Cleveland-Cliffs (CLF) Risk Analysis

We regularly evaluate, and engage third-party QPs to review and validate, our mineral reserves based on revenues and costs and update them as required in accordance with SEC regulations. Estimates of mineral reserves and future net cash flows necessarily depend upon a number of variable factors and assumptions, some of which are beyond our control, such as production capacity, effects of governmental regulations, future prices for minerals we mine, future industry conditions and operating costs, taxes, development costs, and costs of extraction and reclamation. Estimating the quantity and grade of mineral reserves requires us to determine the size, shape and depth of our mineralized bodies by analyzing geological data, such as samplings of drill holes, and a QP to review and validate our determinations. Estimated mineral reserves could be affected by future industry conditions, future changes in the SEC's mining property disclosure requirements, variation in geological conditions and ongoing mine planning. Actual volume and grade of reserves recovered, production rates, revenues on third-party sales and expenditures with respect to our reserves and production will likely vary from estimates, and if such variances are material, our cost structure and gross margins could be adversely affected. In addition, we have announced that we are in the early stages of evaluating our Michigan and Minnesota mining properties for indicators of rare earth mineralization. It is uncertain whether we will be able to complete the requisite technical and economic studies to determine the economic potential for extraction of rare earths at our properties. Moreover, there is risk that our geological surveying and exploration activities may never result in the identification of rare earth minerals in economic concentrations at any of our mining properties.

We completed the Stelco Acquisition in the fourth quarter of 2024. We remain subject to significant risks and uncertainties arising out of the Stelco Acquisition that may adversely affect us, including in connection with the following: - our ability to service additional debt incurred;- our ability to manage additional known and unknown liabilities assumed;- challenges of operating in multiple countries with potentially conflicting laws, including in respect of tariff and trade matters; and - our ability to satisfy our operational, employment, environmental, charitable or other undertakings made to the Canadian government. If one or more of these risks were to materialize, we could experience higher costs, lower profitability, reputational damage, and other adverse impacts to our operations and businesses, which could cause the price of our common shares to decline. We would expect that similar risks would apply to the extent that we engage in any future acquisitions activity. We are also subject to risks and uncertainties relating to our non-binding Memorandum of Understanding with POSCO. Although we believe a successful transaction would be highly accretive to our shareholders, the strategic partnership contemplated by the Memorandum of Understanding remains subject to negotiation of definitive terms regarding such strategic partnership, together with the execution and closing of definitive agreements between the parties. As such, there can be no assurances that the parties will enter into such definitive agreements, that the strategic partnership will be implemented in accordance with the terms of the Memorandum of Understanding, or that the strategic partnership will proceed as currently expected or will ultimately be successful. While we expect to realize certain financial benefits arising out of the proposed partnership under the Memorandum of Understanding, including substantial proceeds that could be used to reduce our outstanding indebtedness, there is risk that the proposed partnership with POSCO does not come to fruition in a timely manner or at all or that any ultimate financial benefits could be less significant than we currently anticipate. We are also subject to risks and uncertainties relating to potential divestitures of our non-core operating assets and idled, closed or otherwise inactive sites. While we anticipate using future proceeds from any such divestiture transactions to reduce our outstanding indebtedness, it is uncertain whether we will be successful in completing any such potential transactions in a timely manner or at all. Even if we are successful in completing any such divestitures, there is a risk that our actual realized cost savings and/or cash proceeds may be less than we have forecasted. Furthermore, we may incur asset impairment charges related to divestitures that reduce our profitability. We may also be unable to recover the carrying value of any divested assets, which potentially could have an adverse impact on our financial results and shareholders' equity. In addition, our divestiture activities may present financial, managerial and operational risks, including diversion of management attention from our core businesses, difficulties separating personnel and financial, IT and other systems, adverse effects on existing business relationships with suppliers and customers, trailing indemnity obligations and potential disputes with transaction counterparties. Any of these factors could adversely affect our financial condition, business productivity and results of operations.

New laws or regulations, or changes in existing laws or regulations, or the manner of their interpretation or enforcement, could increase our cost of doing business and restrict our ability to operate our businesses or execute our strategies. This includes, among other things: - changes in, and enforcement of, MSHA regulations, such as respirable silica standards;- evaluation of the National Ambient Air Quality Standards, such as revised nitrogen dioxide, sulfur dioxide, lead, ozone and particulate matter criteria;- changes in the interpretation of OSHA regulations, such as those covering respiratory protection, heat stress and potentially hazardous machinery, as well as continued enforcement of various OSHA National Emphasis Programs focused on particular hazards, including those for indoor and outdoor heat stress; and - changes in tax laws and regulations, including the possible taxation under U.S. or foreign country laws of certain income from worldwide operations. Our operations are subject to various laws and regulations relating to protection of the environment and human health and safety, including those relating to: - air quality, water quality and conservation;- plant, wetlands, natural resources and wildlife protection (including endangered or threatened species);- reclamation, remediation and restoration of properties and related surety bonds or other financial assurances;- land use;- the discharge of materials into the environment; and - the effects that industrial operations and mining have on groundwater quality and availability, such as the potential effects of laws or regulations related to per-and polyfluoroalkyl substances ("PFAS"). Despite implementation of rigorous environmental protocols and management systems, we cannot be certain that we have been or will be at all times in complete compliance with all such laws and regulations. If we violate or fail to comply with these laws or regulations, we could be fined, required to retrofit or cease operations, subject to criminal or civil liability, or otherwise sanctioned by regulators or barred from participating in government contracts. In addition, regulatory agencies have the authority to order a mine or production facility to be temporarily or permanently closed where imminent danger that could cause death or serious physical harm is perceived. Compliance with the complex and extensive laws and regulations to which we are subject imposes substantial costs on us, which could increase over time because of heightened regulatory oversight, adoption of more stringent environmental,health and safety standards and greater demand for remediation services leading to shortages of equipment, supplies and labor, as well as other factors. Specifically, there are several notable proposed or recently enacted rulemakings or activities to which we would be subject or that would further regulate and/or tax us and our customers, which may also require us or our customers to reduce or otherwise change operations significantly or incur significant additional costs, potentially limiting our ability to produce our raw materials and products, depending on their ultimate outcome. These emerging or recently enacted rules, regulations and policy guidance include, but are not limited to: - trade regulations, trade agreements, treaties or related policies;- changes in tariff policy, including with respect to the 50% tariff on certain imported steel imposed under Section 232, and the retaliatory tariffs that have already been, or may in the future be, imposed in response to such tariffs;- revised National Emission Standards for Hazardous Air Pollutants in the taconite, integrated iron and steel, lime and coke sectors;- climate change mitigation strategies, carbon taxes and GHG regulation;- selenium discharge regulation;- revisions to the sulfate wild rice water quality standard and its implementation;- Minnesota's Mercury TMDL;- ozone transport regulations;- state agency decisions related to environmental justice initiatives;- reduction of SO2 levels at steel plants in Canada;- revised National Ambient Air Quality Standards, particularly for particulate matter, sulfur dioxide and ozone; and - additional regulations regarding PFAS. We similarly expect some state governments to continue to propose more stringent environmental regulation, in particular related to climate change. Any new or more stringent legislation, regulations, rules, interpretations or orders, when enacted and enforced, including any related to required monitoring and reporting or reductions in, or taxes on, levels of carbon emissions, could have a material adverse effect on our business, results of operations, financial condition or profitability. In addition, judicial decisions or executive actions limiting the authority of regulatory agencies or impacting current regulations and policies implemented by such agencies could create uncertainty regarding the regulatory landscape and impact our ability to operate our existing business and plan for future investments. Our operations may be impacted by the recent proposal and ongoing consideration of significant federal and state laws and regulations relating to certain mine-related issues, including potential changes to the approval process for roof control and ventilation plans in underground coal mines and training plans for all mines. Additionally, there are requirements for the prompt reporting of accidents and increased fines and penalties for violations of these laws and regulations. Enforcement of existing mine-related laws and regulations, as well as enactment of any new such laws or regulations, may cause us to incur substantial additional compliance costs and fines and penalties for any violations. In addition, certain of our operations are subject to the risks of doing business abroad and we must comply with complex foreign and U.S. laws and regulations, which may include, but are not limited to, the Foreign Corrupt Practices Act and other anti-bribery laws, regulations related to import/export and trade controls, the European Union's General Data Protection Regulation and other U.S. and foreign privacy regulations, and transportation and logistics regulations. These laws and regulations may increase our costs of doing business in international jurisdictions and expose our operations and employees to elevated risk. We require our employees, contractors and agents to comply with these and all other applicable laws and regulations, but failure to do so could result in possible administrative, civil or criminal liability and reputational harm to us and our employees. As a supplier on public procurement projects, we may be subject to certain stringent regulations that may present compliance challenges or may increase the costs of securing certain business. These public procurement projects include projects that may arise out of proposed or recently enacted governmental legislation regarding infrastructure investments, which may require unique compliance obligations when compared with private sector projects. For example, in order to remain eligible for DOE funding, our major Butler and Middletown capital projects are subject to extensive U.S. government and DOE-specific regulations with which we must comply, including with respect to restrictions related to the use of foreign contractors and workers. Also, the U.S. government has rights to, and imposes ownership and use restrictions on, intellectual property that may be developed in connection with these projects. Further, our business is subject to risks associated with changes in laws, regulations and government policies, including executive orders. For example, executive orders may impose new compliance obligations, restrict our ability to perform under existing government contracts, impact our eligibility for future government awards, or require changes to our business practices. The additional burdens and restrictions imposed by these types of regulations and executive orders could increase our costs, delay our projects, limit our operational and contracting flexibility, and disincentivize certain technology providers or other vendors from working with us. We may also be indirectly affected through regulatory changes that impact our customers, which in turn could reduce the quantity of our products they demand, adversely impact the terms upon which they purchase or the prices for our products they are willing to pay. Regulatory changes that impact our suppliers, such as any changes in labor or environmental standards in China, could decrease the availability of products or services they sell to us or could increase the price they demand for products or services they sell to us.

As described in detail in Part I - Item 1. Business - Environmental Matters - Regulatory Developments - Climate Change and GHG Regulations above, because our operations use carbon-based energy and produce GHG emissions, we are subject to risks relating to decarbonization initiatives being undertaken by regulators and other stakeholders as part of global efforts to address the potential impacts of climate change. For example, as part of climate change mitigation strategies, governmental authorities may introduce mandatory carbon pricing obligations, carbon emissions limitations, carbon taxes or carbon trading mechanisms, such as the carbon taxes we are required to pay in respect of Stelco's emissions, any of which could impose significant costs on our operations, including causing us to incur higher energy and supplier costs, invest in costly and potentially unproven emissions control or reduction technologies, and engage in more intensive environmental monitoring and reporting efforts. In addition, complying with current or future international treaties and laws or regulations concerning climate change and GHG emissions could negatively impact our ability, and that of our customers and suppliers, to compete with companies located in areas not subject to or not complying with such constraints. We may also face more limited access to, or increased costs of, capital to the extent financial institutions and investors increase expectations relating to lowering GHG emissions or reduce investments in carbon-intensive businesses or industries. Further, increased pressure from customers or other business partners seeking to reduce their indirect carbon footprints and achieve certain overall decarbonization targets, including by sourcing a larger percentage of steel products from recycled steel, could result in the potential loss of business opportunities if we are unable to meet their carbon, GHG emissions or sustainability expectations, or if we are perceived to have higher GHG intensity than our competition. In addition, as part of our decarbonization strategy, we are investigating and from time to time may consider investments in or other relationships with various energy efficiency and clean energy initiatives. In 2024, the DOE awarded us funding to pursue two innovative projects intended to enhance business competitiveness and reduce emissions related to our Butler facility in Pennsylvania and our Middletown facility in Ohio. We also continue to engage with developers on energy projects, including potential behind-the-meter solar projects that could be located onsite at certain of our operating facilities. While we are actively pursuing these decarbonization and energy-related projects and working closely with the DOE to align these facility investments with the U.S. federal government's goals, there are no guarantees that sufficient funding or the necessary advanced technology will be available to complete any of these projects under currently anticipated timeframes or at all. Additionally, we may not be successful in achieving our current or any future short, medium or long-term GHG emissions reduction goals, including any net-zero or near-zero goals, due to adverse changes in business conditions over time, unanticipated financial challenges or operational improvement efforts that may not be as successful as originally forecasted, or regulatory developments arising after such goals were initially announced.