NOTE 17 – COMMITMENTS AND CONTINGENCIES

Purchase Commitments

In May 2011, we incurred capital commitments related to the expansion of our Bloom Lake mine. As of September 30, 2011, the project has been approved for capital investments of approximately $615 million, of which $206 million has been committed. The expansion is part of ramping up production capacity by 8.0 million metric tons of iron ore concentrate per year. As of September 30, 2011, capital expenditures related to this commitment were approximately $65 million. Of the committed capital, expenditures of approximately $73 million and $68 million are expected to be made during the remainder of 2011 and 2012, respectively.

As a result of the significant tornado damage to the above-ground operations at our Oak Grove mine during the second quarter of 2011, we incurred capital commitments to repair the damage done to the preparation plant and the overland conveyor system. As of September 30, 2011, the project requires a capital investment of approximately $55 million, of which approximately $31 million has been committed. As of September 30, 2011, $26 million in capital expenditures had been expended related to this commitment. Of the committed capital, expenditures of $5 million are scheduled to be made during the remainder of 2011.

In March 2011, we incurred capital commitments related to bringing Lower War Eagle, a high volatile metallurgical coal mine in West Virginia, into production. As of September 30, 2011, the project has been approved for capital investments of approximately $49 million, all of which has been committed. As of September 30, 2011, capital expenditures related to this commitment were approximately $31 million. Of the committed capital, expenditures of approximately $10 million and $8 million are scheduled to be made during the remainder of 2011 and in 2012, respectively.

In 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 $272 million, of which approximately $246 million has been committed, that will be required to meet the timing of the proposed expansion. As of September 30, 2011, $133 million in capital expenditures had been expended related to this commitment. Of the committed capital, expenditures of $67 million and $46 million are scheduled to be made during the remainder of 2011 and in 2012, respectively.

We incurred capital commitments related to an expansion project at our Empire and Tilden mines in Michigan's Upper Peninsula in 2010. The expansion project requires a capital investment of approximately $264 million, of which $178 million has been committed as of September 30, 2011, 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 September 30, 2011, capital expenditures related to this commitment were approximately $123 million. Of the committed capital, expenditures of approximately $31 million and $24 million are scheduled to be made during the remainder of 2011 and in 2012, respectively.

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 effect on our financial position, results of operations or cash flows. 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 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.