingess-Chilton (1)		Coal			21				0				0				0				11,898			None
Powellton (1)		Coal			31				0				2				0				49,381			None
Saunders Prep (1)		Coal			3				0				0				0				1,194			None
Tony Fork (1)		Coal			15				0				0				0				11,348			None
Elk Lick Tipple (1)		Coal			1				0				0				0				424			None
Lower War Eagle (1)		Coal			0				0				0				0				100			None
Elk Lick Chilton (1)		Coal			0				0				0				0				-			None
Tilden		Iron Ore			69				1				0				0				223,432			None
Empire		Iron Ore			65				1				2				0				221,164			None
NorthShore		Iron Ore			130				1				3				0				250,731			None
Hibbing Taconite		Iron Ore			29				0				0				0				122,100			None
United Taconite		Iron Ore			67				0				0				1				383,796			1

(1)	All information related to Cliffs Logan County Coal is presented as of the acquisition date of July 30, 2010.

(2)	Amounts included under the heading "Proposed Assessments" are the total dollar amounts for proposed assessments received from MSHA on or before December 31, 2010.

(3)

On December 11, 2010, we received an imminent danger order from MSHA stating that oxygen levels in a portion of the bleeder system at our Oak Grove mine were below acceptable levels. We have completed work to address the issue and oxygen levels in the affected area returned to acceptable levels, resulting in the termination of the imminent danger order on December 12, 2010. The conditions cited in the imminent danger order did not result in an accident or injury and had no material adverse impact on our operations at the Oak Grove mine.

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PART III

Item 10.

Directors, Executive Officers and Corporate Governance.

The information required to be furnished by this Item will be set forth in our definitive Proxy Statement to Security Holders under the headings "Information Concerning Directors and Nominees", "Section 16(a) Beneficial Ownership Reporting and Compliance", "Business Ethics Policy", "Board of Directors and Board Committees - Audit Committee", and "Agreements and Transactions" and is incorporated herein by reference and made a part hereof from the Proxy Statement. The information regarding executive officers required by this Item is set forth in Part I hereof under the heading "Executive Officers of the Registrant", which information is incorporated herein by reference and made a part hereof.

Item 11.

Executive Compensation.

The information required to be furnished by this Item will be set forth in our definitive Proxy Statement to Security Holders under the headings "Executive Compensation", "Directors' Compensation", "Compensation Committee Interlocks and Insider Participation" and "Compensation Committee Report" and is incorporated herein by reference and made a part hereof from the Proxy Statement.

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

EQUITY COMPENSATION PLAN INFORMATION

The table below sets forth certain information regarding the following equity compensation plans as of December 31, 2010: ICE Plan, the Management Performance Incentive Plan (MPI Plan), the Executive Management Performance Incentive Plan (EMPI Plan), the Operations Performance Incentive Plan (OPIP Plan), the VNQDC Plan and the Directors' Plan. Only the ICE Plan, the Directors' Plan and the EMPI Plan have been approved by shareholders.

Plan category

Number of securities to be issued upon exercise of outstanding options, warrants and rights

Weighted- average exercise price of outstanding options, warrants and rights

Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column(a))

(a)

(b)

(c)

Equity compensation plans approved by security holders

1,124,667

(1)

N/A

7,391,334

(2)

Equity compensation plans not approved by security holders

-

N/A

(3

)

(1)	Includes 843,238 performance share awards for which issuance is dependent upon meeting certain performance targets, and 281,429 restricted awards for which issuance is based upon a three-year vesting period.

(2)

Includes 7,265,391 common shares remaining available under the ICE Plan, which authorizes the Compensation Committee to make awards of option rights, restricted shares, deferred shares, performance shares and performance units; and 125,943 common shares remaining available under the Directors' Plan, which authorizes the award of restricted shares, which we refer to as the annual equity grant, to Directors upon their election or re-election to the Board at the annual meeting and provides (i) that the Directors are required to take $20,000 of the annual retainer in common shares unless they meet the Director share ownership guidelines, and (ii) may take up to 100 percent of their retainer and other fees in common shares.

(3)	The MPI Plan, the OPIP Plan, and the VNQDC Plan provide for the issuance of common shares, but do not provide for a specific amount available under the plans. Descriptions of those plans are set forth below.

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EMPI and MPI Plan

The MPI Plan provides an opportunity for elected officers and other salaried employees in designated positions to earn annual cash bonuses. At the discretion of the Compensation Committee, bonus payments may be made in cash or shares of company stock or a combination thereof, and restrictions may be placed on the vesting of any stock award. Certain participants in the MPI Plan may elect to defer all or a portion of such bonus into the VNQDC Plan. Each year the participants under the MPI Plan must make their cash bonus deferral election by December 31 st of the year prior to the year in which the bonus is earned. The participants can elect to defer their cash bonus in shares and the amount deferred in shares is eligible for a matching contribution equal to 25 percent. We refer to these exchanged shares as the Management Share Acquisition Program ("MSAP") or bonus exchange and match. At this time, these participants may also elect to have dividends credited with respect to the bonus exchange shares in a one-time, irrevocable election. The dividends can be credited in additional deferred common shares, deferred in cash or paid out in cash in an in-service compensation distribution. At our discretion, matching contributions may be made in matching shares or restricted shares, and are subject to a five-year vesting schedule. These participants must comply with the employment and non-distribution requirements for the bonus match shares to become vested and nonforfeitable.

The EMPI Plan is intended to provide a competitive annual incentive compensation opportunity to selected senior executive officers based on achievement against key corporate objectives and thereby align actual pay results with the short-term business performance of the company. The Compensation Committee selects the individual participants for participation in the plan, for each plan year, no later than 90 days after the beginning of the plan year. Awards made under the plan are intended to qualify as performance-based compensation. Payment of the award is based on continued employment through the date on which the awards are paid, following certification by the Compensation Committee. If a participant dies, becomes disabled, retires, or is terminated without cause after the start of a plan year, the participant will be entitled to a pro-rata award based on the number of days as an active employee before the change in status.

OPIP Plan

The OPIP Plan provides an opportunity for senior mine managers and salaried employees to earn cash bonuses. The purpose of the plan is to encourage improvements in areas, such as energy utilization, labor productivity, controllable costs and safety by providing incentive compensation for improvements in these areas. Bonuses earned under the OPIP Plan are determined and paid monthly and annually to the participants. The OPIP Plan recognizes both team and individually based performance by leaving monthly OPIP bonus calculations entirely team based, but incorporating individual performance results into annual bonus calculations. Certain participants may elect to defer all or part of their cash bonuses under the VNQDC Plan. Participants in the OPIP Plan eligible for the VNQDC Plan may further elect to have his or her deferred cash bonus credited to an account with deferred common shares. Each year participants under the OPIP Plan must make their bonus exchange shares election, for the four quarters of that year, by December 31 st of the year prior to the year in which the monthly bonuses are earned. As with the participants electing bonus exchange shares under the MPI Plan, participants under the OPIP Plan electing bonus exchange shares will receive or be credited with restricted bonus match shares in an amount of 25 percent of the bonus exchange shares with the same five-year vesting period.

VNQDC

The VNQDC Plan was originally adopted by the Board of Directors to provide certain management and highly compensated employees of ours or our selected affiliates with the option to defer receipt of a portion of their regular base salary compensation, bonuses under the MPI Plan, the EMPI Plan and the OPIP Plan or performance and restricted shares awarded under the ICE Plan in order to defer taxation of these amounts. Each year the participants must make their deferral election by December 31 st of the year prior to the year in which base salary compensation is earned; bonuses before the beginning of the year in which the bonus is earned; and long-term incentives, performance and restricted shares, before the beginning of the final year in which the incentive is earned. In addition, the VNQDC Plan contains the MSAP or bonus exchange and match. The MSAP provides designated management employees with the opportunity to acquire deferred interests in common shares through deferral of their bonuses. The VNQDC Plan also contains the Officer Share Acquisition Program, or

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("OSAP"), which permits elected officers who have not met the requirements of the Company's Share Ownership Guidelines, to invest a specified dollar amount or percentage of their share deferral account in common shares with compensation previously deferred in cash under the VNQDC Plan. However, no participant may elect to invest any such amount or percentage in excess of that needed to enable the participant to satisfy the Company's Share Ownership Guidelines. When participants in the MPI Plan, OPIP Plan, MSAP or OSAP elect to have accounts credited with deferred common shares under the VNQDC Plan, they receive a match equal to 25 percent of the value of the deferred common shares. The matching shares are subject to the same five-year vesting period and employment and non-distribution requirements.

Item 13.

Certain Relationships and Related Transactions, and Director Independence.

The information required to be furnished by this Item will be set forth in our definitive Proxy Statement to Security Holders under the heading "Director Independence" and is incorporated herein by reference and made a part hereof from the Proxy Statement.

Item 14.

Principal Accountant Fees and Services.

The information required to be furnished by this Item will be set forth in our definitive Proxy Statement to Security Holders under the heading "Ratification of Independent Registered Public Accounting Firm" and is incorporated herein by reference and made a part hereof from the Proxy Statement.

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PART IV

Item 15.

Exhibits, Financial Statement Schedules.

(a)(1) and (2) - List of Financial Statements and Financial Statement Schedules.

The following consolidated financial statements of Cliffs Natural Resources Inc. are included at Item 8 above:

Statements of Consolidated Financial Position - December 31, 2010 and 2009

Statements of Consolidated Operations - Years ended December 31, 2010, 2009 and 2008

Statements of Consolidated Cash Flows - Years ended December 31, 2010, 2009 and 2008

Statements of Consolidated Changes in Equity - Years ended December 31, 2010, 2009 and 2008

Notes to Consolidated Financial Statements

The following consolidated financial statement schedule of Cliffs Natural Resources Inc. is included herein in Item 15(d) and attached as Exhibit 99(a):

Schedule II - Valuation and Qualifying Accounts

All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have been omitted.

(3) List of Exhibits - Refer to Exhibit Index on pages 184-193, which is incorporated herein by reference.

(c) Exhibits listed in Item 15(a)(3) above are incorporated herein by reference.

(d) The schedule listed above in Item 15(a)(1) and (2) is attached as Exhibit 99(a) and incorporated herein by reference.

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SIGNATURES

Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

CLIFFS NATURAL RESOURCES INC.
By:		/s/    TERRANCE M. PARADIE
		Name:		Terrance M. Paradie
		Title:		Senior Vice President, Corporate Controller and Chief Accounting Officer

Date: February 17, 2011

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signatures		Title		Date
/s/    J. CARRABBA J. Carrabba		Chairman, President and Chief Executive Officer and Director (Principal Executive Officer)		February 17, 2011
/s/    L. BRLAS L. Brlas		Executive Vice President, Finance and Administration and Chief Financial Officer (Principal Financial Officer)		February 17, 2011
/s/    T. M. PARADIE T. M. Paradie		Senior Vice President, Corporate Controller and Chief Accounting Officer		February 17, 2011
* R. C. Cambre		Director		February 17, 2011
* S. M. Cunningham		Director		February 17, 2011
* B. J. Eldridge		Director		February 17, 2011
* A. R. Gluski		Director		February 17, 2011
* S. M. Green		Director		February 17, 2011
* J. K. Henry		Director		February 17, 2011
* J. F. Kirsch		Director		February 17, 2011

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Signatures		Title		Date
* F. R. McAllister		Director		February 17, 2011
* R. Phillips		Director		February 17, 2011
* R. K. Riederer		Director		February 17, 2011
* R. Ross		Director		February 17, 2011
* A. Schwartz		Director		February 17, 2011

*	The undersigned, by signing her name hereto, does sign and execute this Annual Report on Form 10-K pursuant to a Power of Attorney executed on behalf of the above-indicated officers and directors of the registrant and filed herewith as Exhibit 24 on behalf of the registrant.

By:		/s/    L. Brlas
		(L. Brlas, as Attorney-in-Fact)

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EXHIBIT INDEX

All documents referenced below were filed pursuant to the Securities Exchange Act of 1934 by Cliffs Natural Resources Inc., file number 1-09844, unless otherwise indicated.

Exhibit Number				Pagination  by Sequential Numbering System
		Plan of acquisition, reorganization, arrangement, liquidation or succession
2(a)		# Membership Interest Purchase Agreement among Cliffs Natural Resources Inc., INR Energy, LLC and INR-1 Holdings LLC dated July 2, 2010 (filed as Exhibit 2(a) to Form 8-K of Cliffs on July 7, 2010 and incorporated by reference)			Not Applicable
2(b)		# Arrangement Agreement Between Cliffs Natural Resources Inc. and Consolidated Thompson Iron Mines Limited dated January 11, 2011 (filed as Exhibit 2.1 to Form 8-K of Cliffs on January 18, 2010 and incorporated by reference)			Not Applicable
		Articles of Incorporation and By-Laws of Cliffs Natural Resources Inc.
3(a)		Regulations of Cleveland-Cliffs Inc. (filed as Exhibit 3(b) to Form 10-K of Cliffs filed on February 2, 2001 and incorporated by reference)			Not Applicable
3(b)		Second Amended Articles of Incorporation of Cliffs Natural Resources Inc. as filed with the Secretary of State of the State of Ohio on July 13, 2010 (filed as Exhibit 3(a) to Form 8-K of Cliffs on July 15, 2010 and incorporated by reference)			Not Applicable
		Instruments defining rights of security holders, including indentures
4(a)		Multicurrency Credit Agreement among Cleveland-Cliffs Inc, Bank of America, N.A., as Administrative Agent, Swing Line Lender and Letter of Credit Issuer, JP Morgan Chase Bank, N.A., as Syndication Agent, and 11 other financial institutions dated August 17, 2007 (filed as Exhibit 4(a) to Form 8-K of Cliffs on August 20, 2007 and incorporated by reference)			Not Applicable
4(b)		First Amendment to Multicurrency Credit Agreement among Cleveland-Cliffs Inc, Bank of America, N.A. as Administrative Agent, Swing Line Lender and Letter of Credit Issuer and certain other financial institutions dated May 15, 2008 (filed as Exhibit 4(a) to Form 8-K of Cliffs on May 21, 2008 and incorporated by reference)			Not Applicable
4(c)		Second Amendment to Multicurrency Credit Agreement among Cliffs Natural Resources Inc. (f/k/a Cleveland-Cliffs Inc), Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, and certain other financial institutions dated October 29, 2009 (filed as Exhibit 4(c) to Form 10-K of Cliffs on February 18, 2010 and incorporated by reference)			Not Applicable
4(d)		Note Purchase Agreement dated June 25, 2008 by and among Cleveland-Cliffs Inc and the institutional investors party thereto (filed as Exhibit 4(a) to Form 8-K of Cliffs Inc on June 30, 2008 and incorporated by reference)			Not Applicable
4(e)		Form of Indenture between Cliffs Natural Resources Inc. and U.S. Bank National Association, as trustee, dated March 17, 2010 (filed as Exhibit 4.1 to Form S-3 No. 333-165376 of Cliffs on March 10, 2010 and incorporated by reference)			Not Applicable
4(f)		Form of 5.90% Notes due 2020 First Supplemental Indenture between Cliffs Natural Resources Inc. and U.S. Bank National Association, as trustee, dated March 17, 2010 (filed as Exhibit 4.2 to Form 8-K of Cliffs on March 16, 2010 and incorporated by reference)			Not Applicable

#	The Company agrees to furnish supplementally a copy of any omitted exhibits or schedules to the Securities and Exchange Commission upon request.

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Exhibit Number				Pagination by Sequential Numbering System
4(g)		Form of 4.80% Notes due 2020 Second Supplemental Indenture between Cliffs Natural Resources Inc. and U.S. Bank National Association, as trustee, dated September 20, 2010 (filed as Exhibit 4.3 to Form 8-K of Cliffs on September 17, 2010 and incorporated by reference)			Not Applicable
4(h)		Form of 6.25% Notes due 2040 Third Supplemental Indenture between Cliffs Natural Resources Inc. and U.S. Bank National Association, as trustee, dated September 20, 2010 (filed as Exhibit 4.4 to Form 8-K of Cliffs on September 17, 2010 and incorporated by reference)			Not Applicable
4(i)		Form of Common Share Certificate			Filed Herewith
		Material Contracts
10(a)		* Cleveland-Cliffs Inc Change in Control Severance Pay Plan, effective as of January 1, 2000 (filed as Exhibit 10(jj) to Form 10-K of Cliffs on March 16, 2000 and incorporated by reference)			Not Applicable
10(b)		* Cleveland-Cliffs Inc Voluntary Non-Qualified Deferred Compensation Plan (Amended and Restated as of January 1, 2000) (filed as Exhibit 10(a) to Form 10-Q of Cleveland-Cliffs Inc on July 27, 2000 and incorporated by reference)			Not Applicable
10(c)		* Form of Indemnification Agreement between Cleveland-Cliffs Inc and Directors (filed as Exhibit 10(f) to Form 10-K of Cliffs on February 2, 2001 and incorporated by reference)			Not Applicable
10(d)		* Amended and Restated Cleveland-Cliffs Inc Retirement Plan for Non-Employee Directors effective on July 1, 1995 (filed as Exhibit 10(l) to Form 10-K of Cliffs on February 2, 2001 and incorporated by reference)			Not Applicable
10(e)		* Amendment to Amended and Restated Cleveland-Cliffs Inc Retirement Plan for Non-Employee Directors dated as of January 1, 2001 (filed as Exhibit 10(d) to Form 10-Q of Cliffs on July 27, 2001 and incorporated by reference)			Not Applicable
10(f)		* Second Amendment to the Amended and Restated Cleveland-Cliffs Inc Retirement Plan for Non-Employee Directors dated and effective January 14, 2003 (filed as Exhibit 10(a) to Form 10-Q of Cliffs on April 24, 2003 and incorporated by reference)			Not Applicable
10(g)		* Cleveland-Cliffs Inc and Subsidiaries Management Performance Incentive Plan, effective January 1, 2004 (filed as Exhibit 10(c) to Form 10-Q of Cliffs on July 29, 2004 and incorporated by reference)			Not Applicable
10(h)		* Form of the 2006 Restricted Shares Agreement for the Non-Retirement Eligible Employee (filed as Exhibit 99(b) to Form 8-K of Cliffs on March 17, 2006 and incorporated by reference)			Not Applicable
10(i)		* Form of letter to Participants of the 2006-2008 and 2007-2009 Performance Share Periods amending the payment calculation method to be used for 2006 and 2007 Performance Share Grants, dated May 27, 2008 (filed as Exhibit 10(a) to Form 10-Q of Cliffs on July 31, 2008 and incorporated by reference)			Not Applicable
10(j)		* Trust Agreement No. 1 (Amended and Restated effective June 1, 1997), dated June 12, 1997, by and between Cleveland-Cliffs Inc and KeyBank National Association, Trustee, with respect to the Cleveland-Cliffs Inc Supplemental Retirement Benefit Plan, Severance Pay Plan for Key Employees and certain executive agreements (filed as Exhibit 10(o) to Form 10-K of Cliffs on February 5, 2002 and incorporated by reference)			Not Applicable

*	Reflects management contract or other compensatory arrangement required to be filed as an Exhibit pursuant to Item 15(c) of this Report.

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Exhibit Number				Pagination by Sequential Numbering System
10(k)		* Trust Agreement No. 1 Amendments to Exhibits, effective as of January 1, 2000, by and between Cleveland-Cliffs Inc and KeyBank National Association, as Trustee (filed as Exhibit 10(n) to Form 10-K of Cliffs on March 16, 2000 and incorporated by reference)			Not Applicable
10(l)		* First Amendment to Trust Agreement No. 1, effective September 10, 2002, by and between Cleveland-Cliffs Inc and KeyBank National Association, as Trustee (filed as Exhibit 10(p) to Form 10-K of Cliffs on February 5, 2003 and incorporated by reference)			Not Applicable
10(m)		* Second Amendment to Trust Agreement No. 1 between Cliffs Natural Resources Inc. (f/k/a Cleveland-Cliffs Inc) and KeyBank, N.A. entered into and effective as of December 31, 2008 (filed as Exhibit 10(y) to Form 10-K of Cliffs on February 26, 2009 and incorporated by reference)			Not Applicable
10(n)		* Amended and Restated Trust Agreement No. 2, effective as of October 15, 2002, by and between Cleveland-Cliffs Inc and KeyBank National Association, Trustee, with respect to Executive Agreements and Indemnification Agreements with the Company's Directors and certain Officers, the Company's Severance Pay Plan for Key Employees, and the Retention Plan for Salaried Employees (filed as Exhibit 10(q) to Form 10-K of Cliffs on February 5, 2003 and incorporated by reference)			Not Applicable
10(o)		* Second Amendment to Amended and Restated Trust Agreement No. 2 between Cliffs Natural Resources Inc. (f/k/a Cleveland-Cliffs Inc) and KeyBank, N.A. entered into and effective as of December 31, 2008 (filed as Exhibit 10(aa) to Form 10-K of Cliffs on February 26, 2009 and incorporated by reference)			Not Applicable
10(p)		* Trust Agreement No. 5, dated as of October 28, 1987, by and between Cleveland-Cliffs Inc and KeyBank National Association, Trustee, with respect to the Cleveland-Cliffs Inc Voluntary Non-Qualified Deferred Compensation Plan (filed as Exhibit 10(v) to Form 10-K of Cliffs on February 2, 2001 and incorporated by reference)			Not Applicable
10(q)		* First Amendment to Trust Agreement No. 5, dated as of May 12, 1989, by and between Cleveland-Cliffs Inc and KeyBank National Association, Trustee (filed as Exhibit 10(x) to Form 10-K of Cliffs on February 2, 2001 and incorporated by reference)			Not Applicable
10(r)		* Second Amendment to Trust Agreement No. 5, dated as of April 9, 1991, by and between Cleveland-Cliffs Inc and KeyBank National Association, Trustee (filed as Exhibit 10(y) to Form 10-K of Cliffs on February 2, 2001 and incorporated by reference)			Not Applicable
10(s)		* Third Amendment to Trust Agreement No. 5, dated as of March 9, 1992, by and between Cleveland-Cliffs Inc and KeyBank National Association, Trustee (filed as Exhibit 10(z) to Form 10-K of Cliffs on February 2, 2001 and incorporated by reference)			Not Applicable
10(t)		* Fourth Amendment to Trust Agreement No. 5, dated November 18, 1994, by and between Cleveland-Cliffs Inc and KeyBank National Association, Trustee (filed as Exhibit 10(w) to Form 10-K of Cliffs on March 16, 2000 and incorporated by reference)			Not Applicable

*	Reflects management contract or other compensatory arrangement required to be filed as an Exhibit pursuant to Item 15(c) of this Report.

177

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Exhibit Number				Pagination by Sequential Numbering System
10(u)		* Fifth Amendment to Trust Agreement No. 5, dated May 23, 1997, by and between Cleveland-Cliffs Inc and KeyBank National Association, Trustee (filed as Exhibit 10(cc) to Form 10-K of Cliffs on February 5, 2002 and incorporated by reference)			Not Applicable
10(v)		* Sixth Amendment to Trust Agreement No. 5 between Cliffs Natural Resources Inc. (f/k/a Cleveland-Cliffs Inc) and KeyBank, N.A. entered into and effective as of December 31, 2008 (filed as Exhibit 10(hh) to Form 10-K of Cliffs on February 26, 2009 and incorporated by reference)			Not Applicable
10(w)		* Trust Agreement No. 7, dated as of April 9, 1991, by and between Cleveland-Cliffs Inc and KeyBank National Association, Trustee, with respect to the Cleveland-Cliffs Inc Supplemental Retirement Benefit Plan (filed as Exhibit 10(ee) to Form 10-K of Cliffs on February 2, 2001 and incorporated by reference)			Not Applicable
10(x)		* First Amendment to Trust Agreement No. 7, by and between Cleveland-Cliffs Inc and KeyBank National Association, Trustee, dated as of March 9, 1992 (filed as Exhibit 10(ff) to Form 10-K of Cliffs on February 2, 2001 and incorporated by reference)			Not Applicable
10(y)		* Second Amendment to Trust Agreement No. 7, dated November 18, 1994, by and between Cleveland-Cliffs Inc and KeyBank National Association, Trustee (filed as Exhibit 10(bb) to Form 10-K of Cliffs on March 16, 2000 and incorporated by reference)			Not Applicable
10(z)		* Third Amendment to Trust Agreement No. 7, dated May 23, 1997, by and between Cleveland-Cliffs Inc and KeyBank National Association, Trustee (filed as Exhibit 10(ii) to Form 10-K of Cliffs on February 5, 2002 and incorporated by reference)			Not Applicable
10(aa)		* Fourth Amendment to Trust Agreement No. 7, dated July 15, 1997, by and between Cleveland-Cliffs Inc and KeyBank National Association, Trustee (filed as Exhibit 10(jj) to Form 10-K of Cliffs on February 5, 2002 and incorporated by reference)			Not Applicable
10(bb)		* Amendment to Exhibits to Trust Agreement No. 7, effective as of January 1, 2000, by and between Cleveland-Cliffs Inc and KeyBank National Association, Trustee (filed as Exhibit 10(ee) to Form 10-K of Cliffs on March 16, 2000 and incorporated by reference)			Not Applicable
10(cc)		* Sixth Amendment to Trust Agreement No. 7 between Cliffs Natural Resources Inc. (f/k/a Cleveland-Cliffs Inc) and KeyBank, N.A. entered into and effective as of December 31, 2008 (filed as Exhibit 10(oo) to Form 10-K of Cliffs on February 26, 2009 and incorporated by reference)			Not Applicable
10(dd)		* Trust Agreement No. 8, dated as of April 9, 1991, by and between Cleveland-Cliffs Inc and KeyBank National Association, Trustee, with respect to the Cleveland-Cliffs Inc Retirement Plan for Non-Employee Directors (filed as Exhibit 10(kk) to Form 10-K of Cliffs on February 2, 2001 and incorporated by reference)			Not Applicable
10(ee)		* First Amendment to Trust Agreement No. 8, dated as of March 9, 1992, by and between Cleveland-Cliffs Inc and KeyBank National Association, Trustee (filed as Exhibit 10(ll) to Form 10-K of Cliffs on February 2, 2001 and incorporated by reference)			Not Applicable

*	Reflects management contract or other compensatory arrangement required to be filed as an Exhibit pursuant to Item 15(c) of this Report.

178

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Exhibit Number				Pagination by Sequential Numbering System
10(ff)		* Second Amendment to Trust Agreement No. 8, dated June 12, 1997, by and between Cleveland-Cliffs Inc and KeyBank National Association, Trustee (filed as Exhibit 10(nn) to Form 10-K of Cliffs on February 5, 2002 and incorporated by reference)			Not Applicable
10(gg)		* Third Amendment to Trust Agreement No. 8 between Cliffs Natural Resources Inc. (f/k/a Cleveland-Cliffs Inc) and KeyBank, N.A. entered into and effective as of December 31, 2008 (filed as Exhibit 10(ss) to Form 10-K of Cliffs on February 26, 2009 and incorporated by reference)			Not Applicable
10(hh)		* Trust Agreement No. 9, dated as of November 20, 1996, by and between Cleveland-Cliffs Inc and KeyBank National Association, Trustee, with respect to the Cleveland-Cliffs Inc Nonemployee Directors' Supplemental Compensation Plan (filed as Exhibit 10(oo) to Form 10-K of Cliffs on February 5, 2002 and incorporated by reference)			Not Applicable
10(ii)		* First Amendment to Trust Agreement No. 9 between Cliffs Natural Resources Inc. (f/k/a Cleveland-Cliffs Inc) and KeyBank, N.A. entered into and effective as of December 31, 2008 (filed as Exhibit 10(uu) to Form 10-K of Cliffs on February 26, 2009 and incorporated by reference)			Not Applicable
10(jj)		* Trust Agreement No. 10, dated as of November 20, 1996, by and between Cleveland-Cliffs Inc and KeyBank National Association, Trustee, with respect to the Cleveland-Cliffs Inc Nonemployee Directors' Compensation Plan (filed as Exhibit 10(pp) to Form 10-K of Cliffs on February 5, 2002 and incorporated by reference)			Not Applicable
10(kk)		* First Amendment to Trust Agreement No. 10 between Cliffs Natural Resources Inc. (f/k/a Cleveland-Cliffs Inc) and KeyBank, N.A. entered into and effective as of December 31, 2008 (filed as Exhibit 10(ww) to Form 10-K of Cliffs on February 26, 2009 and incorporated by reference)			Not Applicable
10(ll)		* Letter Agreement of Employment by and between Cleveland-Cliffs Inc and Joseph A. Carrabba dated April 29, 2005 (filed as Exhibit 10(b) to Form 10-Q of Cliffs on July 28, 2005 and incorporated by reference)			Not Applicable
10(mm)		* Letter Agreement of Employment by and between Cleveland-Cliffs Inc and Laurie Brlas dated November 22, 2006 (filed as Exhibit 10(a) to Form 8-K of Cliffs on November 28, 2006 and incorporated by reference)			Not Applicable
10(nn)		* Letter Agreement of Employment by and between Cleveland-Cliffs Inc and William Brake dated April 4, 2007 (filed as Exhibit 10(a) to Form 8-K of Cliffs on April 10, 2007 and incorporated by reference)			Not Applicable
10(oo)		* Cleveland-Cliffs Inc Executive Management Performance Incentive Plan adopted July 27, 2007 and effective as of January 1, 2007 (filed as Annex C to the proxy statement of Cliffs on June 15, 2007 and incorporated by reference)			Not Applicable
10(pp)		* First Amendment to Executive Management Performance Incentive Plan dated December 31, 2008 (filed as Exhibit 10(bbb) to Form 10-K of Cliffs on February 26, 2009 and incorporated by reference)			Not Applicable
10(qq)		* Amended and Restated Cliffs 2007 Incentive Equity Plan adopted July 27, 2007 and effective as of May 11, 2010 (filed as Exhibit 10(a) to the Form 8-K of Cliffs on May 14, 2010 and incorporated by reference)			Not Applicable

*	Reflects management contract or other compensatory arrangement required to be filed as an Exhibit pursuant to Item 15(c) of this Report.

179

Table of Contents

Exhibit Number				Pagination by Sequential Numbering System
10(rr)		* First Amendment to Amended and Restated Cliffs 2007 Incentive Equity Plan dated January 11, 2011			Filed Herewith
10(ss)		* Form of 2007 Participant Grant and Agreement effective March 13, 2007 from the Cleveland-Cliffs Inc 2007 Incentive Equity Plan (filed as Exhibit 10(d) to Form 10-Q of Cliffs on August 3, 2007 and incorporated by reference)			Not Applicable
10(tt)		* Form of 2008 Participant Grant and Agreement Under the 2007 Incentive Equity Plan for performance grant period January 1, 2008 through December 31, 2009, effective March 10, 2008 (filed as Exhibit 10(b) to Form 10-Q of Cliffs on July 31, 2008 and incorporated by reference)			Not Applicable
10(uu)		* Omnibus Amendment to Outstanding Grants Under Cleveland-Cliffs Inc 2007 Incentive Equity Plan dated January 13, 2009 between Cliffs Natural Resources Inc. and Plan participants (filed as Exhibit 10(jjj) to Form 10-K of Cliffs on February 26, 2009 and incorporated by reference)			Not Applicable
10(vv)		* Form of Amendment and Restatement of Severance Agreement entered into between Cliffs Natural Resources Inc. and elected officers and certain mine managers (filed as Exhibit 10(b) to Form 8-K of Cliffs on November 14, 2008 and incorporated by reference)			Not Applicable
10(ww)		* Cliffs Natural Resources Inc. 2005 Voluntary Non-Qualified Deferred Compensation Plan (Effective as of January 1, 2005) dated November 11, 2008 (filed as Exhibit 10(a) to Form 8-K of Cliffs on November 14, 2008 and incorporated by reference)			Not Applicable
10(xx)		* First Amendment to Cliffs Natural Resources Inc. 2005 Voluntary Non-Qualified Deferred Compensation Plan dated September 2, 2009 and effective as of January 1, 2009 (filed as Exhibit 10(a) to Form 10-Q of Cliffs on October 30, 2009 and incorporated by reference)			Not Applicable
10(yy)		* Cliffs Natural Resources Inc. Supplemental Retirement Benefit Plan (as Amended and Restated effective December 1, 2006) dated December 31, 2008 (filed as Exhibit 10(mmm) to Form 10-K of Cliffs on February 26, 2009 and incorporated by reference)			Not Applicable
10(zz)		* Cliffs Natural Resources Inc. Nonemployee Directors' Compensation Plan (Amended and Restated as of December 31, 2008) (filed as Exhibit 10(nnn) to Form 10-K of Cliffs on February 26, 2009 and incorporated by reference)			Not Applicable
10(aaa)		* 2009 Participant Grant Under the 2007 Incentive Equity Plan by and between Cliffs and Joseph A. Carrabba effective December 17, 2009 subject to Terms and Conditions of the 2009 Participant Grant to Joseph A. Carrabba Under the 2007 Incentive Equity Plan adopted February 16, 2010, and effective December 17, 2009 (filed as Exhibit 10(qqq) to Form 10-K of Cliffs on February 18, 2010 and incorporated by reference)			Not Applicable
10(bbb)		Support Agreement among Cliffs Natural Resources Inc. and Wuhan Iron and Steel (Group) Corporation dated January 11, 2011 (filed as Exhibit 10.1 to Form 8-K of Cliffs on January 18, 2011 and incorporated by reference)			Not Applicable
10(ccc)		* Form of Cliffs Natural Resources Restricted Shares Agreement pursuant to the Amended and Restated Cliffs 2007 Incentive Equity Plan between the employee participant and the Company or its Subsidiary			Filed Herewith

*	Reflects management contract or other compensatory arrangement required to be filed as an Exhibit pursuant to Item 15(c) of this Report.

180

Table of Contents

Exhibit Number				Pagination by Sequential Numbering System
10(ddd)		** Pellet Sale and Purchase Agreement, dated and effective as of January 31, 2002, by and among The Cleveland-Cliffs Iron Company, Cliffs Mining Company, Northshore Mining Company and Algoma Steel Inc. (filed as Exhibit 10(a) to Form 10-Q of Cliffs on April 25, 2002 and incorporated by reference)			Not Applicable
10(eee)		** Pellet Sale and Purchase Agreement, dated and effective as of April 10, 2002, by and among The Cleveland-Cliffs Iron Company, Cliffs Mining Company, Northshore Mining Company, Northshore Sales Company, International Steel Group Inc., ISG Cleveland Inc., and ISG Indiana Harbor Inc. (filed as Exhibit 10(a) to Form 10-Q of Cliffs on July 25, 2002 and incorporated by reference)			Not Applicable
10(fff)		** First Amendment to Pellet Sale and Purchase Agreement, dated and effective December 16, 2004 by and among The Cleveland-Cliffs Iron Company, Cliffs Mining Company, Northshore Mining Company, Cliffs Sales Company (formerly known as Northshore Sales Company), International Steel Group Inc., ISG Cleveland Inc., and ISG Indiana Harbor (filed as Exhibit 10(a) to Form 8-K of Cliffs on December 29, 2004, and incorporated by reference)			Not Applicable
10(ggg)		** Pellet Sale and Purchase Agreement, dated and effective as of December 31, 2002 by and among The Cleveland-Cliffs Iron Company, Cliffs Mining Company, and Ispat Inland Inc. (filed as Exhibit 10(vv) to Form 10-K of Cliffs filed on February 5, 2003, and incorporated by reference)			Not Applicable
10(hhh)		** Amended and Restated Pellet Sale and Purchase Agreement, dated and effective as of May 17, 2004, by and among The Cleveland-Cliffs Iron Company, Cliffs Mining Company, Northshore Mining Company, Cliffs Sales Company, International Steel Group Inc., and ISG Weirton Inc. (filed as Exhibit 10(a) of Form 8-K of Cliffs on September 20, 2004, and incorporated by reference)			Not Applicable
10(iii)		** Umbrella Agreement between Mittal Steel USA and Cleveland-Cliffs Inc, The Cleveland-Cliffs Iron Company, Cliffs Mining Company, Northshore Mining Company, and Cliffs Sales Company amending three existing pellet sales contracts for Mittal Steel USA-Indiana Harbor West (Exhibit 10(eee) and 10(fff) above in this index), Mittal Steel USA-Indiana Harbor East (Exhibit 10(ggg) above in this index), and Mittal Steel USA-Weirton (Exhibit 10(hhh) above in this index), dated as of March 1, 2007 and effective as of April 12, 2006 (filed as Exhibit 10(www) for Form 10-K of Cliffs on May 25, 2007 and incorporated by reference)			Not Applicable
10(jjj)		** Amended and Restated Pellet Sale and Purchase Agreement, dated and effective January 1, 2006 by and among Cliffs Sales Company, The Cleveland-Cliffs Iron Company, Cliffs Mining Company, and Severstal North America, Inc. (filed as Exhibit 10(fff) of Form 10-K of Cliffs on February 21, 2006 and incorporated by reference)			Not Applicable
10(kkk)		** Term Sheet for Amendment and Extension of the Amended and Restated Pellet Sale and Purchase Agreement among Cliffs Sales Company, The Cleveland-Cliffs Iron Company, Cliffs Mining Company, and Severstal North America, Inc. (filed as Exhibit 10(d) to Form 10-Q of Cliffs on July 31, 2008 and incorporated by reference)			Not Applicable

**	Confidential treatment requested and/or approved as to certain portions, which portions have been omitted and filed separately with the Securities and Exchange Commission.

181

Table of Contents

Exhibit Number				Pagination by Sequential Numbering System
10(lll)		** Term Sheet for Modification of Certain Terms of the Pellet Sale and Purchase Agreement by and between Cliffs and Severstal dated and effective December 15, 2008 (filed as Exhibit 10(a) to Form 10-Q of Cliffs on July 30, 2009 and incorporated by reference)			Not Applicable
10(mmm)		** Term Sheet for Modification of Certain Terms of the Pellet Sale and Purchase Agreement by and between Cliffs and Severstal dated and effective June 19, 2009 (filed as Exhibit 10(b) to Form 10-Q of Cliffs on July 30, 2009 and incorporated by reference)			Not Applicable
10(nnn)		** Pellet Sale and Purchase Agreement by and among The Cleveland-Cliffs Iron Company, Cliffs Sales Company, and AK Steel Corporation dated November 10, 2006 and effective January 1, 2007 through December 31, 2013 (filed as Exhibit 10(a) to Form 8-K of Cliffs on November 15, 2006 and incorporated by reference)			Not Applicable
12		Ratio of Earnings To Combined Fixed Charges And Preferred Stock Dividend Requirements			Filed Herewith
21		Subsidiaries of the registrant			Filed Herewith
23		Consent of independent auditors			Filed Herewith
24		Power of Attorney			Filed Herewith
31(a)		Certification Pursuant to 15 U.S.C. Section 7241, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, signed and dated by Joseph A. Carrabba as of February 17, 2011			Filed Herewith
31(b)		Certification Pursuant to 15 U.S.C. Section 7241, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, signed and dated by Laurie Brlas as of February 17, 2011			Filed Herewith
32(a)		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, signed and dated by Joseph A. Carrabba, President and Chief Executive Officer of Cliffs Natural Resources Inc., as of February 17, 2011			Filed Herewith
32(b)		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, signed and dated by Laurie Brlas, Executive Vice President, Finance and Administration and Chief Financial Officer of Cliffs Natural Resources Inc., as of February 17, 2011			Filed Herewith
99(a)		Schedule II - Valuation and Qualifying Accounts			Filed Herewith
101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		XBRL Taxonomy Extension Label Linkbase Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

**	Confidential treatment requested and/or approved as to certain portions, which portions have been omitted and filed separately with the Securities and Exchange Commission.

182