(In Millions)
Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 Variance
Favorable/
(Unfavorable) 2017 2016
Variance
Favorable/
(Unfavorable)
Revenues from product sales and services $ 698.4
$ 553.3
$ 145.1
$ 1,729.3
$ 1,355.0
$ 374.3
Cost of goods sold and operating expenses (538.2 ) (467.9 ) (70.3 ) (1,328.3 ) (1,147.2 ) (181.1 )
Sales margin $ 160.2
$ 85.4
$ 74.8
$ 401.0
$ 207.8
$ 193.2
Sales margin % 22.9 % 15.4 % 7.5 % 23.2 % 15.3 % 7.9 %

~~Revenues from Product Sales and Services~~

~~The increase in~~ ~~Revenues from product sales and services~~ ~~of $118.9 million or 23.4%, excluding the increase in freight and reimbursements of $26.2 million,~~As for the three months ended September 30, 2017 from the comparable period in 2016 was driven by an increase in the realized revenue rate of 23.1% or $100.5 million from our U.S. Iron Ore operations. Additionally, increased iron ore, ~~sales volumes of 0.6 million long tons~~the Platts 62% price averaged $114 per metric ton in the third quarter of ~~2017 compared~~2023, which is 18% higher than the prior annual ten-year average. While higher iron ore prices play a role in increased steel prices, we also directly benefit from higher iron ore prices for the portion of iron ore pellets we sell to third parties.

OTHER FACTORS

On September 14, 2023, the UAW announced a simultaneous labor strike against three domestic automotive manufacturers, as each of the individual companies have been unable to come to terms on a new labor agreement. The strike originally impacted one assembly plant at each company and was further expanded to additional facilities, including certain parts-distribution centers for each company. Steel demand has remained strong from the automotive industry as the strike has been limited to certain facilities, allowing the automotive manufacturers to continue production at other facilities within their footprint. While we have not yet experienced a meaningful impact from the UAW strike, an expanded or prolonged strike could have negative impacts on demand for automotive steel or domestic automotive production.

In January 2023, we announced that we partnered with the USW and filed antidumping and countervailing duty petitions against eight countries related to unfairly traded tin and chromium coated sheet steel products. Tin mill products are used primarily for packaging applications, particularly canned food. We produce tin mill products at our Weirton, West Virginia operating facility and sell approximately 300,000 net tons per year, representing approximately two percent of total Company steel sales volumes. On June 21, 2023, the U.S. Department of Commerce announced its preliminary affirmative determination in the countervailing duty investigation of tin mill products from China and imposed subsidy rates ranging from 89.02% to 542.55%, based on the exporter. On August 17, 2023, the U.S. Commerce Department announced that it had set preliminary antidumping duties on imports of tin and chromium-coated sheet steel products from Canada, China and Germany. The department determined that imports of these tin mill products were sold to the ~~same period in 2016~~United States at less than normal value. The department set preliminary antidumping tariffs ranging from ~~our U.S. Iron Ore operations positively increased revenue by $41.5 million. These increases were offset partially by~~5.29% to 111.98%.

During 2022, we experienced higher costs than the ~~decrease in sales~~prior year due to inflationary pressures on input and energy costs, as well as lower production volume ~~of 0.6 million metric tons, or a decrease in revenue of $25.6 million,~~and higher repair and maintenance spending. We started to benefit from ~~our Asia Pacific Iron Ore operations for the three months ended September 30, 2017 compared to the prior-year period.~~

~~The increase in~~ ~~Revenues from product sales and services~~ of $315.3 million or 25.5%, excluding the increase in freight and reimbursements of $59.0 million, for the nine months ended September 30, 2017 from the comparable period in 2016 was driven by an increase in realized revenue rate of 17.0% or $173.3 million and 9.6% or $35.0 million for our U.S. Iron Ore operations and Asia Pacific Iron Ore operations, respectively. Additionally, increased iron ore sales volumes of 1.9 million long tons inlower costs during the first nine months of ~~2017 compared~~2023 and expect that to continue through the rest of 2023 and through 2024, as many inflationary pressures have started to ease, production volume has improved, and repair and maintenance expenses have begun to normalize.

COMPETITIVE STRENGTHS

As the leading flat-rolled steel producer in North America, we benefit from having the size and scale necessary in a competitive, capital intensive business. Our sizeable operating footprint provides us with the operational leverage and flexibility to achieve competitive margins throughout the business cycle. We also have a unique vertically integrated profile from mined raw materials, direct reduced iron, and ferrous scrap to primary steelmaking and downstream finishing, stamping, tooling and tubing. This positioning gives us more predictable costs throughout our supply chain and more control over both our manufacturing inputs and our end-product destination.

Our primary competitive strength lies within our automotive steel business. We are a leading supplier of automotive-grade steel in the U.S. Compared to other steel end markets, automotive steel is generally higher quality, more operationally and technologically intensive to produce, and requires significantly more devotion to customer service than other steel end markets. This dedication to service and the infrastructure in place to meet our automotive customers’ demanding needs took decades to develop. We have continued to invest capital and resources to meet the requirements needed to serve the automotive industry and intend to maintain our position as an industry leader going forward.

Due to its demanding nature, the automotive steel business typically generates higher through-the-cycle margins, making it a desirable end market. Demand for our automotive-grade steel is expected to remain strong in the coming years as a result of low unemployment, pent-up automotive demand arising out of supply chain issues and the replacement of older vehicles.

Our footprint provides us with a competitive advantage in supplying automotive and other highly demanding end markets, as we are able to produce a wide range of high-quality products. Our integrated facilities utilize domestic internally sourced iron ore as the primary feedstock, which allows us to produce a high quality product with low residual content. We also possess the breadth and depth related to customer service, technical support, and research and development, which are necessary to supply the demanding needs of the automotive industry.

Since the acquisition of our steelmaking assets, we have dedicated significant resources to maintain and upgrade our facilities and equipment. The quality of our assets gives us a unique advantage in product offerings and operational efficiencies. In 2022, we brought our facilities and equipment up to the ~~same period~~standard required to maintain and improve the quality and reliability of our supply to the automotive industry, as well as other end markets. The necessary resources that we have invested in ~~2016~~our footprint are expected to keep our assets at an automotive-grade quality and reliability for years to come.

Our industry leading portfolio of fixed price contracts provides us a competitive advantage, as the steel industry is often viewed as volatile and subject to the market price of steel. Our fixed price contracts mitigate pricing volatility and support us in achieving healthy margins through the cycle.

Our ability to source our primary feedstock domestically and internally is a competitive strength. This model reduces our exposure to volatile pricing and unreliable global sourcing. The ongoing conflict between Russia and Ukraine has displayed the importance of our U.S.-centric footprint, as our competitors who primarily operate EAF facilities rely on imported pig iron to produce flat-rolled steel, the supply of which has been disrupted by that conflict. The best example is our legacy business of producing iron ore

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pellets. By controlling our iron ore pellet supply, our primary steelmaking raw material feedstock can be secured at a stable and predictable cost and not be subject to as many factors outside of our control.

We believe we offer the most comprehensive flat-rolled steel product selection in the industry, along with several complementary products and services. A sampling of our offering includes advanced high-strength steel, hot-dipped galvanized, aluminized, galvalume, electrogalvanized, galvanneal, HRC, cold-rolled coil, plate, tinplate, GOES, NOES, stainless steels, tool and die, stamped components, rail, slab and cast ingot. Across the quality spectrum and the supply chain, our customers can frequently find the solutions they need from our product selection.

We are currently a leading producer of electrical steels referred to as GOES and NOES in the U.S. ~~Iron Ore operations positively~~In November 2021, the Infrastructure and Jobs Act was passed in the U.S., which provides funding to be used for the modernization of the electrical grid and the infrastructure needed to allow for increased ~~revenue~~EV adoption, both of which require electrical steels. As a result, we expect to benefit from this position in what we forecast as a rapidly growing market. Our electrical steel business is expected to achieve strong profitability throughout the remainder of 2023 and in the coming years. We also recently commissioned our NOES expansion at our Zanesville facility, which will ultimately increase our annual capacity by ~~$150.2 million. These increases were offset partially by~~approximately 70,000 net tons.

We are the ~~decrease~~first and the only producer of HBI in ~~sales volume~~the Great Lakes region. Construction of ~~0.9~~our Toledo direct reduction plant was completed in the fourth quarter of 2020 and reached full run-rate nameplate annual capacity of 1.9 million metric tons during the middle of 2021. From this modern plant, we produce a high-quality, low-cost and low-carbon intensive HBI product that can be used in our blast furnaces as a productivity enhancer, or in our BOFs and EAFs as a ~~decrease~~premium scrap alternative. We use HBI to stretch our hot metal production, lowering carbon intensity and reliance on coke. With increasing tightness in ~~revenue~~the scrap and metallics markets combined with our own internal needs, we expect our Toledo direct reduction plant to support healthy margins for us going forward.

STRATEGY

MAXIMIZE OUR COMMERCIAL STRENGTHS

We offer a full suite of ~~$42.3 million,~~ flat steel products encompassing all steps of the steel manufacturing process. We are a leading supplier to the automotive sector, where our portfolio of high-end products delivers a broad range of differentiated solutions for this highly sought after customer base.

As a result of our exposure to these high-end markets, we have the highest fixed price contractual volumes in our industry. Approximately 45% of our volumes are sold under these contracts. These contracts reduce volatility and allow for more predictable through-the-cycle margins. Our fixed-price contract values significantly improved throughout 2023 compared to 2022. In addition to our fixed price contracts, we also sell significant volumes under index-linked contracts, which reduces our reliance on spot sales and allows us to improve our efficiency with increased volumes.

Our unique capabilities, driven by our portfolio of assets and technical expertise, give us an advantage in our flat-rolled product offering. We offer products that have superior formability, surface quality, strength and corrosion resistance for the automotive industry. In addition, our state-of-the-art Research and Innovation Center in Middletown, Ohio gives us the ability to collaborate with our customers and create new products and develop new and efficient steel manufacturing processes. During 2022, we introduced our MOTOR-MAX™ product line of NOES for high frequency motors and generators. We also recently introduced our C-STAR™ protection steel, which was developed for the purpose of providing battery support in EVs, but can be used in any type of light vehicle. These unique product offerings and customer service capabilities enable us to remain a leading steel supplier to the automotive industry.

TAKE ADVANTAGE OF OUR U.S.-CENTRIC, INTERNALLY SOURCED SUPPLY CHAIN

The ongoing conflict between Russia and Ukraine has reinforced the unique advantage of our vertically integrated business model. Two-thirds of U.S. imports of pig iron, a critical raw material for flat-rolled EAFs, had historically been sourced from Russia and Ukraine. This supply remains largely disrupted, driving volatility in input costs and reducing availability for our competitors’ ferrous inputs. We, on the other hand, produce our pig iron and liquid steel entirely in the U.S., supported by internally sourced iron ore and HBI and supplemented with internally sourced scrap. In addition, our internally produced pig iron is more environmentally friendly than imported pig iron, which is often made from sintered iron ore fines and with higher coke rates, for example. While competitors are forced to rely on suppliers who are subject to unpredictable disruptions in their ability to supply materials, we are able to take advantage of our vertically integrated footprint.

We began construction of our Toledo direct reduction plant in 2017, in part because of the uncertainty of the industry sourcing metallics from Russia and Ukraine. Russia had previously invaded the Crimea peninsula in 2014, and we saw a need for more on-shore metallics capacity in the U.S. HBI, which is a lower-carbon alternative to imported pig iron, has now become a critical component of our decarbonization strategy.

OPTIMIZE OUR FULLY-INTEGRATED STEELMAKING FOOTPRINT

We are a fully-integrated steel enterprise with the size and scale to achieve margins above industry averages for flat-rolled steel. Our focus remains on realizing our inherent cost advantage in flat-rolled steel while also lowering carbon emissions. The combination of our ferrous raw materials, including iron ore, scrap and HBI, allows us to do so relative to peers who must rely on more unpredictable and unreliable raw material sourcing strategies.

We have ample access to scrap along with internally sourced iron ore pellets and HBI. Our ability to optimize use of these raw materials in our blast furnaces and BOFs ultimately boosts liquid steel output, reduces coke needs and lowers carbon emissions

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from our ~~Asia Pacific Iron Ore operations~~operations. As a result of successful operational improvements, we announced the indefinite idle of the Indiana Harbor #4 blast furnace in the first quarter of 2022. The indefinite idle reduced our operational blast furnaces from eight to seven. Our strategic use of HBI in our blast furnaces and maximizing scrap usage in our BOFs has allowed us to achieve the same steel production with one less blast furnace in our footprint.

During the second quarter of 2023, it was announced that we entered into long-term state mineral leases for more than 2,600 acres of iron ore at the Nashwauk mine site in Itasca County, Minnesota. The award of these leases resolved years of uncertainty regarding Hibbing Taconite’s mine life. This ore body is intended to serve as an extension of Hibbing Taconite, as the state’s mineral leases, combined with our own private mineral holdings at Nashwauk, are expected to provide more than two decades of additional ore reserves.

We used 2022 as an opportunity to optimize our steelmaking footprint by dedicating significant resources to bring our facilities and equipment up to the standard required to maintain and improve our supply to the automotive industry. The necessary resources that we have invested in our footprint are expected to keep our assets at automotive-grade quality and reliability for years to come. With our facilities and equipment in the best shape since the acquisition of our steelmaking assets and no major investments expected until at least 2026, we are well positioned to benefit from operating efficiencies and improved capabilities in the coming years.

ADVANCE OUR PARTICIPATION IN THE GREEN ECONOMY

We are seeking to expand our customer base with the rapidly growing and desirable EV market. At this time, we believe the North American automotive industry is at a structural inflection point, with the adoption of electrical motors in passenger vehicles. As this market grows, it will require more advanced steel applications to meet the needs of EV producers and consumers. These features include the already existing sophisticated steel supply for internal combustion engine vehicle parts, along with the added need for steel-based battery enclosures in EVs. With our unique technical capabilities and leadership in the automotive industry, we believe we are positioned better than any other North American steelmaker to supply the steel and parts necessary to fill these needs.

We also have the right products to meet the growing demand for renewable energy as well as for the ~~nine months ended September~~modernization of the U.S. electrical grid. We offer plate products that can be used in windmills, which we estimate contain 130 tons of steel per megawatt of electricity. In addition, panels for solar power are heavy consumers of galvanized steel, where we are a leading producer. We estimate solar panels consume 40 tons of steel per megawatt of electricity.

We are currently a leading producer of electrical steel in the U.S., which can facilitate the modernization of the U.S. electrical grid. Along with charging networks, electrical steels are also needed in the motors of EVs.

ENHANCE OUR ENVIRONMENTAL SUSTAINABILITY

Our commitment to operating our business in a more environmentally responsible manner remains constant. One of the most important issues impacting our industry, our stakeholders and our planet is climate change. In early 2021, we announced our commitment to reduce GHG emissions 25% from 2017 levels by 2030. This goal represents combined Scope 1 (direct emissions) and Scope 2 (indirect emissions from purchased electricity or other forms of energy) GHG emission reductions across all of our operations. Our 2022 absolute Scope 1 and Scope 2 GHG emissions were below our reduction goal well ahead of our 2030 target year. Since 2017, we have reduced our absolute emissions by 32% from 44 million metric tons to 30 ~~2017 compared~~million metric tons of CO2ein 2022.

We plan to further our efforts towards our GHG emissions reduction goal by focusing on actionable, commercially viable technologies and solutions while supporting research for breakthrough technologies for the primary iron and steel sector. In an effort to build on our GHG emissions reduction progress, we have continued our partnership with the U.S. Department of Energy as part of the Better Climate Challenge initiative, which was established in December 2021. We have continued to pursue opportunities such as carbon capture and the use of hydrogen within our facilities. With the U.S. government funding toward the development of regional hydrogen hubs throughout the country, we expect to dramatically increase our use of hydrogen gas as both a reducing agent and energy source as the clean hydrogen production facilities come online.

In May 2023, we completed a successful blast furnace hydrogen injection trial at Middletown Works. During the trial, hydrogen gas was injected in all 20 tuyeres at the Middletown #3 blast furnace, facilitating the production of clean pig iron. In this trial, hydrogen served as a partial substitute for the fossil fuels necessary for iron reduction, ultimately replacing the release of CO2 with the release of H2O (water vapor) with no impact to product quality or operating efficiency.

In October 2023, the U.S. Department of Energy announced the intention to award funding under the Bipartisan Infrastructure Law for seven regional hydrogen hubs, including the Midwest Alliance for Clean Hydrogen. This hub covering Illinois, Indiana and Michigan was selected for $1 billion in funding and is near our two largest steel plants, Indiana Harbor and Burns Harbor. We are currently constructing a pipeline to bring hydrogen to our Indiana Harbor blast furnace #7. The use of hydrogen within our blast furnace is expected to partially displace the release of CO2 with H2O, reducing our overall emissions.

Our future GHG emissions reductions are expected to be driven by the use of direct reduced iron in blast furnaces, the stretching of hot metal with additional scrap, driving more productivity out of fewer blast furnaces, implementing hydrogen use where possible, utilizing carbon capture, procuring more clean energy and operating with higher energy efficiency.

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IMPROVE FINANCIAL FLEXIBILITY

Given the cyclicality of our business, it is important to us to be in the financial position to easily withstand economic cycles. Since the acquisition of our steelmaking assets, we have demonstrated our ability to generate healthy free cash flow and use it to reduce substantial amounts of debt, return capital to shareholders through our share repurchase program and make investments to both improve and grow our business. During the third quarter of 2023, we reduced the principal amount of outstanding debt by $508 million while returning $58 million in capital to shareholders via share repurchases. We have also historically shown our ability to take advantage of volatility in the debt markets and repurchase notes at a discount. During 2022, we repurchased $351 million aggregate principal amount of assorted series of notes at an average price of 92% of par.

We expect to have ample opportunities to reduce our debt with our own free cash flow generation through the remainder of 2023 and in the coming years. It is also important for us to maintain sufficient liquidity. Pursuant to the ~~prior-year period.~~

~~Cost~~Fourth ABL Amendment, certain assets of ~~Goods Sold~~Ferrous Processing and ~~Operating Expenses~~

~~The increase in~~ ~~Cost of goods sold and operating expenses~~ ~~of $44.1 million or 10.4%, excluding~~Trading Company were pledged as collateral to secure borrowings under the increase in freight and reimbursements of $26.2 million, for the three months ended September 30, 2017 from the comparable period in 2016 was primarily due to increased production cost rates across all operations that resulted in increased costs of $39.9 million and increased sales volumes from our U.S. Iron Ore operations that resulted in $31.2 million of additional costs. These increases were offset partially by lower iron ore sales volumes from our Asia Pacific Iron Ore operationsABL Facility during the third quarter ~~compared to~~of 2023. Our liquidity as of September 30, 2023 is the ~~prior-year period that resulted in lower costs of $21.4 million and incrementally lower idle costs~~highest in our ~~U.S. Iron Ore operations of $9.4 million.~~Company’s history.

~~The increase in~~ ~~Cost of goods sold and operating expenses~~ of $122.1 million or 11.9%, excluding the increase in freight and reimbursements of $59.0 million, for the nine months ended September 30, 2017 from the comparable period in 2016 was primarily due to increased sales volumes from our U.S. Iron Ore operations that resulted in $108.3 million of additional costs and increased production cost rates across all operations that resulted in increased costs of $93.5 million. These increases were offset partially by incrementally lower idle costs in our U.S. Iron Ore operations of $54.6 million and lower iron ore sales volumes from our Asia Pacific Iron Ore operations for the nine months ended September 30, 2017 compared to the prior-year period that resulted in lower costs of $34.8 million.

~~Refer to “Results of Operations – Segment Information” for additional information regarding the specific factors that impacted our revenue and operating results during the period.~~STEELMAKING RESULTS

~~Other Operating Income (Expense)~~

The following is a summary of ~~Other~~our Steelmaking segment operating ~~income (expense)~~results for the three and nine months ended September 30, ~~2017~~2023 and ~~2016:~~2022 (dollars in millions, except for average selling price and shipments in thousands of net tons):

Total Revenue

Gross Margin

Adjusted EBITDA

Steel Shipments (nt)


Q3 2023		Q3 2022		YTD 2023		YTD 2022		Q3 2023	Q3 2022	YTD 2023	YTD 2022	Q3 2023	Q3 2022	YTD 2023	YTD 2022	Q3 2023	Q3 2022	YTD 2023	YTD 2022

STEEL PRODUCT REVENUE:								GROSS MARGIN %:				ADJUSTED EBITDA %:				AVERAGE SELLING PRICE PER TON OF STEEL PRODUCTS:
$	4,940	$	4,945	$	14,823	$	15,618	9%	6%	7%	14%	11%	8%	10%	17%	$1,203	$1,360	$1,196	$1,431

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(In Millions)
Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 Variance
Favorable/
(Unfavorable) 2017 2016
Variance
Favorable/
(Unfavorable)
Selling, general and administrative expenses $ (24.6 ) $ (31.1 ) $ 6.5
$ (77.8 ) $ (81.8 ) $ 4.0
Miscellaneous - net (5.9 ) (19.6 ) 13.7
3.0
(16.9 ) 19.9
$ (30.5 ) $ (50.7 ) $ 20.2
$ (74.8 ) $ (98.7 ) $ 23.9
REVENUES

The following tables represent our steel shipments by product and total revenues by market:


	Three Months Ended September 30,						Nine Months Ended September 30,
(In thousands of net tons)	2023		2022		% Change		2023		2022		% Change
Steel shipments by product:
Hot-rolled steel	1,475		1,055		40	%	4,427		2,996		48	%
Cold-rolled steel	564		530		6	%	1,806		1,771		2	%
Coated steel	1,239		1,203		3	%	3,651		3,636		—	%
Stainless and electrical steel	169		196		(14)	%	524		579		(9)	%
Plate	234		228		3	%	686		687		—	%
Slab and other steel products	425		423		—	%	1,299		1,244		4	%
Total steel shipments by product	4,106		3,635		13	%	12,393		10,913		14	%

	Three Months Ended September 30,						Nine Months Ended September 30,
(In millions)	2023		2022		% Change		2023		2022		% Change
Steelmaking revenues by market:
Direct automotive	$	1,958	$	1,734	13	%	$	5,808	$	4,985	17	%
Infrastructure and manufacturing	1,427		1,462		(2)	%	4,315		4,619		(7)	%
Distributors and converters	1,321		1,468		(10)	%	4,020		5,137		(22)	%
Steel producers	737		847		(13)	%	2,234		2,740		(18)	%
Total Steelmaking revenues by market	$	5,443	$	5,511	(1)	%	$	16,377	$	17,481	(6)	%

Revenues decreased by 1% during the three months ended September 30, 2023, as compared to the prior-year period, primarily due to:

•A decrease of $147 million, or 10%, in revenues from the distributors and converters market, predominantly due to the average HRC price declining, which was partially offset by increased hot-rolled steel shipments; and

•A decrease of $110 million, or 13%, in revenues from the steel producers markets, predominantly due to the decrease in pricing indices for slabs and busheling scrap.

•These decreases were partially offset by an increase in the direct automotive market of $224 million, or 13%, primarily due to increases in selling prices as a result of favorable renewals of annual fixed-price contracts and an increase in shipments.

Revenues decreased by 6% during the nine months ended September 30, 2023, as compared to the prior-year period, primarily due to:

•A decrease of $1,117 million, or 22%, in revenues from the distributors and converters market, predominantly due to the average HRC price declining, which was partially offset by increased hot-rolled steel shipments; and

•A decrease of $506 million, or 18%, in revenues from the steel producers markets, predominantly due to the decrease in pricing indices for slabs and busheling scrap.

•These decreases were partially offset by an increase in revenues from the direct automotive market of $823 million, or 17%, predominantly due to increases in selling prices as a result of favorable renewals of annual fixed-price contracts and an increase in shipments.

GROSS MARGIN

Gross margin increased by $129 million, or 38%, during the three months ended September 30, 2023, as compared to the prior-year period, primarily due to:

•A decrease in costs of production (approximately $500 million) driven by lower raw materials and utilities costs, including natural gas, coal, coke, alloys and scrap, coupled with decreased maintenance costs; and

•An increase in sales volume (approximately $100 million impact).

•These increases in gross margin were partially offset by a decrease in selling prices (approximately $400 million impact), predominantly due to lower spot prices, which was partially offset by favorable renewals of annual fixed price contracts.

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Gross margin decreased by $1,337 million, or 53%, during the nine months ended September 30, 2023, as compared to the prior-year period, primarily due to:

•A decrease in selling prices (approximately $2.4 billion impact) predominantly due to lower spot prices, which was partially offset by favorable renewals of annual fixed price contracts.

•This decrease was partially offset by an increase in sales volume (approximately $600 million impact); and

•A decrease in costs of production (approximately $400 million) driven by lower raw materials and utilities costs, including natural gas, coal, coke, alloys and scrap, coupled with decreased maintenance costs.

ADJUSTED EBITDA

Adjusted EBITDA from our Steelmaking segment for the three months ended September 30, 2023, increased by $156 million, as compared to the three months ended September 30, 2022, primarily due to the increased gross margin from our operations. Additionally, our Steelmaking Adjusted EBITDA included $138 million and $117 million of Selling, general and administrative expenses ~~during~~ for the three months ended September 30, 2023 and 2022, respectively.

Adjusted EBITDA from our Steelmaking segment for the nine months ended September 30, 2023, decreased by $1,372 million, as compared to the nine months ended September 30, 2022, primarily due to the decreased gross margin from our operations. Additionally, our Steelmaking Adjusted EBITDA included $398 million and $331 million of Selling, general and administrative expenses for the nine months ended September 30, 2023 and 2022, respectively.

RESULTS OF OPERATIONS

REVENUES & GROSS MARGIN

During the three and nine months ended September 30, ~~2017~~2023, our consolidated Revenues decreased by ~~$6.5~~$48 million and ~~$4.0~~$1,061 million, respectively, compared to the prior-year periods. The decrease for the three months ended September 30, 2023, was primarily due to the decrease in the average steel product selling price of $157 per net ton, partially offset by the increase of 0.5 million net tons of steel shipments from our Steelmaking segment. The decrease for the ~~comparable periods~~nine months ended September 30, 2023, was primarily due to the decrease in ~~2016. The favorable variance for~~the average steel product selling price of $235 per net ton, partially offset by the increase of 1.5 million net tons of steel shipments from our Steelmaking segment.

During the three and nine months ended September 30, ~~2017 was driven~~2023, our consolidated gross margin increased by ~~$3.5~~$132 million ~~of union signing bonuses in the~~

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~~prior-year periods, which was not repeated in the 2017 periods. In addition, external services costs~~and decreased by ~~$2.0~~$1,355 million, ~~and $4.4 million~~respectively, as compared to the prior-year periods. See "— Steelmaking Results" above for further detail on our operating results.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

During the three and nine months ended September 30, ~~2017,~~2023, Selling, general and administrative expenses increased by $20 million and $67 million, respectively, as compared to the prior-year periods. ~~For the nine months ended September 30, 2017, these favorable variances~~The increases were ~~offset partially by HBI project spending of $2.2 million~~primarily related to higher employment-related costs and ~~increased employment costs of $1.0 million.~~outside legal fees.

~~The following is a summary of~~ ~~Miscellaneous~~MISCELLANEOUS - ~~net~~ ~~for~~NET

During the three and nine months ended September 30, ~~2017 and 2016:~~

(In Millions)
Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 Variance
Favorable/
(Unfavorable) 2017 2016 Variance
Favorable/
(Unfavorable)
Foreign exchange remeasurement $ (2.4 ) $ (0.3 ) $ (2.1 ) $ 11.2
$ (1.2 ) $ 12.4
Management and royalty fees 1.6
0.9
0.7
4.8
6.8
(2.0 )
Empire idle costs (5.2 ) (8.2 ) 3.0
(17.7 ) (8.2 ) (9.5 )
Michigan Electricity Matters accrual —
(12.4 ) 12.4
—
(12.4 ) 12.4
Other 0.1
0.4
(0.3 ) 4.7
(1.9 ) 6.6
$ (5.9 ) $ (19.6 ) $ 13.7
$ 3.0
$ (16.9 ) $ 19.9

~~Miscellaneous - net~~ ~~improved~~2023, miscellaneous expense decreased by ~~$13.7~~$26 million and ~~$19.9~~$78 million, respectively, as compared to the prior-year periods. The decrease in miscellaneous expense for the three ~~and nine~~ months ended September 30, ~~2017, from the comparable periods in 2016. For the three and nine months ended September 30, 2017, there~~2023, was ~~an incrementally favorable consolidated impact of~~ ~~$12.4 million~~primarily related to lower idle expenses and loss on disposal of assets as compared to the ~~FERC ruling on the Michigan Electricity Matters that was recorded~~prior-year period. The decrease in ~~the third quarter of 2016. Additionally,~~miscellaneous expense for the nine months ended September 30, ~~2017, there~~2023, was ~~an incrementally favorable impact of $12.4 million due to~~also impacted by the ~~change~~higher expenses in foreign exchange remeasurement of short-term intercompany loans and cash and cash equivalents, offset partially by an increase in Empire idle costs as the mine was indefinitely idled during August 2016.

~~Other Income (Expense)~~

~~The following is a summary of~~ ~~Other income (expense)~~ ~~for the three and nine months ended September 30, 2017 and 2016:~~

(In Millions)
Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 Variance
Favorable/
(Unfavorable) 2017 2016
Variance
Favorable/
(Unfavorable)
Interest expense, net $ (28.9 ) $ (48.7 ) $ 19.8
$ (103.1 ) $ (156.2 ) $ 53.1
Gain (loss) on extinguishment/restructuring of debt (88.6 ) (18.3 ) (70.3 ) (165.4 ) 164.1
(329.5 )
Other non-operating income 0.8
0.1
0.7
2.3
0.4
1.9
$ (116.7 ) $ (66.9 ) $ (49.8 ) $ (266.2 ) $ 8.3
$ (274.5 )

~~Interest expense, net~~ for the three and nine months ended September 30, 2017, had a favorable variance of $19.8 million and $53.1 million, respectively, versus the comparable prior-year periods, predominantly as a result of the debt restructuring activities that occurred throughout 2017. These debt restructurings resulted in a net reduction of the outstanding principal balance of our secured and unsecured senior notes and lowered our effective interest rate.

~~The loss on extinguishment/restructuring of debt for the nine months ended September 30, 2017 was $165.4 million~~2022 related to ~~the repurchase~~our asset retirement obligation, which was caused by rising electricity costs associated with water management systems at closed coal mines in Pennsylvania and an impairment expense, both of certain of our unsecured senior notes and the redemption in full of all of our outstanding secured notes compared to a gain of $164.1 million related to the issuance of our 1.5 Lien Notes through the exchange offer on March 2, 2016.which were not repeated during 2023.

~~Refer to NOTE 5 - DEBT AND CREDIT FACILITIES for further discussion.~~

~~Table of Contents~~

~~Income Taxes~~INCOME TAXES

Our effective tax rate is impacted by state income tax expense and permanent items, ~~such as depletion and the relative mix of income we earn in various foreign jurisdictions with tax rates that differ from the U.S. statutory rate.~~primarily depletion. It also is affected by discrete items that may occur in any given period but are not consistent from period to period. The following represents a summary of our tax provision and corresponding effective ~~rates~~rates:


	Three Months Ended September 30,						Nine Months Ended September 30,
(In millions)	2023			2022			2023			2022
Income tax expense	$	(29)		$	(10)		$	(118)		$	(404)
Effective tax rate	10		%	6		%	17		%	20		%

The changes in income tax expense and the effective tax rate for the three and nine months ended September 30, ~~2017 and 2016:~~

(In Millions)
Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 Variance 2017 2016 Variance
Income tax benefit $ 7.6
$ 7.1
$ 0.5
$ 6.8
$ 1.7
$ 5.1
Effective tax rate (58.5 )% 22.1 % (80.6 )% (11.3 )% (1.5 )% (9.8 )%

~~A reconciliation of the statutory rate~~2023, as compared to the ~~effective tax rate~~prior-year periods, are primarily related to the changes in pre-tax income. Additionally, for the nine months ended September 30, ~~2017 is~~2023, we had $18 million of discrete benefit, as ~~follows:~~

(In Millions)
Nine Months Ended September 30,
2017 2016
Tax at U.S. statutory rate of 35% $ 21.0
35.0 % $ 41.1
35.0 %
Increases/(Decreases) due to:
Percentage depletion (21.6 ) (36.0 ) (21.9 ) (18.7 )
Worthless stock deduction —
—
(45.4 ) (38.7 )
State taxes 1.1
1.8
2.7
2.4
Impact of foreign operations 3.8
6.3
(0.9 ) (0.8 )
Non-taxable income related to noncontrolling interest 0.4
0.7
(4.3 ) (3.7 )
Valuation allowance build (reversal) on current year operations (5.7 ) (9.4 ) 28.4
24.2
Other items - net —
(0.1 ) 0.8
0.7
Income tax expense (benefit) and effective income tax rate before discrete items (1.0 ) (1.7 ) 0.5
0.4
Discrete Items:
Valuation allowance (reversal) on prior year assets —
—
(23.9 ) (20.4 )
Tax uncertainties (1.2 ) (1.9 ) 0.7
0.6
Prior-year adjustments made in current year (4.6 ) (7.7 ) 21.0
17.9
Income tax benefit and effective income tax rate including discrete items $ (6.8 ) (11.3 )% $ (1.7 ) (1.5 )%

~~Our tax provision~~compared to $3 million of discrete expense for the nine months ended September 30, ~~2017 was a benefit~~2022.

Table of ~~$6.8 million and a negative 11.3% effective tax rate compared with a benefit of $1.7 million and a negative 1.5% effective tax rate for the comparable prior-year period.~~Contents

For the three and nine months ended September 30, 2017, we recorded discrete items that resulted in an income tax benefit of $5.9 million and $5.8 million, respectively. These items relate primarily to the monetization of unused AMT credits upon the filing of the 2016 U.S. federal income tax return and adjustments to reserves for uncertain tax positions. For the three and nine months ended September 30, 2016, there were discrete items that resulted in an income tax benefit of $2.9 million and $2.2 million, respectively. These items related primarily to prior year adjustments due to a change in estimate of the 2015 net operating loss and corresponding reversal of valuation allowance and quarterly interest accrued on reserves for uncertain tax positions.

Our ~~2017~~2023 estimated annual effective tax rate before discrete items at September 30, 2023 is ~~negative 1.7%~~19%. This estimated annual effective tax rate ~~differs from~~is less than the U.S. statutory rate of ~~35% primarily due to~~21%, as state income tax expense is less than the ~~deductions for~~ percentage depletion in excess of cost ~~depletion related to U.S. operations and the reversal of valuation allowance from operations in the current year.~~

~~Table of Contents~~

~~Income (Loss) from Discontinued Operations, net of~~depletion. The 2022 estimated annual effective tax

~~During the three months ended~~ rate before discrete items at September 30, ~~2017, the Wabush Scully Mine~~2022 was sold as part of the ongoing CCAA proceedings. As part of this transaction, we were required to fund the buyer's financial assurance shortfall of $7.7 million in order to complete the conveyance of the environmental remediation obligations to the buyer, which released us from our guarantees and resulted in a net gain of $31.4 million in ~~Income (loss) from discontinued operations, net of tax.~~ During the nine months ended September 30, 2017, we recorded a net loss from discontinued operations, net of tax, of $13.6 million, primarily due to recording an estimated liability of $50.0 million related to the probable assertion of a preference claim against the Company which is classified as ~~Contingent claims~~ in the Statements of Unaudited Condensed Consolidated Financial Position, partially offset by the gain discussed above. We recorded a loss from discontinued operations of $2.7 million and $0.6 million, net of tax, for the three and nine months ended September 30, 2016, respectively. Refer to NOTE 18 - COMMITMENTS20%.

LIQUIDITY, CASH FLOWS AND ~~CONTINGENCIES for additional information.~~CAPITAL RESOURCES

~~Noncontrolling Interest~~OVERVIEW

During the third quarter of 2017, our ownership interest in Empire increased to 100% as we reached an agreement to distribute the noncontrolling interest net assets for $132.7 million to ArcelorMittal in exchange for its interest in Empire. The agreement had no direct impact on the ~~Loss (income) attributable to noncontrolling interest~~ in the Statements of Unaudited Condensed Consolidated Operations. However, for the nine months ended September 30, 2017, the Empire mine was indefinitely idled resulting in a loss attributable to the noncontrolling interest of $3.9 million. In comparison, during the nine months ended September 30, 2016, the Empire mine was operating and had income of $23.5 million attributable to the noncontrolling interest.

~~Table of Contents~~

~~Results of Operations – Segment Information~~

We evaluate segment performance based on sales margin, defined as revenues less cost of goods sold and operating expenses identifiable to each segment. Additionally, we evaluate performance on a segment basis, as well as a consolidated basis, based on EBITDA and Adjusted EBITDA. These measures allow management and investors to focus on our ability to service our debt as well as illustrate how the business and each operating segment are performing. Additionally, EBITDA and Adjusted EBITDA assist management and investors in their analysis and forecasting as these measures approximate the cash flows associated with operational earnings.

~~EBITDA and Adjusted EBITDA~~

(In Millions)
Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
Net Income (Loss) $ 52.9
$ (27.8 ) $ 53.2
$ 118.5
Less:
Interest expense, net (28.9 ) (48.7 ) (103.1 ) (156.2 )
Income tax benefit 7.6
7.1
6.8
1.7
Depreciation, depletion and amortization (21.5 ) (26.8 ) (66.3 ) (88.9 )
EBITDA $ 95.7
$ 40.6
$ 215.8
$ 361.9
Less:
Gain (loss) on extinguishment/restructuring of debt $ (88.6 ) $ (18.3 ) $ (165.4 ) $ 164.1
Foreign exchange remeasurement (2.4 ) (0.3 ) 11.2
(1.2 )
Impact of discontinued operations 32.3
(2.7 ) (13.6 ) (0.6 )
Severance and contractor termination costs —
—
—
(0.1 )
Adjusted EBITDA $ 154.4
$ 61.9
$ 383.6
$ 199.7

EBITDA:
U.S. Iron Ore $ 168.9
$ 61.1
$ 381.8
$ 196.6
Asia Pacific Iron Ore 2.3
21.2
54.9
69.6
Other (75.5 ) (41.7 ) (220.9 ) 95.7
Total EBITDA $ 95.7
$ 40.6
$ 215.8
$ 361.9

Adjusted EBITDA:
U.S. Iron Ore $ 174.2
$ 65.3
$ 399.8
$ 208.6
Asia Pacific Iron Ore 4.9
23.7
61.7
73.2
Other (24.7 ) (27.1 ) (77.9 ) (82.1 )
Total Adjusted EBITDA $ 154.4
$ 61.9
$ 383.6
$ 199.7

EBITDA increased $55.1 million and decreased $146.1 million for the three and nine months ended September 30, 2017, respectively, on a consolidated basis from the comparable periods in 2016. In the third quarter of 2017, EBITDA was favorably impacted by an increase in sales margin of $74.8 million compared to the prior-year period and a net gain from discontinued operations, net of tax, of $32.3 million. These increases were offset partially by an incrementally negative impact of $70.3 million from debt extinguishment/restructuring activities during the three months ended September 30, 2017 compared to the prior-year period. The unfavorable variance in EBITDA for the nine months ended September 30, 2017 was driven primarily by an incrementally negative impact of $329.5 million from debt extinguishment/restructuring activities compared to the prior-year period, offset partially by an increase in sales margin of $193.2 million compared to the prior-year period.

~~Table of Contents~~

Adjusted EBITDA increased $92.5 million and $183.9 million for the three and nine months ended September 30, 2017, respectively, from the comparable period in 2016. The increase primarily was attributable to higher consolidated sales margins of $74.8 million and $193.2 million for the three and nine months ended September 30, 2017, respectively, compared to the prior-year periods. Refer to further detail below for additional information regarding the specific factors that impacted each reportable segment's sales margin during the three and nine months ended September 30, 2017 and 2016.

~~2017~~ ~~Compared to~~ ~~2016~~

~~U.S. Iron Ore~~

~~The following is a summary of U.S. Iron Ore results for the three months ended~~ ~~September 30, 2017~~ ~~and~~ ~~2016~~:

(In Millions)
Changes due to:
Three Months Ended
September 30,
Revenue
and cost rate
Sales volume Idle cost/production volume variance Freight and reimburse-ment Total change
2017 2016
Revenues from product sales and services $ 596.7
$ 428.3
$ 100.5
$ 41.5
$ —
$ 26.4
$ 168.4
Cost of goods sold and operating expenses (439.5 ) (361.8 ) (29.5 ) (31.2 ) 9.4
(26.4 ) (77.7 )
Sales margin $ 157.2
$ 66.5
$ 71.0
$ 10.3
$ 9.4
$ —
$ 90.7

(in Millions)
Three Months Ended
September 30,
Per Ton Information 2017 2016 Difference Percent change
Realized product revenue rate¹
$ 90.50
$ 73.50
$ 17.00
23.1 %
Cash cost of goods sold and operating expense rate^1,2
60.87
57.37
3.50
6.1 %
Depreciation, depletion & amortization 2.81
3.56
(0.75 ) (21.1 )%
Total cost of goods sold and operating expenses rate 63.68
60.93
2.75
4.5 %
Sales margin $ 26.82
$ 12.57
$ 14.25
113.4 %

Sales tons³ (In thousands)
5,863
5,287

Production tons³(In thousands)

Total 6,048
5,722

Cliffs’ share of total 4,265
3,857

¹ Excludes revenues and expenses related to domestic freight, which are offsetting and have no impact on sales margin. Revenues and expenses also exclude venture partner cost reimbursements.
² Cash cost of goods sold and operating expense rate is a non-GAAP financial measure. Refer to "Non-GAAP Reconciliation" for reconciliation in dollars back to our consolidated financial statements.
³ Tons are long tons.

Sales margin for U.S. Iron Ore was $157.2 million for the three months ended September 30, 2017, compared with $66.5 million for the three months ended September 30, 2016. Sales margin per long ton increased 113.4% to $26.82 during the three months ended September 30, 2017, compared to the three months ended September 30, 2016.

Revenue increased by $142.0 million during the three months ended September 30, 2017, compared to the prior-year period, excluding the freight and reimbursements increase of $26.4 million, predominantly due to:

An increase in the average year-to-date realized product revenue rate of $17 per long ton or 23.1% during the three months ended September 30, 2017, compared to the same period in the previous year, which resulted in an increase of $101 million. This is predominantly due to:

~~Table of Contents~~


◦	~~An increase in Platts 62% Price, which positively affected the realized revenue rate by $9 per long ton or $55 million;~~


◦	~~Higher pellet premiums, which positively affected the realized revenue rate by $5 per long ton or $31 million; and~~


◦	~~An increase in the average annual daily market price for hot-rolled coil steel, which positively affected the realized revenue rate by $5 per long ton or $30 million.~~


◦	These increases were offset partially by higher index freight rates, a component in some of our contract pricing formulas, which negatively affected the realized revenue rate by $4 per long ton or $22 million.

~~Higher sales volumes of 0.6 million long tons, which resulted in increased revenue of $42 million. This is predominantly due to:~~


◦	Increased demand from a customer during the third quarter of 2017, providing additional sales volume of 0.7 million long tons, compared to the prior-year period when the customer had sufficient inventory due to the idle of one of its facilities and additional suppliers;


◦	~~Increased exports as a result of advantageous market pricing during the third quarter of 2017, providing additional sales volume of 0.5 million long tons, compared to the prior-year period; and~~


◦	~~Increased demand from a customer during the third quarter of 2017, providing additional sales volume of 0.3 million long tons, due to the customer's lack of storage space in the prior-year period.~~


◦	These increases were offset partially due to engaging in no spot contracts during the third quarter of 2017, resulting in a decrease in sales volume of 0.9 million long tons compared to the prior-year period.

Cost of goods sold and operating expenses increased $51.3 million during the three months ended September 30, 2017, excluding the freight and reimbursements increase of $26.4 million, compared to the same period in 2016, predominantly as a result of:

Higher spending on repairs and maintenance of $15 million or $3 per long ton, higher profit sharing and benefit costs of $10 million or $2 per long ton, and higher energy rates for natural gas, diesel and electricity of $5 million or $1 per long ton; and

~~Increased sales volumes of 0.6 million long tons, which resulted in increased costs of $31 million period-over-period.~~

~~Partially offset by decreased costs of $9 million or $2 per long ton due to the idle of the United Taconite and Northshore mines during the prior-year period compared to the 2017 period.~~

~~Table of Contents~~

~~2017~~ ~~Compared to~~ ~~2016~~

~~U.S. Iron Ore~~

~~The following is a summary of U.S. Iron Ore results for the nine months ended~~ ~~September 30, 2017~~ ~~and~~ ~~2016~~:

(In Millions)
Changes due to:
Nine Months Ended
September 30,
Revenue
and cost rate
Sales volume Idle cost/production volume variance Freight and reimburse-ment Total change
2017 2016
Revenues from product sales and services $ 1,354.2
$ 975.5
$ 173.3
$ 150.2
$ —
$ 55.2
$ 378.7
Cost of goods sold and operating expenses (1,004.4 ) (825.8 ) (69.7 ) (108.3 ) 54.6
(55.2 ) (178.6 )
Sales margin $ 349.8
$ 149.7
$ 103.6
$ 41.9
$ 54.6
$ —
$ 200.1

(in Millions)
Nine Months Ended
September 30,
Per Ton Information 2017 2016 Difference Percent change
Realized product revenue rate¹
$ 89.91
$ 76.82
$ 13.09
17.0 %
Cash cost of goods sold and operating expense rate^1,2
59.86
57.89
1.97
3.4 %
Depreciation, depletion & amortization 3.73
5.74
(2.01 ) (35.0 )%
Total cost of goods sold and operating expenses rate 63.59
63.63
(0.04 ) (0.1 )%
Sales margin $ 26.32
$ 13.19
$ 13.13
99.5 %

Sales tons³ (In thousands)
13,291
11,343

Production tons³(In thousands)

Total 18,353
16,622

Cliffs’ share of total 13,233
11,059

¹ Excludes revenues and expenses related to domestic freight, which are offsetting and have no impact on sales margin. Revenues and expenses also exclude venture partner cost reimbursements.
² Cash cost of goods sold and operating expense rate is a non-GAAP financial measure. Refer to "Non-GAAP Reconciliation" for reconciliation in dollars back to our consolidated financial statements.
³ Tons are long tons.

Sales margin for U.S. Iron Ore was $349.8 million for the nine months ended September 30, 2017, compared with $149.7 million for the nine months ended September 30, 2016. Sales margin per long ton increased 99.5% to $26.32 in the first nine months of 2017 compared to the first nine months of 2016.

Revenue increased by $323.5 million during the nine months ended September 30, 2017, compared to the prior-year period, excluding the freight and reimbursements increase of $55.2 million, predominantly due to:

An increase in the average year-to-date realized product revenue rate of $13 per long ton or 17.0% during the nine months ended September 30, 2017, compared to the same period in the previous year, which resulted in an increase of $173 million. This is predominantly due to:


◦	~~An increase in Platts 62% Price, which positively affected the realized revenue rate by $11 per long ton or $146 million;~~


◦	~~An increase in the average annual daily market price and customer pricing for hot-rolled coil steel, which positively affected the realized revenue rate by $6 per long ton or $78 million; and~~


◦	~~Higher pellet premiums, which positively affected the realized revenue rate by $5 per long ton or $63 million.~~

~~Table of Contents~~


◦	~~These increases were offset partially by changes in customer and contract mix and carryover pricing impacts, which negatively affected the realized revenue rate by $6 per long ton or $84 million; and~~


◦	~~Higher index freight rates, a component in some of our contract pricing formulas, which negatively affected the realized revenue rate by $3 per long ton or $38 million.~~

~~Higher sales volumes of 1.9 million long tons, which resulted in increased revenues of $150 million predominantly due to:~~


◦	Increased demand from a customer during the nine months ended September 30, 2017, providing additional sales volume of 1.8 million long tons, compared to the prior-year period when the customer had sufficient inventory due to the idle of one of its facilities and additional suppliers;


◦	Additional sales volume of 1.7 million long tons to a customer in the nine months ended September 30, 2017, compared to the prior-year period due to timing of shipments, increased demand due to higher operational levels in the current year and higher inventory levels in the prior year; and


◦	Increased demand from a customer during the nine months ended September 30, 2017, providing additional sales volume of 1.2 million long tons, resulting from the fourth quarter of 2015 termination of its contract, which was then reinstated and became effective during the first quarter of 2017.


◦	These increases were offset partially due to engaging in no spot contracts with two customers during the third quarter of 2017, resulting in a decrease in sales volume of 2.1 million long tons compared to the prior-year period; and


◦	~~Decreased sales from a customer due to timing and a transitioning to our Mustang pellet, resulting in a decrease in sales volume of 0.9 million long tons compared to the prior-year period.~~

Cost of goods sold and operating expenses increased $123.4 million during the nine months ended September 30, 2017, excluding the freight and reimbursements increase of $55.2 million, compared to the same period in 2016, predominantly as a result of:

~~Increased sales volumes as discussed above which resulted in increased costs of $108 million period-over-period; and~~

Higher spending on repairs and maintenance of $33 million or $3 per long ton, higher profit sharing and benefit costs of $22 million or $2 per long ton, and higher energy rates for natural gas, diesel and electricity of $12 million or $1 per long ton.

~~These increases were offset partially by decreased idle costs of $55 million or $4 per long ton due to the idle of the United Taconite and Northshore mines during the prior-year period.~~

~~Production~~

Cliffs' share of production in its U.S. Iron Ore segment increased by 19.7% in the first nine months of 2017 when compared to the same period in 2016. The increase in production volume primarily is attributable to all mining facilities fully operating compared to the various idled operations during the previous-year period. United Taconite was fully operating during the first nine months of 2017, adding an incremental 3.1 million long tons of production, compared to the previous year's production levels as a result of being idled until it was restarted again in August 2016. Secondly, Northshore added incremental tonnage of 2.0 million long tons during the first nine months of 2017, when it was substantially at full production, compared to its previous year's production tonnage when it was fully idled for the first four months of 2016. These production gains were offset partially by the indefinite idle of the Empire mine in August 2016, lowering production by 2.7 million long tons, compared to the prior-year period when the mine was operating.

~~Table of Contents~~

~~Asia Pacific Iron Ore~~

~~The following is a summary of Asia Pacific Iron Ore results for the three months ended~~ ~~September 30, 2017~~ ~~and~~ ~~2016~~:

(In Millions)
Change due to:
Three Months Ended
September 30,
Revenue
and cost rate
Sales volume Exchange rate Freight and reimburse-ment Total change
2017 2016
Revenues from product sales and services $ 101.7
$ 125.0
$ 2.3
$ (25.6 ) $ 0.2
$ (0.2 ) $ (23.3 )
Cost of goods sold and operating expenses (98.7 ) (106.1 ) (10.4 ) 21.4
(3.8 ) 0.2
7.4
Sales margin $ 3.0
$ 18.9
$ (8.1 ) $ (4.2 ) $ (3.6 ) $ —
$ (15.9 )

(in Millions)
Three Months Ended
September 30,
Per Ton Information 2017 2016 Difference Percent change
Realized product revenue rate¹
$ 43.36
$ 42.87
$ 0.49
1.1 %
Cash cost of goods sold and operating expense rate^1,2
40.54
33.87
6.67
19.7 %
Depreciation, depletion & amortization 1.48
2.25
(0.77 ) (34.2 )%
Total cost of goods sold and operating expenses rate 42.02
36.12
5.90
16.3 %
Sales margin $ 1.34
$ 6.75
$ (5.41 ) (80.1 )%

Sales tons³ (In thousands)
2,235
2,799

Production tons³(In thousands)
2,477
2,968

¹ The information above excludes revenues and expenses related to freight, which are offsetting and have no impact on sales margin.
² Cash cost of goods sold and operating expense rate is a non-GAAP financial measure. Refer to "Non-GAAP Reconciliation" for reconciliation in dollars back to our consolidated financial statements.

³ Tons are metric tons.

Sales margin for Asia Pacific Iron Ore decreased to $3.0 million for the three months ended September 30, 2017 compared with $18.9 million for the three months ended September 30, 2016. Sales margin per metric ton decreased 80.1% to $1.34 during the three months ended September 30, 2017, compared to the three months ended September 30, 2016.

Revenue decreased $23.1 million during the three months ended September 30, 2017, compared to the prior-year period, excluding the freight and reimbursements decrease of $0.2 million, predominantly due to:

Decreased sales volume of 0.6 million metric tons, or 20.2%, to 2.2 million metric tons in the third quarter of 2017, compared to the prior-year period. The decrease was driven primarily by lower production volumes, a result of operational decisions reflecting current market conditions and quality ore availability which resulted in decreased revenue of $26 million compared to the prior-year period.

This decrease was offset partially by an increase in average year-to-date realized product revenue of $0.49 per metric ton or 1.1% during the three months ended September 30, 2017, compared to the same period in the previous year, which resulted in an increase of $2.5 million, including the impact of foreign exchange. This increase is predominantly a result of:


◦	~~An increase in the Platts 62% Price, which positively affected the realized revenue rate by $12 per metric ton or $26 million.~~

~~Table of Contents~~


◦	This increase was offset partially by a decrease in revenue rate of $11 per metric ton or $24 million due to price and quality adjustments to meet market conditions and to compensate for varying quality ores and a reduction in iron content.

Cost of goods sold and operating expenses decreased $7.2 million during the three months ended September 30, 2017, compared to the same period in 2016, excluding the freight and reimbursements decrease of $0.2 million, predominantly as a result of:

~~Decreased sales volume of 0.6 million metric tons as discussed above which resulted in decreased costs of $21 million period-over-period.~~

This decrease was offset partially by an increase in production costs of $10 million or $5 per metric ton, predominantly due to increased mining costs driven by a higher strip ratio, higher logistic costs driven by increased freight rates, and higher administrative costs; and

~~Unfavorable foreign exchange rate variances of $4 million or $2 per metric ton.~~

~~Asia Pacific Iron Ore~~

~~The following is a summary of Asia Pacific Iron Ore results for the nine months ended September 30, 2017 and 2016:~~

(In Millions)
Change due to:
Nine Months Ended
September 30,
Revenue
and cost rate
Sales volume Exchange rate Freight and reimburse-ment Total change
2017 2016
Revenues from product sales and services $ 375.1
$ 379.5
$ 35.0
$ (42.3 ) $ (0.9 ) $ 3.8
$ (4.4 )
Cost of goods sold and operating expenses (323.9 ) (321.4 ) (23.8 ) 34.8
(9.7 ) (3.8 ) (2.5 )
Sales margin $ 51.2
$ 58.1
$ 11.2
$ (7.5 ) $ (10.6 ) $ —
$ (6.9 )

(in Millions)
Nine Months Ended
September 30,
Per Ton Information 2017 2016 Difference Percent change
Realized product revenue rate¹
$ 46.03
$ 41.99
$ 4.04
9.6 %
Cash cost of goods sold and operating expense rate^1,2
37.98
33.11
4.87
14.7 %
Depreciation, depletion & amortization 1.46
2.21
(0.75 ) (33.9 )%
Total cost of goods sold and operating expenses rate 39.44
35.32
4.12
11.7 %
Sales margin $ 6.59
$ 6.67
$ (0.08 ) (1.2 )%

Sales tons³ (In thousands)
7,763
8,705

Production tons³(In thousands)
7,910
8,575

¹ The information above excludes revenues and expenses related to freight, which are offsetting and have no impact on sales margin.
² Cash cost of goods sold and operating expense rate is a non-GAAP financial measure. Refer to "Non-GAAP Reconciliation" for reconciliation in dollars back to our consolidated financial statements.
³ Tons are metric tons.

Sales margin for Asia Pacific Iron Ore decreased to $51.2 million for the nine months ended September 30, 2017, compared with $58.1 million for the nine months ended September 30, 2016. Sales margin per metric ton decreased 1.2% to $6.59 for the nine months ended September 30, 2017, compared to the nine months ended September 30, 2016.

~~Table of Contents~~

~~Revenue decreased $8.2 million in the nine months ended September 30, 2017, compared to the prior-year period, excluding the freight and reimbursements increase of $3.8 million, predominantly due to:~~

Decreased sales volume of 0.9 million metric tons, or 10.8%, to 7.8 million metric tons during the nine months ended September 30, 2017 compared to the prior-year period. The decrease in tons sold was driven by lower production, as discussed below, which limited our ability to engage in short-term contract sales and resulted in decreased revenue of $42 million during the nine months ended September 30, 2017 compared to the prior-year period.

This decrease was offset partially by an increase in the average year-to-date realized product revenue rate of $4 per metric ton or 9.6% during the nine months ended September 30, 2017, compared to the same period in the previous year, which resulted in an increase of $34 million, including the impact of foreign exchange. This increase is predominantly a result of:


◦	~~An increase in the Platts 62% Price, which positively affected the realized revenue rate by $18 per metric ton or $141 million.~~


◦	This increase was offset partially by a decrease in revenue rate of $10 per metric ton or $79 million due to price and quality adjustments to meet market competition and to compensate for varying quality ores and a reduction in iron content; and


◦	~~Higher average Western Australia to China freight rates, a component in some of our contract pricing formulas, unfavorably affected the revenue rate by $3 per metric ton or $21 million.~~

Cost of goods sold and operating expenses decreased $1.3 million during the nine months ended September 30, 2017 compared to the same period in 2016, excluding the freight and reimbursements increase of $3.8 million, predominantly as a result of:

~~A decrease in sales volume of 0.9 million metric tons, which decreased costs by $35 million.~~

This decrease was offset partially by an increase in production costs of $24 million or $3 per metric ton, predominantly due to increased mining costs driven by a higher strip ratio and increased administrative costs; and

~~Unfavorable foreign exchange rate variances of $10 million or $1 per metric ton.~~

~~Production~~

Production at our Asia Pacific Iron Ore mining complex decreased by 7.8% or 0.7 million metric tons during the first nine months of 2017 compared to the same period in 2016 driven by operational decisions to reflect current market conditions and quality ore availability.

~~Liquidity, Cash Flows and Capital Resources~~

~~Our primary sources of liquidity are cash generated from our operating and financing activities.~~ Our capital allocation decision-making process is focused on ~~improving~~preserving healthy liquidity levels while maintaining the strength of our balance sheet and creating financial flexibility to manage through the ~~inherent~~ cyclical demand for our products and volatility in commodity prices. We are focused on ~~the preservation of liquidity in our business through~~ maximizing the cash generation of our operations, ~~as well as~~ reducing ~~operating costs,~~debt, returning capital to shareholders and aligning capital investments with our strategic priorities and the requirements of our business plan, including regulatory and permission-to-operate related ~~projects,~~projects.

The following table provides a summary of our cash flow:


	Nine Months Ended September 30,
(In millions)	2023		2022
Cash flows provided by (used in):
Operating activities	$	1,615	$	1,934
Investing activities	(470)		(727)
Financing activities	(1,140)		(1,199)
Net increase in cash and cash equivalents	$	5	$	8

Free cash flow1	$	1,134	$	1,218

1See "— Non-GAAP Financial Measures" for a reconciliation of our free cash flow.

The recent market environment has provided us opportunities to reduce our debt and ~~managing SG&A expenses.~~

return capital to shareholders with our free cash flow generation. We also continue to look at the composition of our debt, as we are interested in both extending our average maturity length and increasing our ratio of unsecured debt to secured debt, which can be accomplished with cash provided by operating activities. During the first nine months ~~ended September 30, 2017,~~of 2023, we took action ~~consistent~~in alignment with our capital allocation priorities, ~~and our stated objective of improving the strength of our balance sheet. Through the issuance of common shares in an underwritten public offering resulting in net proceeds of $661.3~~as follows:

•We issued $750 million ~~and two debt offerings for an~~ aggregate principal amount of ~~$1.075 billion, we extinguished $1.611 billion~~our 6.750% 2030 Senior Notes. The net proceeds from the 6.750% 2030 Senior Notes issuance were used to repay a portion of the borrowings under our ABL Facility. The transaction increased our financial flexibility and liquidity, extended our debt maturity profile, and was effectively leverage and interest expense neutral.

•We entered into the Fourth ABL Amendment, which, among other things, extended the maturity date of our ~~existing debt, thereby lowering~~ABL Facility to June 9, 2028, and increased the overall size of our ABL Facility to $4.75 billion, which added $250 million of liquidity.

•We used our free cash flow to reduce the total principal of our long-term debt by ~~$503.2~~$789 million. This includes a reduction of borrowings under the ABL Facility of $508 million ~~decreasing~~during the third quarter of 2023.

•Additionally, we returned capital to shareholders through our ~~overall average interest rate~~share repurchase program, repurchasing 10.4 million common shares at a cost of $152 million in the aggregate. This includes repurchasing 3.9 million common shares at a cost of $58 million during the third quarter of 2023.

These actions with respect to ~~5.71%~~our debt give us additional financial flexibility and liquidity, along with extending our ~~debt maturities.~~average maturity date, which will better prepare us to navigate more easily through potentially volatile industry conditions in the future.

~~Based on our outlook for the next twelve months, which is subject to continued changing demand from steel makers that utilize our products and volatility in iron ore and domestic steel prices,~~Additionally, we expect to ~~generate cash from operations sufficient~~have opportunities to ~~meet the needs of our existing operations and~~continue to ~~service~~reduce our debt ~~obligations. However,~~and return capital to shareholders with our free cash flow generation during the remainder of 2023. As of September 30, 2023, we do not anticipate generating cash from operations sufficient to meet the additional capital spend associated with the HBI project. We have several options available to us to address this potential shortfall, including the cash on our balance

~~Table~~maintained in excess of ~~Contents~~

~~sheet, availability~~$300 million in pre-payable debt under our ABL Facility ~~access~~and another $1.5 billion in callable notes. As of September 30, 2023, there was $608 million remaining under the authorization of our share repurchase program.

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CASH FLOWS

OPERATING ACTIVITIES


	Nine Months Ended September 30,
(In millions)	2023		2022		Variance
Net income	$	589	$	1,580	$	(991)
Non-cash adjustments to net income	872		1,097		(225)
Working capital:
Accounts receivable, net	(164)		(145)		(19)
Inventories	538		(348)		886
Income taxes	16		(109)		125
Pension and OPEB payments and contributions	(84)		(174)		90
Payables, accrued employment and accrued expenses	(95)		66		(161)
Other, net	(57)		(33)		(24)
Total working capital	154		(743)		897
Net cash provided by operating activities	$	1,615	$	1,934	$	(319)

The variance was driven by:

•A $1,216 million decrease in net income after adjustments for non-cash items primarily due to ~~capital markets or~~lower gross margins resulting from a decrease in selling prices for our steel products, which was partially offset by ~~obtaining~~an increase in sales volumes and a ~~partner or partners~~decrease in costs of production. See "— Steelmaking Results" above for ~~the HBI project.~~further detail on our operating results.

~~Refer~~•A $897 million decrease in cash used for working capital. This was primarily due to ~~“Outlook” for additional guidance regarding expected future results, including projections on~~a decrease in inventories, as a result of higher sales ~~volume~~volumes and ~~production.~~

~~The following discussion summarizes the significant activities impacting our cash flows~~lower production costs during the nine months ended September 30, ~~2017~~2023, as compared to the prior-year period. Cash used for OPEB payments and ~~2016~~contributions decreased as well due to reductions in retiree healthcare costs and the pause on the VEBA trust plans funding requirements as ~~known expected impacts to our future cash flows over~~part of the ~~next 12 months. Refer~~2022 USW labor negotiations. Additionally, working capital was impacted by a decrease in repair and maintenance costs during the nine months ended September 30, 2023.

INVESTING ACTIVITIES


	Nine Months Ended September 30,
(In millions)	2023		2022		Variance
Purchase of property, plant and equipment	$	(481)	$	(716)	$	235
Acquisitions, net of cash acquired	—		(31)		31
Other	11		20		(9)
Net cash used by investing activities	$	(470)	$	(727)	$	257

Cash used for capital expenditures decreased $235 million due to the ~~Statements~~completion of ~~Unaudited Condensed Consolidated Cash Flows~~our major maintenance cycle in 2022. Included within cash used for ~~additional information.~~

~~Operating Activities~~

~~Net cash provided by operating activities~~capital expenditures was ~~$206.7 million and $72.1~~$21 million for the nine months ended September 30, ~~2017 and 2016, respectively. The increase in cash provided by operating activities in the first nine months of 2017 was primarily due~~2023, compared to the improved operating results previously discussed related to our U.S. Iron Ore operating segment offset partially by cash outflows for working capital. The working capital change for the first nine months of 2017 versus the first nine months of 2016 was primarily driven by the timing of inventory and accounts receivable movements.

We believe we have sufficient capital resources for the next 12 months to support our operations and other financial obligations through cash generated from operations and our financing arrangements augmented by our efficient tax structure that allows us to repatriate cash from our foreign operations, if necessary. Our U.S. cash and cash equivalents balance at September 30, 2017 was $200.9 million, or approximately 77.0% of our consolidated total cash and cash equivalents balance of $260.8 million.

~~Investing Activities~~

~~Net cash used by investing activities was $84.4~~$11 million for the nine months ended September 30, ~~2017, compared with $39.5 million for the comparable period in 2016. We spent approximately $34 million and $31 million globally on~~2022, related to our non-owned SunCoke Middletown VIE. Our capital expenditures ~~related~~primarily relate to sustaining capital ~~during the nine months ended September 30, 2017 and 2016, respectively. Sustaining capital~~ spend, which includes infrastructure, mobile equipment, ~~environment, safety,~~ fixed equipment, product quality, environmental, and health. Additionally, during the first nine months of 2017, we spent approximately $40 million on our capital project to produce a specialized, super-flux pellet called "Mustang" at United Taconite in order to meet a customer's pellet specification requirements. We have spent a total of approximately $72 million on the project to datehealth and ~~expect the remaining payments of $4 million to be paid during the fourth quarter of 2017.~~safety.

~~In alignment with our strategy to prioritize our capital allocation between liquidity management and business investment, we~~We anticipate total cash used for capital expenditures during the next ~~twelve~~12 months to be ~~approximately $270~~between $675 and $725 million, ~~the vast majority~~which primarily consists of ~~which relates to~~sustaining capital spend. With our ~~U.S. operations. Included within this estimate is approximately $130 million related to development of the HBI production plant in Toledo, Ohio~~facilities and $40 million for upgrades at the Northshore plant to enable it to produce significantly increased levels of DR-grade pellets that could be sold commercially or used as feedstock for the HBI production plant. In total, we expect to spend approximately $700 million on the HBI production plant and $75 million on the Northshore upgrades, exclusive of construction-related contingencies and capitalized interest, through 2020.

~~Financing Activities~~

~~Net cash used by financing activities~~equipment in the ~~first nine months of 2017 was $188.6 million, compared to $186.0 million for~~best shape since the ~~comparable period in 2016. Uses of cash for financing activities during the first nine months of 2017 included the redemption of various tranches of secured and unsecured debt. We redeemed in full all~~acquisition of our outstanding 8.25% Senior Secured Notes due 2020, 8.00% 1.5 Lien Notes due 2020 and 7.75% Second Lien Notes due 2020 and purchased certain other outstanding senior notes through tender offers and redemptions. The total aggregate principal amount of debt redeemed and purchased, including premiums, during the first nine months of 2017 was $1.721 billion. To fund the redemptions mentioned above,steelmaking assets, we utilized cash provided by financing activities during the first nine months of 2017, which included a common share offering, generating net proceeds of $661.3 million, and the issuance of $1.075 billion aggregate principal amount of 5.75% Senior Notes due 2025, which provided further net proceeds of approximately $1.046 billion.do not expect any major investments until at least 2026.

Additionally, we finalized an agreement to distribute the net assets of the noncontrolling interest in Empire to ArcelorMittal in exchange for its interest in Empire and made the first distribution of approximately $44.2 million. The remaining annual installments of $44.2 million are due in August 2018 and August 2019. We also acquired the remaining 15% equity interest in Tilden owned by U.S. Steel for $105.0 million.FINANCING ACTIVITIES


	Nine Months Ended September 30,
(In millions)	2023		2022		Variance

Proceeds (repayments) of senior notes	$	750	$	(1,355)	$	2,105
Net borrowings (repayments) under credit facilities	(1,539)		481		(2,020)
Repurchase of common shares	(152)		(210)		58
Other	(199)		(115)		(84)
Net cash used by financing activities	$	(1,140)	$	(1,199)	$	59

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The variance was driven by:

~~Net~~•A $59 million decrease in cash used ~~by financing activities in~~during the ~~first~~ nine months ended September 30, 2023, primarily resulting from lower net repayments of ~~2016, included paying off the remaining balance of our Canadian equipment loans of $95.6 million, making distributions of partnership equity of $52.5 million and redeeming all of our outstanding~~ senior notes, ~~due 2018 for $301.0 million, which was~~partially offset ~~partially~~ by ~~net proceeds from~~increased repayments on our ABL Facility, as compared to the ~~issuance of common shares of $287.6 million.~~prior-year period.

LIQUIDITY AND CAPITAL RESOURCES

~~Capital Resources~~

~~The following represents a summary of key liquidity measures as of September 30, 2017 and December 31, 2016:~~

(In Millions)
September 30,
2017 December 31,
2016
Cash and cash equivalents $ 260.8
$ 323.4

Available borrowing base on ABL Facility¹
$ 254.2
$ 333.0
ABL Facility loans drawn —
—
Letter of credit obligations and other commitments (45.0 ) (106.0 )
Borrowing capacity available $ 209.2
$ 227.0

¹ The ABL Facility has a maximum borrowing base of $550 million, determined by applying customary advance rates to eligible accounts receivable, inventory and certain mobile equipment.

Our primary sources of ~~funding~~liquidity are Cash and cash ~~on hand,~~equivalents, cash generated from our operations, availability under our ABL Facility and access to capital markets. We generally maintain minimal cash balances and utilize our access to our ABL Facility to cover fluctuations in our cash requirements. Cash and cash equivalents, which totaled ~~$260.8~~$31 million as of September 30, ~~2017,~~2023, include cash ~~generated by our business~~on hand and ~~availability under the ABL Facility.~~on deposit. The combination of cash and availability under ~~the~~our ABL Facility gives us ~~$470.0~~$4.36 billion in liquidity as of September 30, 2023. During the second quarter of 2023, we issued $750 million in ~~liquidity entering~~aggregate principal amount of our 6.750% 2030 Senior Notes. We used the ~~fourth~~net proceeds from the offering to repay a portion of the borrowings under our ABL Facility, increasing our liquidity. Additionally, during the second quarter of ~~2017, which is expected~~2023, we entered into the Fourth ABL Amendment to our ABL Facility, increasing our liquidity by $250 million. We believe our liquidity and access to capital markets will be adequate to fund ~~operations, letter of credit obligations, sustaining and expansion capital expenditures and other~~our cash ~~commitments~~requirements for ~~at least~~ the next 12 ~~months.~~months and for the foreseeable future.

Our ABL Facility, which now matures in June 2028, has a maximum borrowing base of $4.75 billion, determined by applying customary advance rates to eligible accounts receivable, inventory and certain mobile equipment. Our ABL Facility includes a $555 million sublimit for the issuance of letters of credit and a $200 million sublimit for swingline loans. As of September 30, ~~2017,~~2023, outstanding letters of credit totaled $94 million, which reduced availability. We issue standby letters of credit with certain financial institutions in order to support business obligations, including, but not limited to, workers' compensation, operating agreements, employee severance, environmental obligations and insurance. Our ABL Facility agreement contains various financial and other covenants. As of September 30, 2023, we were in compliance with ~~the~~all of our ABL Facility liquidity requirements and, therefore, the springing financial covenant requiring a minimum Fixed Charge Coverage Ratio of 1.0 to 1.0 was not applicable. We believe that the cash on hand and the ABL Facility provide us sufficient liquidity to support our operating, investing and financing activities. covenants.

We have the capability to issue additional unsecured notes and, subject to the limitations set forth in our existing ~~debt~~senior notes indentures and ABL Facility, additional secured ~~indebtedness,~~notes, if we elect to access the debt capital markets. However, ~~available capacity of these~~our ability to issue additional notes could be limited by market conditions. We intend from time to time to seek to redeem or repurchase our outstanding senior notes with cash on hand, borrowings from existing credit sources or new debt financings and/or exchanges for debt or equity securities, in open market purchases, privately negotiated transactions or otherwise. Such redemptions or repurchases, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors, and the amounts involved may be material.

~~Off-Balance Sheet Arrangements~~

~~In the normal course of business, we are a party~~Refer to ~~certain arrangements that are not reflected~~NOTE 7 - DEBT AND CREDIT FACILITIES for more information on our ABL Facility and debt.

NON-GAAP FINANCIAL MEASURES

ADJUSTED EBITDA

We evaluate performance on an operating segment basis, as well as a consolidated basis, based on Adjusted EBITDA, which is a non-GAAP measure. This measure is used by management, investors, lenders and other external users of our financial statements to assess our operating performance and to compare operating performance to other companies in the steel industry. In addition, management believes Adjusted EBITDA is a useful measure to assess the earnings power of the business without the impact of capital structure and can be used to assess our ability to service debt and fund future capital expenditures in the business.

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The following table provides a reconciliation of our Net income to Adjusted EBITDA:


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2023		2022		2023		2022
Net income	$	275	$	165	$	589	$	1,580
Less:
Interest expense, net	(70)		(64)		(226)		(205)
Income tax expense	(29)		(10)		(118)		(404)
Depreciation, depletion and amortization	(249)		(237)		(738)		(788)
Total EBITDA	$	623	$	476	$	1,671	$	2,977
Less:
EBITDA of noncontrolling interests1	$	20	$	22	$	60	$	57
Gain (loss) on extinguishment of debt	—		4		—		(76)

Asset impairment	—		—		—		(29)
Other, net	(11)		(13)		(21)		(21)
Total Adjusted EBITDA	$	614	$	463	$	1,632	$	3,046

1 EBITDA of noncontrolling interests includes the following:
Net income attributable to noncontrolling interests	$	11	$	13	$	35	$	31
Depreciation, depletion and amortization	9		9		25		26
EBITDA of noncontrolling interests	$	20	$	22	$	60	$	57

The following table provides a summary of our Adjusted EBITDA by segment:


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2023		2022		2023		2022
Adjusted EBITDA:
Steelmaking	$	603	$	447	$	1,608	$	2,980
Other Businesses	9		9		32		58
Corporate and eliminations	2		7		(8)		8
Total Adjusted EBITDA	$	614	$	463	$	1,632	$	3,046

FREE CASH FLOW

Free cash flow is a non-GAAP financial measure defined as operating cash flow less purchase of property, plant and equipment. Management believes it is an important measure to assess the cash generation available to service debt, strategic initiatives or other financing activities.

The following table provides a reconciliation of our operating cash flows to free cash flow:


	Nine Months Ended September 30,
(In millions)	2023		2022
Net cash provided by operating activities	$	1,615	$	1,934
Purchase of property, plant and equipment	(481)		(716)
Free cash flow	$	1,134	$	1,218

INFORMATION ABOUT OUR GUARANTORS AND THE ISSUER OF OUR GUARANTEED SECURITIES

The accompanying summarized financial information has been prepared and presented pursuant to SEC Regulation S-X, Rule 3-10, “Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered,” and Rule 13-01 "Financial Disclosures about Guarantors and Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralized a Registrant's Securities." Certain of our subsidiaries (the "Guarantor subsidiaries") as of September 30, 2023 have fully and unconditionally, and jointly and severally, guaranteed the obligations under (a) the 5.875% 2027 Senior Notes, the 7.000% 2027 Senior Notes, the 4.625% 2029 Senior Notes, the 6.750% 2030 Senior Notes, and the 4.875% 2031 Senior Notes issued by Cleveland-Cliffs Inc. on a senior unsecured basis and (b) the 6.750% 2026 Senior Secured Notes issued by Cleveland-Cliffs Inc. on a senior secured basis. See NOTE 7 - DEBT AND CREDIT FACILITIES for further information.

The following presents the summarized financial information on a combined basis for Cleveland-Cliffs Inc. (parent company and issuer of the guaranteed obligations) and the Guarantor subsidiaries, collectively referred to as the obligated group. Transactions

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between the obligated group have been eliminated. Information for the non-Guarantor subsidiaries was excluded from the combined summarized financial information of the obligated group.

Each Guarantor subsidiary is consolidated by Cleveland-Cliffs Inc. as of September 30, 2023. Refer to Exhibit 22, incorporated herein by reference, for the detailed list of entities included within the obligated group as of September 30, 2023.

As of September 30, 2023, the guarantee of a Guarantor subsidiary with respect to Cliffs' 6.750% 2026 Senior Secured Notes, the 5.875% 2027 Senior Notes, the 7.000% 2027 Senior Notes, the 4.625% 2029 Senior Notes, the 6.750% 2030 Senior Notes and the 4.875% 2031 Senior Notes will be automatically and unconditionally released and discharged, and such Guarantor subsidiary’s obligations under the guarantee and the related indentures (the “Indentures”) will be automatically and unconditionally released and discharged, upon the occurrence of any of the following, along with the delivery to the trustee of an officer’s certificate and an opinion of counsel, each stating that all conditions precedent provided for in the applicable Indenture relating to the release and discharge of such Guarantor subsidiary’s guarantee have been complied with:

(a) any sale, exchange, transfer or disposition of such Guarantor subsidiary (by merger, consolidation, or the sale of) or the capital stock of such Guarantor subsidiary after which the applicable Guarantor subsidiary is no longer a subsidiary of the Company or the sale of all or substantially all of such Guarantor subsidiary’s assets (other than by lease), whether or not such Guarantor subsidiary is the surviving entity in such transaction, to a person which is not the Company or a subsidiary of the Company; provided that (i) such sale, exchange, transfer or disposition is made in compliance with the applicable Indenture, including the covenants regarding consolidation, merger and sale of assets and, as applicable, dispositions of assets that constitute notes collateral, and (ii) all the obligations of such Guarantor subsidiary under all debt of the Company or its subsidiaries terminate upon consummation of such transaction;

(b) designation of any Guarantor subsidiary as an “excluded subsidiary” (as defined in the Indentures); or

Each entity in the summarized combined financial information follows the same accounting policies as described in the consolidated financial statements. The accompanying summarized combined financial information does not reflect investments of the obligated group in non-Guarantor subsidiaries. The financial information of the obligated group is presented on a combined basis; intercompany balances and transactions within the obligated group have been eliminated. The obligated group's amounts due from, amounts due to, and transactions with, non-Guarantor subsidiaries and related parties have been presented in separate line items.

SUMMARIZED COMBINED FINANCIAL INFORMATION OF THE ISSUER AND GUARANTOR SUBSIDIARIES:

The following table is summarized combined financial information from the Statements of Unaudited Condensed Consolidated Financial ~~Position. These arrangements include minimum "take or pay" purchase commitments, such as minimum electric power demand charges, minimum coal, diesel~~Position of the obligated group:


(In millions)	September 30, 2023		December 31, 2022
Current assets	$	6,867	$	7,063
Non-current assets	10,306		9,935
Current liabilities	(3,603)		(3,866)
Non-current liabilities	(6,046)		(6,630)

The following table is summarized combined financial information from the Statements of Unaudited Condensed Consolidated Operations of the obligated group:


	Nine Months Ended
(In millions)	September 30, 2023
Revenues	$	16,679
Cost of goods sold	(15,561)
Income from continuing operations	483
Net income	484
Net income attributable to Cliffs shareholders	484

The obligated group had the following balances with non-Guarantor subsidiaries and ~~natural gas purchase commitments, minimum railroad transportation commitments~~other related parties:


(In millions)	September 30, 2023		December 31, 2022
Balances with non-Guarantor subsidiaries:
Accounts receivable, net	$	188	$	163
Accounts payable	(532)		(527)

Balances with other related parties:
Accounts receivable, net	$	2	$	8

Accounts payable	(12)		(13)

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Additionally, for the nine months ended September 30, 2023, the obligated group had Revenues of $95 million and ~~minimum port facility usage commitments; financial instruments~~Cost of goods sold of $70 million, in each case, with ~~off-balance sheet risk, such as bank letters of credit and bank guarantees; and operating leases, which relate primarily to equipment and office space.~~other related parties.

~~Market Risks~~MARKET RISKS

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

~~Pricing Risks~~

~~Commodity Price Risk~~

Our consolidated revenues include the sale of iron ore pellets, iron ore lump and iron ore fines. Our financial results can vary significantly as a result of fluctuations in the market prices of iron ore and hot-rolled coil. World market prices for these commodities have fluctuated historically and are affected by numerous factors beyond our control.The world market price that is most commonly utilized in our iron ore sales contracts is the Platts 62% Price, which can fluctuate widely due to numerous factors, such as global economic growth or contraction, change in demand for steel

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~~or change in availability of supply. The other important metric in our price realizations in the U.S. is the price for domestic hot-rolled coil steel, which can fluctuate due to similar factors.~~

~~Customer Supply Agreements~~

Certain supply agreements with one U.S. Iron Ore customer provide for supplemental revenue or refunds based on the customer’s annual steel pricing or the average annual daily market price for hot-rolled coil steel at the time the product is consumed in the customer’s blast furnaces. In the new contract that commenced in 2017, this supplemental revenue and refund data source changes from the customer's average annual steel price to an average annual daily market price for hot-rolled coil steel. At ~~September 30, 2017~~, we had derivative assets of $84.8 million, representing the fair value of the pricing factors, based upon the amount of unconsumed long tons and an estimated average hot-rolled coil steel price related to the period in which the iron ore is expected to be consumed in the customer's blast furnaces, subject to final pricing at a future date. We estimate that a $75 positive or negative change in the customer's average hot-rolled coil steel price or the average daily market price for hot-rolled coil steel realized in the fourth quarter of 2017 from the year-to-date ~~September 30, 2017~~ estimated average price recorded, would cause the fair value of the derivative instrument to increase or decrease by approximately $15 million, respectively, 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.~~

~~Provisional Pricing Arrangements~~

Certain of our U.S. Iron Ore and Asia Pacific Iron Ore customer supply agreements specify provisional price calculations, where the pricing mechanisms generally are based on market pricing, with the final revenue rate to be based on market inputs at a specified point in time in the future, per the terms of the supply agreements. At ~~September 30, 2017~~, we had derivative assets and liabilities of $4.7 million and $9.3 million, respectively, reflected as part of our U.S. Iron Ore and Asia Pacific Iron Ore segment revenue, representing the fair value of the provisional price calculations. We estimate that a positive or negative $10 change in the Platts 62% Price from the ~~September 30, 2017~~ estimated price recorded would cause the fair value of the derivative instrument to increase or decrease by approximately $5 million, respectively, for our Asia Pacific Iron Ore segment. Additionally, for our U.S. Iron Ore segment, one customer's supply agreement has a pricing mechanism based on the average annual daily market price for hot-rolled coil steel in addition to the Platts 62% Price. In this case, a $75 positive or negative change in the fourth quarter 2017 average daily market price for hot-rolled coil steel from the from the year-to-date ~~September 30, 2017~~ estimated average price recorded, would cause the fair value of the derivative instrument to increase or decrease by approximately $1 million, respectively, thereby impacting our consolidated revenues by the same amount. Further, we estimate that if the average Platts 62% Price during the remaining three months of 2017 is $10 higher or lower than the September 30, 2017 estimated price, this would cause the fair value of the derivative instrument to increase or decrease by approximately $14 million, respectively, for our U.S. Iron Ore segment.

~~We have not entered into any hedging programs to mitigate the risk of adverse price fluctuations.~~

~~Volatile Energy and Fuel Costs~~

The volatile cost of energy is an important factor affecting the production costs at our iron ore operations. Our consolidated U.S. Iron Ore operations consumed 12.5 million MMBtu’s of natural gas at an average delivered price of $3.57 per MMBtu, excluding the natural gas hedge impact or $3.65 per MMBtu net of the natural gas hedge impact during the first nine months of 2017. Additionally, our consolidated U.S. Iron Ore operations consumed 16.6 million gallons of diesel fuel at an average delivered price of $1.77 per gallon, excluding the diesel fuel hedge impact or $1.79 per gallon net of the diesel fuel hedge impact during the first nine months of 2017. Consumption of diesel fuel by our Asia Pacific operations was 8.5 million gallons at an average delivered price of $1.69 per gallon for the same period.PRICING RISKS

In the ordinary course of business, ~~there may also be increases~~we are exposed to market risk and price fluctuations related to the sale of our products, which are impacted primarily by market prices for HRC and other related spot pricing indices, and the purchase of energy and raw materials used in our operations, which are impacted by market prices ~~relative~~for natural gas, electricity, ferrous and stainless steel scrap, chrome, metallurgical coal, coke, zinc and nickel. Our strategy to ~~electrical costs at~~address market risk has generally been to obtain competitive prices for our ~~U.S. mine sites. Specifically, our Tilden mine in Michigan has entered~~products and services and allow operating results to reflect market price movements dictated by supply and demand; however, we make forward physical purchases and enter into ~~large curtailable special~~hedge contracts ~~with Wisconsin Electric Power Company. Charges under those special contracts are subject~~ to ~~a power supply cost recovery mechanism that is based on variations~~manage exposure to price risk related to the purchases of certain raw materials and energy used in the ~~utility's actual fuel~~production process.

Our financial results can vary for our operations as a result of fluctuations in market prices. We attempt to mitigate these risks by aligning fixed and variable components in our customer pricing contracts, supplier purchasing agreements and derivative financial instruments.

Some customer contracts have fixed-pricing terms, which increase our exposure to fluctuations in raw material and energy costs. To reduce our exposure, we enter into annual, fixed-price agreements for certain raw materials. Some of our existing multi-year raw material supply agreements have required minimum purchase ~~power expenses.~~quantities. Under adverse economic conditions, those minimums may exceed our needs. Absent exceptions for force majeure and other circumstances affecting the legal enforceability of the agreements, these minimum purchase requirements may compel us to purchase quantities of raw materials that could significantly exceed our anticipated needs or pay damages to the supplier for shortfalls. In these circumstances, we would attempt to negotiate agreements for new purchase quantities. There is a risk, however, that we would not be successful in reducing purchase quantities, either through negotiation or litigation. If that occurred, we would likely be required to purchase more of a particular raw material in a particular year than we need, negatively affecting our results of operations and cash flows.

Certain of our customer contracts include variable-pricing mechanisms that adjust selling prices in response to changes in the costs of certain raw materials and energy, while other of our customer contracts exclude such mechanisms. We may enter into multi-year purchase agreements for certain raw materials with similar variable-price mechanisms, allowing us to achieve natural hedges between the customer contracts and supplier purchase agreements. Therefore, in some cases, price fluctuations for energy (particularly natural gas and electricity), raw materials (such as scrap, chrome, zinc and nickel) or other commodities may be, in part, passed on to customers rather than absorbed solely by us. There is a risk, however, that the variable-price mechanisms in the sales contracts may not necessarily change in tandem with the variable-price mechanisms in our purchase agreements, negatively affecting our results of operations and cash flows.

Our strategy to address volatile natural gas rates and ~~diesel~~electricity rates includes improving efficiency in energy usage, identifying alternative providers and utilizing the lowest cost alternative fuels. AnIf we are unable to align fixed and variable components between customer contracts and supplier purchase agreements, we use cash-settled commodity price swaps to hedge the market risk associated with the purchase of certain of our raw materials and energy ~~hedging program was implemented in order~~requirements. Additionally, we routinely evaluate the use of these derivative instruments to ~~manage the price risk~~hedge a portion of ~~diesel and~~our natural gas, ~~at our U.S. Iron Ore mines during the first quarter of 2017. We will continue~~electricity, tin and zinc requirements. Our hedging strategy is designed 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 appropriate by management. Assumingprotect us from excessive pricing volatility. However, since we do not ~~enter into further hedging activity~~typically hedge 100% of our exposure, abnormal price increases in any of these commodity markets might still negatively affect operating costs.

The following table summarizes the negative effect of a hypothetical change in the ~~near term,~~fair value of our derivative instruments outstanding as of September 30, 2023, due to a 10% and 25%change in the market price of each of the indicated commodities:


Commodity Derivative (In millions)	10% Change		25% Change
Natural gas	$	61	$	152
Electricity	13		33

Any resulting changes in fair value would be recorded as adjustments to AOCI, net of income taxes, or recognized in net earnings, as appropriate. These hypothetical losses would be partially offset by the benefit of lower prices paid for the related commodities.

VALUATION OF GOODWILL AND OTHER LONG-LIVED ASSETS

GOODWILL

We assign goodwill arising from acquired companies to the reporting units that are expected to benefit from the synergies of the acquisition. Goodwill is tested on a qualitative or quantitative basis for impairment at the reporting unit level on an annual basis (October 1) and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. These events or circumstances could include a significant change in the business climate, legal factors, operating performance indicators, competition, or sale or disposition of a significant portion of a reporting unit. We have an unconditional option to bypass the qualitative test for any reporting unit in any period and proceed directly to performing the quantitative test. Should our ~~current~~

qualitative test indicate that it is more likely than not that the fair value of a reporting

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unit is less than its carrying value, we perform a quantitative test to determine the amount of impairment, if any, to the carrying value of the reporting unit and its associated goodwill.

Application of the goodwill impairment test requires judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units and if a quantitative assessment is deemed necessary in determination of the fair value of each reporting unit. The fair value of each reporting unit is estimated using the guideline public company method, the discounted cash flow methodology, or a combination of both, which considers forecasted cash flows discounted at an estimated weighted average ~~year-to-date natural gas~~cost of capital. Assessing the recoverability of our goodwill requires significant assumptions regarding the estimated future cash flows and ~~diesel fuel prices would~~other factors to determine the fair value of a reporting unit, including, among other things, estimates related to forecasts of future revenues, expected Adjusted EBITDA, expected capital expenditures and working capital requirements, which are based upon our long-range plan estimates. The assumptions used to calculate the fair value of a reporting unit may change from year to year based on operating results, market conditions and other factors. Changes in these assumptions could materially affect the determination of fair value for each reporting unit.

Our Tooling and Stamping reporting unit fair value was not substantially in excess of its carrying values as of September 30, 2023. A slower than anticipated resolution of the supply chain issues related to the global semiconductor shortages that have hampered the automotive industry, higher than expected capital requirements, and/or an increase in the discount rate could result in ~~a change of $3 million in our annual fuel and energy cost based on expected consumption for the rest of 2017.~~future impairment indicators.

~~Valuation of Other Long-Lived Assets~~OTHER LONG-LIVED ASSETS

Long-lived assets are reviewed for impairment upon the occurrence of events or changes in circumstances that would indicate that the carrying value of the assets may not be recoverable. Such indicators may ~~include, among others:~~include: a significant decline in expected future cash flows; a sustained, significant decline in market pricing; a significant adverse change in legal or environmental factors or in the business climate; changes in estimates of our recoverable reserves; and unanticipated ~~competition; and slower growth or production rates.~~competition. Any adverse change in these factors could have a significant impact on the recoverability of our long-lived assets and could have a material impact on our consolidated statements of operations and ~~statement~~statements of financial position.

A comparison of each asset group's carrying value to the estimated undiscounted net future cash flows expected to result from the use of the assets, including cost of disposition, is used to determine if an asset is recoverable. Projected future cash flows reflect management's best ~~estimates~~estimate of economic and market conditions over the projected period, including growth rates in revenues and costs, and estimates of future expected changes in operating margins and capital expenditures. If the carrying value of the asset group is higher than its undiscounted net future cash flows, the asset group is measured at fair value and the difference is recorded as a reduction to the long-lived assets. We estimate fair value using a market approach, an income approach or a cost approach. ~~As of~~ For the nine months ended September 30, ~~2017~~,2023, we concluded that there were no ~~indicators present indicative of~~additional triggering events resulting in the need for an impairment ~~or the inability to recover the value of our long-lived assets.~~assessment.

~~Foreign Currency Exchange Rate Risk~~INTEREST RATE RISK

We are subject to changes in foreign currency exchange rates as a result of our operations in Australia, which could impact our financial condition. With respect to Australia, foreign exchange risk arises from our exposure to fluctuations in foreign currency exchange rates because our reporting currency is the U.S. 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 sales and incur costs in Australian currency. We estimate that if the average Australian dollar to U.S. dollar exchange rate during the remaining three months of 2017 is $0.05 higher or lower than the September 30, 2017 rate, this would cause our cash cost of goods sold and operating expense to increase or decrease by approximately $7 million, respectively, for our Asia Pacific Iron Ore segment.

We have not entered into any hedging programs to mitigate the risk of adverse currency fluctuations. We have suspended entering into new foreign exchange rate contracts through 2017 as we have waived compliance with our current derivative financial instruments and hedging activities policy through December 31, 2017. In the future, we may enter into additional hedging instruments as needed in order to further hedge our exposure to changes in foreign currency exchange rates.

~~Interest Rate Risk~~

Interest payable on our senior notes is at fixed rates. Interest payable under our ABL Facility is at a variable rate based upon the applicable base rate plus the applicable base rate margin depending on the excess availability. As of September 30, ~~2017~~,2023, we had ~~no amounts drawn on the~~$325 million outstanding under our ABL Facility.

~~During 2017, we issued the 5.75% Senior Notes~~ An increase in ~~private transactions exempt from the registration requirements of the Securities Act. Pursuant~~prevailing interest rates would increase interest expense and interest paid for any outstanding borrowings under our ABL Facility. For example, a 100 basis point change to the registration rights agreement executed as part of the issuances, we agreed to file a registration statement with the SEC with respect to a registered offer to exchange the 5.75% Senior Notes for publicly registered notes within 365 days of the issue date. If we fail to satisfyinterest rates under our obligations under the registration rights agreement, we will be required to pay additional interest to the holders of the 5.75% Senior Notes under certain circumstances. In the event of a registration default, the interest rate will be increased by 0.25% per annum during the 90-day period immediately following the occurrence of any registration default, and such rate shall increase by 0.25% per annumABL Facility at the ~~end~~September 30, 2023 borrowing level would result in a change of ~~each subsequent 90-day period until all registration defaults have been cured, up~~$3 million to ~~a maximum additional~~ interest ~~rate of 1.00% per annum.~~expense on an annual basis.

~~Supply Concentration Risks~~SUPPLY CONCENTRATION RISKS

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

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~~Outlook~~

~~Segment Outlook~~

2017 Outlook Summary
Per Sales Ton Information
U.S. Iron Ore¹

Asia Pacific Iron Ore²
Cost of goods sold and operating expense rate $70 - $75 $40 - $45
Less:
Freight and venture partners' cost reimbursements expense rate³
$11 $3
Depreciation, depletion & amortization rate $4 $1
Cash cost of goods sold and operating expense rate $55 - $60 $36 - $41

Sales volume (million tons) 18.5 10.5
Production volume (million tons) 18.5 11.0

¹ U.S. Iron Ore tons are reported in long tons of pellets.
² Asia Pacific Iron Ore tons are reported in metric tons of lump and fines.
³ The freight and venture partners' cost reimbursements have offsetting amounts in revenue and have no impact on sales margin.

~~U.S. Iron Ore Outlook~~ ~~(Long Tons)~~

Our full-year sales and production volume expectations were each reduced by 500,000 tons to 18.5 million long tons. The reduction in sales volumes is attributable to a significant reduction in pellet nomination by a large customer, partially offset by increased export sales.

~~For 2018, we expect sales and production volumes of 20 million long tons, as a result of the increased capacity from the acquisition of the remaining minority interest in the Tilden mine.~~

~~Our full-year 2017 U.S. Iron Ore cash cost of goods sold and operating expense expectation is unchanged at $55 - $60 per long ton.~~

~~Asia Pacific Iron Ore Outlook~~ ~~(Metric Tons, F.O.B. the port)~~

Our full-year 2017 Asia Pacific Iron Ore sales and production volume expectations were each reduced by 500,000 metric tons, to 10.5 million metric tons of sales and 11 million metric tons of production. The reductions were driven by operational decisions reflecting current market conditions and quality ore availability.

~~For 2018, we expect Asia Pacific Iron Ore sales and production volumes of 11 million tons.~~

Due to unfavorable exchange rate movements and lower production volumes, our full-year 2017 cash cost of goods sold and operating expense expectation has been increased to $36 - $41 per metric ton. This assumes a full-year average exchange rate of $0.77 U.S. Dollar to Australian Dollar.

~~SG&A Expenses and Other Expectations~~

~~We are maintaining our full-year 2017 SG&A expense expectation of $110 million. We also note that of the $110 million expectation, approximately $30 million is considered non-cash.~~

As a result of the July refinancing transaction, our full-year 2017 interest expense was reduced by $5 million to approximately $130 million. Of this $130 million, approximately $20 million is expected to be non-cash. In 2018, we expect net interest expense to be less than $100 million.

~~Capital Budget Update~~

~~Our full-year 2017 capital expenditures budget has been maintained at $115 million.~~

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~~Forward-Looking Statements~~FORWARD-LOOKING STATEMENTS

This report contains statements that constitute "forward-looking statements" within the meaning of the federal securities laws. As a general matter, forward-looking statements relate to anticipated trends and expectations rather than historical matters. Forward-looking statements are subject to uncertainties and factors relating to ~~Cliffs’~~our operations and business environment that are difficult to predict and may be beyond our control. Such uncertainties and factors may cause actual results to differ materially from those expressed or implied by the forward-looking statements. 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. Investors are cautioned not to place undue reliance on forward-looking statements. Uncertainties and risk factors that could affect ~~Cliffs’~~our future performance and cause results to differ from the forward-looking statements in this report include, but are not limited to:

~~uncertainty~~•continued volatility of steel, iron ore and scrap metal market prices, which directly and indirectly impact the prices of the products that we sell to our customers;

•uncertainties associated with the highly competitive and cyclical steel industry and our reliance on the demand for steel from the automotive industry, which has been experiencing supply chain disruptions, such as the semiconductor shortage, the UAW strike, and higher consumer interest rates, which could result in lower steel volumes being demanded;

•potential weaknesses and uncertainties in global economic conditions, ~~including downward pressure on prices caused by~~excess global steelmaking capacity, oversupply ~~or imported products, the impact~~ of ~~any reduced barriers to trade, the outcomes~~iron ore, prevalence of ~~recently filed~~steel imports and ~~forthcoming trade cases,~~ reduced market demand, ~~and any change to~~including as a result of inflationary pressures, infectious disease outbreaks, conflicts or otherwise;

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•severe financial hardship, bankruptcy, temporary or permanent shutdowns or operational challenges of one or more of our major customers, including customers in the ~~economic growth rate in China;~~

~~continued volatility of iron ore and steel prices and~~automotive market, key suppliers or contractors, which, among other ~~trends, including the supply approach of the major iron ore producers, affecting~~adverse effects, could disrupt our ~~financial condition, results of~~ operations or ~~future prospects, specifically~~lead to reduced demand for our products, increased difficulty collecting receivables, and customers and/or suppliers asserting force majeure or other reasons for not performing their contractual obligations to us;

•disruptions to our operations relating to an infectious disease outbreak, including workforce challenges and the ~~impact of price-adjustment factors on our sales contracts;~~

~~our level of indebtedness could limit cash flow available~~risk that novel variants will prove resistant to ~~fund working capital, capital expenditures, acquisitions and other general corporate purposes~~existing vaccines or ~~ongoing needs of our business;~~

~~availability of capital and~~that new or continuing pandemic lockdowns in China will impact our ability to ~~maintain adequate liquidity;~~

~~our ability to successfully conclude the CCAA process~~source certain critical supplies in a ~~manner that minimizes cash outflows~~timely and ~~associated liabilities;~~predictable manner;

•risks related to U.S. government actions with respect to Section 232, the ~~impact of our customers reducing their steel production due to increased market share of steel produced using other methods or lighter-weight steel alternatives;~~

~~uncertainty relating to restructurings in the steel industry~~USMCA and/or ~~affecting the steel industry;~~

~~the outcome of any contractual disputes with our customers, joint venture partners~~other trade agreements, tariffs, treaties or ~~significant energy, material or service providers or any other litigation or arbitration;~~

~~the ability of our customers and joint venture partners to meet their obligations to us on a timely basis or at all;~~

~~problems or uncertainties with productivity, tons mined, transportation, mine-closure obligations, environmental liabilities, employee-benefit costs and other risks of the mining industry;~~

~~our ability to reach agreement with our customers regarding any modifications to sales contract provisions, renewals or new arrangements;~~

~~our actual levels of capital spending;~~

~~our ability to successfully diversify our product mix and add new customers beyond our traditional blast furnace clientele;~~

~~our actual economic iron ore reserves or reductions in current mineral estimates, including whether any mineralized material qualifies as a reserve;~~

~~our ability to cost-effectively achieve planned production rates or levels, including at our HBI production plant;~~

~~our ability to successfully identify and consummate any strategic investments or development projects, including our HBI production plant;~~

~~our ability to obtain the investments necessary for our HBI production plant;~~

~~changes in sales volume or mix;~~

~~events or circumstances that could impair or adversely impact the viability of a mine and the carrying value of associated assets,~~policies, as well as ~~any resulting impairment charges;~~the uncertainty of obtaining and maintaining effective antidumping and countervailing duty orders to counteract the harmful effects of unfairly traded imports;

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~~our ability to maintain appropriate relations with unions and employees;~~

•impacts of existing and increasing governmental regulation, including potential environmental regulations relating to climate change and carbon emissions, and related costs and liabilities, including failure to receive or maintain required operating and environmental permits, approvals, modifications or other ~~authorization~~authorizations of, or from, any governmental or regulatory ~~entity~~authority and costs related to implementing improvements to ensure compliance with regulatory ~~changes;~~changes, including potential financial assurance requirements, and reclamation and remediation obligations;

•potential impacts to the environment or exposure to hazardous substances resulting from our operations;

•our ability to maintain adequate liquidity, our level of indebtedness and the availability of capital could limit our financial flexibility and cash flow necessary to fund working capital, planned capital expenditures, acquisitions, and other general corporate purposes or ongoing needs of our business;

•our ability to reduce our indebtedness or return capital to shareholders within the currently expected timeframes or at all;

•adverse changes in credit ratings, interest rates, foreign currency rates and tax laws, including adverse impacts as a result of the Inflation Reduction Act;

•the outcome of, and costs incurred in connection with, lawsuits, claims, arbitrations or governmental proceedings relating to commercial and business disputes, antitrust claims, environmental matters, government investigations, occupational or personal injury claims, property-related matters, labor and employment matters, or suits involving legacy operations and other matters;

•uncertain availability or cost, due to inflation or otherwise, of critical manufacturing equipment and spare parts;

•supply chain disruptions or changes in the cost, quality or availability of energy sources, including electricity, natural gas and diesel fuel, or critical raw materials and supplies, including iron ore, industrial gases, graphite electrodes, scrap metal, chrome, zinc, coke and metallurgical coal;

•problems or disruptions associated with transporting products to our customers, moving manufacturing inputs or products internally among our facilities, or suppliers transporting raw materials to us;

•the risk that the cost or time to implement a strategic or sustaining capital project may prove to be greater than originally anticipated;

•our ability to consummate any public or private acquisition transactions and to realize any or all of the anticipated benefits or estimated future synergies, as well as to successfully integrate any acquired businesses into our existing businesses;

•uncertainties associated with natural or human-caused disasters, adverse weather conditions, unanticipated geological conditions, ~~supply or price of energy,~~critical equipment failures, infectious disease outbreaks, tailings dam failures and other unexpected events;

•cybersecurity incidents relating to, disruptions in, or failures of, information technology systems that are managed by us or third parties that host or have access to our data and systems, including the loss, theft or corruption of sensitive or essential business or personal information and the inability to access or control systems;

•liabilities and costs arising in connection with any business decisions to temporarily or indefinitely idle or permanently close an operating facility or mine, which could adversely impact the carrying value of associated assets and give rise to impairment charges or closure and reclamation obligations, as well as uncertainties associated with restarting any previously idled operating facility or mine;

•our level of self-insurance and our ability to obtain sufficient third-party insurance to adequately cover potential adverse events and business risks;

•uncertainties associated with our ability to meet customers’ and suppliers’ decarbonization goals and reduce our GHG emissions in alignment with our own announced targets;

•challenges to maintaining our social license to operate with our stakeholders, including the impacts of our operations on local communities, reputational impacts of operating in a carbon-intensive industry that produces GHG emissions, and our ability to foster a consistent operational and safety track record;

•our actual economic mineral reserves or reductions in current mineral reserve estimates, and any title defect or loss of any lease, license, easement or other possessory interest for any mining property;

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•our ability to maintain satisfactory labor relations with unions and employees;

•unanticipated or higher costs associated with pension and OPEB obligations resulting from changes in ~~currency values, currency exchange rates, interest rates~~the value of plan assets or contribution increases required for unfunded obligations;

•uncertain availability or cost of skilled workers to fill critical operational positions and ~~tax laws;~~potential labor shortages caused by experienced employee attrition or otherwise, as well as our ability to attract, hire, develop and retain key personnel;

~~risks related to international operations;~~•the amount and timing of any repurchases of our common shares; and

~~the~~ •potential ~~existence of~~ significant deficiencies or material ~~weakness~~weaknesses in our internal control over financial reporting.

For additional factors affecting ~~the~~our business, ~~of Cliffs,~~ refer to Part II – Item 1A. Risk ~~Factors.~~Factors of this Quarterly Report on Form 10-Q. You are urged to carefully consider these risk factors.

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~~Non-GAAP Reconciliation~~

~~We present cash cost of goods sold~~Forward-looking and ~~operating expense rate per long/metric ton, which is a non-GAAP financial measure~~other statements in this Quarterly Report on Form 10-Q regarding our GHG reduction plans and goals are not an indication that ~~management uses in evaluating operating performance. We believe our presentation of non-GAAP cash cost of goods sold and operating expenses is useful~~these statements are necessarily material to investors because it excludes depreciation, depletion and amortization, which are non-cash, and freight and joint venture partners' cost reimbursements, which have no impact on sales margin, thus providing a more accurate view of the cash outflows related to the sale of iron ore. The presentation of this measure is not intendedor required to be ~~considered~~disclosed in ~~isolation from, as a substitute for, or as superior to,~~our filings with the ~~financial information prepared~~SEC. In addition, historical, current and ~~presented in accordance with GAAP. The presentation of this measure~~forward-looking GHG-related statements may be ~~different from non-GAAP financial measures used by other companies. Below is a reconciliation~~based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve and assumptions that are subject to change in ~~dollars of this non-GAAP financial measure to our consolidated financial statements for~~ the ~~three and nine months ended September 30, 2017 and 2016.~~future.

(In Millions)
Three Months Ended September 30, Three Months Ended September 30,
2017 2016
U.S. Iron Ore Asia Pacific Iron Ore Total U.S. Iron Ore Asia Pacific Iron Ore Total
Cost of goods sold and operating expenses $ (439.5 ) $ (98.7 ) $ (538.2 ) $ (361.8 ) $ (106.1 ) $ (467.9 )
Less:
Freight and reimbursements (66.1 ) (4.8 ) (70.9 ) (39.7 ) (5.0 ) (44.7 )
Depreciation, depletion & amortization (16.5 ) �� (3.3 ) (19.8 ) (18.8 ) (6.3 ) (25.1 )
Cash cost of goods sold and operating expenses $ (356.9 ) $ (90.6 ) $ (447.5 ) $ (303.3 ) $ (94.8 ) $ (398.1 )

(In Millions)
Nine Months Ended September 30, Nine Months Ended September 30,
2017 2016
U.S. Iron Ore Asia Pacific Iron Ore Total U.S. Iron Ore Asia Pacific Iron Ore Total
Cost of goods sold and operating expenses $ (1,004.4 ) $ (323.9 ) $ (1,328.3 ) $ (825.8 ) $ (321.4 ) $ (1,147.2 )
Less:
Freight and reimbursements (159.2 ) (17.8 ) (177.0 ) (104.0 ) (14.0 ) (118.0 )
Depreciation, depletion & amortization (49.6 ) (11.3 ) (60.9 ) (65.1 ) (19.2 ) (84.3 )
Cash cost of goods sold and operating expenses $ (795.6 ) $ (294.8 ) $ (1,090.4 ) $ (656.7 ) $ (288.2 ) $ (944.9 )



~~Item~~
ITEM 3.			~~Quantitative and Qualitative Disclosures About Market Risk~~ QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Information regarding our ~~Market Risk~~market risk is presented under the caption ~~Market~~"Market Risks,," which is included inour Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2022, and ~~in the~~Part I – Item 2. Management's Discussion and Analysis ~~section~~of Financial Condition and Results of Operations of this ~~report.~~Quarterly Report on Form 10-Q.

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~~Item~~
ITEM 4.			~~Controls and Procedures~~ 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 ~~the~~our President and Chief Executive Officer and ~~the~~ 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 ~~the~~our President and Chief Executive Officer and ~~the~~our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, ~~the~~our President and Chief Executive Officer and ~~the~~ Chief Financial Officer concluded that our disclosure controls and procedures were effective.

There ~~have been~~was no ~~changes~~change in ~~our~~the Company’s internal control over financial reporting ~~or in other factors~~during the quarter ended September 30, 2023 that ~~occurred during our last fiscal quarter that have~~ materially affected, or ~~are~~is reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION



~~Item~~
ITEM 1.			~~Legal Proceedings~~ LEGAL PROCEEDINGS

~~CCAA Proceedings.~~ ~~Refer~~Environmental Matters. SEC regulations require us to disclose certain information about administrative or judicial proceedings involving the environment and to which a governmental authority is a party if we reasonably believe that such proceedings may result in monetary sanctions above a stated threshold. Pursuant to SEC regulations, we use a threshold of $1 million for purposes of determining whether disclosure of any such proceedings is required. We believe that this threshold is reasonably designed to result in disclosure of any such proceedings that are material to our business or financial condition.

We have described the other material pending legal proceedings, including administrative or judicial proceedings involving the environment, to which we are a party in our Annual Report on Form 10-K for the year ended December 31, 2022, and in NOTE 1817 - COMMITMENTS AND CONTINGENCIES ofto the ~~notes to our condensed~~ consolidated financial statements ~~included~~ in Part I – Item ~~1 of Part 1~~1. Financial Statements of this ~~report for a description of the CCAA Proceedings underway with respect to the Bloom Lake Group and the Wabush Group. Such description~~Quarterly Report on Form 10-Q, which is incorporated herein by ~~reference into this Item 1.~~reference.

~~Mesabi Metallics Adversary Proceeding.~~ ~~On September 7, 2017, Mesabi Metallics Company LLC (f/k/a Essar Steel Minnesota LLC) filed a complaint against Cleveland-Cliffs Inc. in the~~ ~~Essar Steel Minnesota LLC and ESML Holdings Inc.~~ bankruptcy proceeding that is pending in the United States Bankruptcy Court, District of Delaware. Mesabi Metallics alleges tortious interference with its contractual rights and business relations involving certain vendors, suppliers and contractors, violations of federal and Minnesota antitrust laws through monopolization, attempted monopolization and restraint of trade, violation of the automatic stay, and civil conspiracy with unnamed Doe defendants. Mesabi Metallics seeks, among other things, unspecified damages and injunctive relief. We believe the claims are unmeritorious and intend to vigorously defend the lawsuit.



~~Item~~
ITEM 1A.			~~Risk Factors~~ RISK FACTORS

~~Our~~We caution readers that our business activities involve risks and uncertainties that could cause actual results to differ materially from those currently expected by management. We described the most significant risks that could impact our results in Part I, Item 1A, "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, ~~2016, includes a detailed discussion of our risk factors.~~2022.



~~Item~~
ITEM 2.			~~Unregistered Sales of Equity Securities and Use of Proceeds~~ UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES

The following table presents information with respect to repurchases by the Company of our common shares during the periods ~~indicated.~~indicated:

ISSUER PURCHASES OF EQUITY SECURITIES


Period	Total Number of Shares (or Units) Purchased1	Average Price Paid per Share (or Unit)2		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 Programs3
July 1 - 31, 2023	823	$	16.55	—	$	666,390,714
August 1 - 31, 2023	3,853,004	$	15.11	3,850,000	$	608,285,509
September 1 - 30, 2023	3,545	$	16.84	—	$	608,285,509
Total	3,857,372	$	15.11	3,850,000

1 Includes 823 shares that were delivered to us in July 2023, 3,004 shares that were delivered to us in August 2023, and 3,545 shares that were delivered to us in September 2023, in each case, to satisfy tax withholding obligations due upon the vesting or payment of stock awards.
2 Excludes the 1% excise tax on net stock repurchases.
3 On February 11, 2022, we announced that our Board of Directors authorized a program to repurchase our outstanding common shares in the open market or in privately negotiated transactions, which may include purchases pursuant to Rule 10b5-1 plans or accelerated share repurchases, up to a maximum of $1 billion. We are not obligated to make any repurchases, and the program may be suspended or discontinued at any time. The share repurchase program does not have a specific expiration date.

Period
Total Number of Shares
(or Units) Purchased¹

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
July 1 - 31, 2017 1,301
$ 6.92
— $ —
August 1 - 31, 2017 —
$ —
— $ —
September 1 - 30, 2017 —
$ —
— $ —
1,301
$ 6.92
— $ —

¹ These shares were delivered to us to satisfy tax withholding obligations due upon the vesting or payment of stock awards.

Table of Contents



~~Item~~
ITEM 4.			~~Mine Safety Disclosures~~ MINE SAFETY DISCLOSURES

We are committed to protecting the occupational health and well-being of each of our employees. Safety is one of our 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 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, we have developed an effective safety management system.

Under the 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 and Item 104 of Regulation S-K, the ~~required mine safety results regarding certain~~information concerning mining safety and health or other regulatory matters for each of our mine locations that are covered under the scope of the Dodd-Frank Act are included in Exhibit 95 of ~~Item~~Part II –ITEM 6. ~~Exhibits~~ EXHIBITS of this Quarterly Report on Form 10-Q.



~~Item~~
ITEM 5.			~~Other Information~~ OTHER INFORMATION

~~On October 23, 2017,~~During the ~~Compensation and Organization Committee~~quarter ended September 30, 2023, no director or officer (as defined in Rule 16a-1(f) promulgated under the Exchange Act) of the ~~Board~~Company adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" (as each term is defined in Item 408 of Directors of Cliffs acted, pursuant to the terms of our A&R 2015 Equity Plan (and predecessor versions of the plan) and the applicable equity award agreements, to amend the terms of outstanding 2016 and 2017 restricted stock unit awards, 2017 performance shares awards and certain outstanding 2016 and 2017 cash incentive awards held by employees (collectively, the “Awards”)Regulation S-K). The amendment provides that, in general, for any holder of an Award who experiences a qualifying retirement on or after October 23, 2017, such Award will vest as to a prorated amount of the outstanding Award, with such proration based on the number of full months that the holder was employed with Cliffs or a subsidiary during the vesting period for the Award (and actual performance in the case of performance-based awards). For these purposes, a qualifying retirement means attainment of at least age 55 with five years of service.

Table of Contents



~~Item~~
ITEM 6.			~~Exhibits~~ EXHIBITS

All documents referenced below have been filed pursuant to the Securities Exchange Act of 1934 by Cleveland-Cliffs Inc., file number 1-09844, unless otherwise indicated.



Exhibit Number		Exhibit
~~3.1~~4.1		Amendment to Third Amended Articles of Incorporation of Cliffs, as filed with the Secretary of State of the State of Ohio on August 15, 2017 (filed as Exhibit 3.1 to Cliffs' Form 8-K on August 17, 2017 and incorporated herein by reference)
~~4.1~~	Sixth Supplemental Indenture, dated as of ~~February 27, 2017,~~July 31, 2023, among ~~Cliffs Natural Resources~~Cleveland-Cliffs Inc., the ~~guarantors parties~~Additional Guarantors party thereto and U.S. Bank Trust Company, National Association (successor in interest to U.S. Bank National Association), as trustee (filed herewith).
4.2		Sixth Supplemental Indenture, dated as of July 31, 2023, among Cleveland-Cliffs Inc., the Additional Guarantors party thereto, U.S. Bank Trust Company, National Association (successor in interest to U.S. Bank National Association), as trustee, and U.S. Bank National Association, as ~~trustee, including Form of 5.75% Senior Notes due 2025~~first lien notes collateral agent (filed ~~as Exhibit 4.1 to Cliffs' Form 8-K on August 7, 2017 and incorporated herein by reference)~~herewith).
~~4.2~~4.3		Fifth Supplemental Indenture, dated as of July 31, 2023, among Cleveland-Cliffs Inc., the Additional Guarantors party thereto and U.S. Bank Trust Company, National Association (successor in interest to U.S. Bank National Association), as trustee (filed herewith).
4.4		Second Supplemental Indenture, dated as of July 31, 2023, among Cleveland-Cliffs Inc., the Additional Guarantors party thereto and U.S. Bank Trust Company, National Association (successor in interest to U.S. Bank National Association), as trustee (filed herewith).
4.5		First Supplemental Indenture, dated as of ~~August 7, 2017,~~July 31, 2023, among ~~Cliffs Natural Resources~~Cleveland-Cliffs Inc., the ~~guarantors parties~~Additional Guarantors party thereto and U.S. Bank Trust Company, National Association, as trustee (filed herewith).
22		Schedule of the obligated group, including ~~Form of 5.75%~~the parent and issuer and the subsidiary guarantors that have guaranteed the obligations under the 6.750% 2026 Senior Secured Notes, the 5.875% 2027 Senior Notes, ~~due 2025~~the 7.000% 2027 Senior Notes, the 4.625% 2029 Senior Notes, the 6.750% 2030 Senior Notes and the 4.875% 2031 Senior Notes issued by Cleveland-Cliffs Inc. (filed ~~as Exhibit 4.2 to Cliffs' Form 8-K on August 7, 2017 and incorporated herein by reference)~~herewith).
~~4.3~~31.1		Joinder to Registration Rights Agreement, by and among Cliffs Natural Resources Inc., each of the Guarantors named therein and Credit Suisse Securities (USA) LLC, as Representative of the Several Initial Purchasers, dated August 7, 2017 (filed as Exhibit 4.3 to Cliffs' Form 8-K on August 7, 2017 and incorporated herein by reference)
~~4.4~~	~~Form of Common Share Certificate (filed herewith)~~
~~31.1~~	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 Lourenco Goncalves as of October ~~23, 2017~~25, 2023 (filed herewith).
31.2		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 ~~Timothy K. Flanagan~~Celso L. Goncalves Jr. as of October ~~23, 2017~~25, 2023 (filed herewith).
32.1		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 Lourenco Goncalves, Chairman, President and Chief Executive Officer of Cleveland-Cliffs Inc., as of October ~~23, 2017~~25, 2023 (filed herewith).
32.2		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 ~~Timothy K. Flanagan,~~Celso L. Goncalves Jr., Executive Vice President, Chief Financial Officer ~~& Treasurer~~ of Cleveland-Cliffs Inc., as of October ~~23, 2017~~25, 2023 (filed herewith).
95		Mine Safety Disclosures (filed herewith).
~~101.INS~~101		The following financial information from Cleveland-Cliffs Inc.'s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2023 formatted in Inline XBRL ~~Instance Document~~(Extensible Business Reporting Language) includes: (i) the Statements of Unaudited Condensed Consolidated Financial Position, (ii) the Statements of Unaudited Condensed Consolidated Operations, (iii) the Statements of Unaudited Condensed Consolidated Comprehensive Income, (iv) the Statements of Unaudited Condensed Consolidated Cash Flows, (v) the Statements of Unaudited Condensed Consolidated Changes in Equity, and (vi) Notes to the Unaudited Condensed Consolidated Financial Statements.
~~101.SCH~~104		The cover page from this Quarterly Report on Form 10-Q, formatted in Inline 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~~and contained in Exhibit 101.

Table of Contents

SIGNATURES

Pursuant to the requirements 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.

CLEVELAND-CLIFFS INC.

By:

/s/ Kimberly A. Floriani

Name:

Kimberly A. Floriani

Title:

Senior Vice President, Controller & Chief Accounting Officer

Date:

October 25, 2023

~~CLEVELAND-CLIFFS INC.~~

~~By:~~

~~/s/ R. Christopher Cebula~~

~~Name:~~

~~R. Christopher Cebula~~

~~Title:~~

~~Vice President, Corporate Controller & Chief Accounting Officer~~

~~Date:~~

~~October 23, 2017~~

6240


Abbreviation or acronym			Term


~~Abbreviation or acronym~~			~~Term~~
~~A&R 2015 Equity Plan~~6.750% 2030 Senior Notes			~~Amended and Restated Cliffs Natural Resources~~6.750% Senior Guaranteed Notes due 2030 issued by Cleveland-Cliffs Inc. ~~2015 Equity and Incentive Compensation Plan~~on April 14, 2023 in an aggregate principal amount of $750 million
ABL Facility			~~Syndicated Facility~~Asset-Based Revolving Credit Agreement, bydated as of March 13, 2020, among Cleveland-Cliffs Inc., the lenders party thereto from time to time and ~~among~~ Bank of America, N.A., as ~~Administrative Agent and Australian Security Trustee, the Lenders that are parties hereto, Cleveland-Cliffs Inc.,~~administrative agent, as ~~Parent and a Borrower, and the Subsidiaries of Parent party hereto, as Borrowers dated~~amended as of March ~~30, 2015,~~27, 2020, December 9, 2020, December 17, 2021, and June 9, 2023, and as may be further amended from time to time
Adjusted EBITDA			EBITDA, excluding certain items such as ~~extinguishment/restructuring~~EBITDA of noncontrolling interests, extinguishment of debt, ~~foreign currency exchange remeasurement, impacts of discontinued operations, severance~~asset impairment and ~~contractor termination costs and intersegment corporate allocations of SG&A costs~~other, net
~~ArcelorMittal~~AOCI			~~ArcelorMittal (as the parent company of ArcelorMittal Mines Canada, ArcelorMittal USA and ArcelorMittal Dofasco, as well as, many other subsidiaries)~~Accumulated Other Comprehensive Income (Loss)
~~ALJ~~ASC			~~Administrative Law Judge~~
~~ASC~~	Accounting Standards Codification
ASU			Accounting Standards ~~Updates~~Update
~~Bloom Lake Group~~			~~Bloom Lake General Partner Limited and certain of its affiliates, including Cliffs Quebec Iron Mining ULC~~
~~Canadian Entities~~BOF			~~Bloom Lake Group, Wabush Group and certain other wholly-owned Canadian subsidiaries~~Basic oxygen furnace
~~CCAA~~CERCLA			~~Companies' Creditors Arrangement~~Comprehensive Environmental Response, Compensation and Liability Act ~~(Canada)~~of 1980
CHIPS Act			The Creating Helpful Incentives to Produce Semiconductors and Science Act of 2022
CO2e			Carbon dioxide equivalent
Dodd-Frank Act			Dodd-Frank Wall Street Reform and Consumer Protection Act
~~DR-grade~~EAF			~~Direct Reduction-grade~~Electric arc furnace
EBITDA			Earnings before interest, taxes, depreciation and amortization
~~Empire~~			~~Empire Iron Mining Partnership~~
EPA			U.S. Environmental Protection Agency
EPS			Earnings per share
EV			Electric vehicle
Exchange Act			Securities Exchange Act of 1934, as amended
FASB			Financial Accounting Standards Board
Fe			~~Iron~~
~~FERC~~		~~Federal Energy Regulatory Commission~~
FMSH Act		~~U.S.~~ Federal Mine Safety and Health Act of 1977, as amended
~~GAAP~~Fourth ABL Amendment			Fourth Amendment to Asset-Based Revolving Credit Agreement, dated as of June 9, 2023, among Cleveland-Cliffs Inc., the lenders party thereto from time to time and Bank of America, N.A., as administrative agent
GAAP			Accounting principles generally accepted in the United States
~~HBI~~GHG			Greenhouse gas
GOES			Grain oriented electrical steel
HBI			Hot briquetted iron
~~Hibbing~~			~~Hibbing Taconite Company, an unincorporated joint venture~~
~~Koolyanobbing~~HRC			~~Collective term for the operating deposits at Koolyanobbing, Mount Jackson and Windarling~~Hot-rolled coil steel
~~Long ton~~Inflation Reduction Act			~~2,240 pounds~~Inflation Reduction Act of 2022
~~LTVSMC~~			~~LTV Steel Mining Company~~
~~Metric ton~~LIBOR			~~2,205 pounds~~London Interbank Offered Rate
~~MISO~~Metric ton (mt)			~~Midcontinent Independent System Operator, Inc.~~2,205 pounds
~~MMBtu~~MSHA			~~Million British Thermal Units~~
~~MSHA~~	U.S. Mine Safety and Health Administration
~~Monitor~~Net ton (nt)			~~FTI Consulting Canada Inc.~~2,000 pounds
~~Net ton~~NOES			~~2,000 pounds~~Non-oriented electrical steel
~~Northshore~~			~~Northshore Mining Company~~
~~OPEB~~NPDES			National Pollutant Discharge Elimination System, authorized by the Clean Water Act
OPEB			Other postretirement ~~employment~~ benefits
Platts 62% ~~Price~~price			Platts IODEX 62% Fe Fines ~~Spot Price~~CFR North China
~~SEC~~RCRA			Resource Conservation and Recovery Act

SEC			U.S. Securities and Exchange Commission
~~SG&A~~Section 232			~~Selling, general and administrative~~Section 232 of the Trade Expansion Act of 1962, as amended
Securities Act			Securities Act of 1933, as amended
~~SSR~~SOFR			~~System Support Resource~~Secured Overnight Financing Rate
~~Tilden~~SunCoke Middletown			~~Tilden Mining~~Middletown Coke Company, ~~L.C.~~LLC, a subsidiary of SunCoke Energy, Inc.
~~TSR~~			~~Total Shareholder Return~~
~~United Taconite~~	~~United Taconite LLC~~
~~U.S.~~	~~United States of America~~
~~U.S. Steel~~	~~U.S Steel Corporation and all subsidiaries~~
~~Wabush Group~~	Wabush Iron Co. Limited and Wabush Resources Inc., and certain of its affiliates, including Wabush Mines (an unincorporated joint venture of Wabush Iron Co. Limited and Wabush Resources Inc.), Arnaud Railway Company and Wabush Lake Railway Company
~~2015 Equity Plan~~	~~Cliffs Natural Resources Inc. 2015 Equity and Incentive Compensation Plan~~



~~Item 1.~~	~~Financial Statements~~
U.S.		United States of America

UAW		United Auto Workers
USW		United Steelworkers
VEBA		Voluntary employee benefit association trusts
VIE		Variable interest entity



	(In Millions)
	September 30, 2017		December 31, 2016
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	260.8	$	323.4
Accounts receivable, net	63.9		128.7
Inventories	207.7		178.4
Supplies and other inventories	92.5		91.4
Derivative assets	89.5		33.1
Loans to and accounts receivable from the Canadian Entities	51.9		48.6
Other current assets	24.8		21.0
TOTAL CURRENT ASSETS	791.1		824.6
PROPERTY, PLANT AND EQUIPMENT, NET	993.8		984.4
OTHER NON-CURRENT ASSETS	138.4		114.9
TOTAL ASSETS	$	1,923.3	$	1,923.9


(In millions, except share information)	September 30, 2023		December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	31	$	26
Accounts receivable, net	2,122		1,960
Inventories	4,592		5,130
Other current assets	196		306
Total current assets	6,941		7,422
Non-current assets:
Property, plant and equipment, net	8,837		9,070
Goodwill	1,130		1,130
Pension and OPEB, asset	392		356
Other non-current assets	759		777
TOTAL ASSETS	$	18,059	$	18,755
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	2,076	$	2,186
Accrued employment costs	467		429
Accrued expenses	263		383
Other current liabilities	488		551
Total current liabilities	3,294		3,549
Non-current liabilities:
Long-term debt	3,458		4,249
Pension liability, non-current	456		473
OPEB liability, non-current	563		585
Deferred income taxes	662		590
Other non-current liabilities	1,362		1,267
TOTAL LIABILITIES	9,795		10,713
Commitments and contingencies (See Note 17)
Equity:
Common shares - par value $0.125 per share
Authorized - 1,200,000,000 shares (2022 - 1,200,000,000 shares);
Issued - 531,051,530 shares (2022 - 531,051,530 shares);
Outstanding - 504,849,719 shares (2022 - 513,340,779 shares)	66		66
Capital in excess of par value of shares	4,850		4,871
Retained earnings	1,888		1,334
Cost of 26,201,811 common shares in treasury (2022 - 17,710,751 shares)	(431)		(310)
Accumulated other comprehensive income	1,647		1,830
Total Cliffs shareholders' equity	8,020		7,791
Noncontrolling interest	244		251
TOTAL EQUITY	8,264		8,042
TOTAL LIABILITIES AND EQUITY	$	18,059	$	18,755


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions, except per share amounts)	2023		2022		2023		2022
Revenues	$	5,605	$	5,653	$	16,884	$	17,945
Operating costs:
Cost of goods sold	(5,125)		(5,305)		(15,661)		(15,367)
Selling, general and administrative expenses	(144)		(124)		(420)		(353)
Miscellaneous – net	(11)		(37)		(26)		(104)
Total operating costs	(5,280)		(5,466)		(16,107)		(15,824)
Operating income	325		187		777		2,121
Other income (expense):
Interest expense, net	(70)		(64)		(226)		(205)
Gain (loss) on extinguishment of debt	—		4		—		(76)
Net periodic benefit credits other than service cost component	50		49		150		148
Other non-operating income (expense)	(2)		(1)		4		(6)
Total other expense	(22)		(12)		(72)		(139)
Income from continuing operations before income taxes	303		175		705		1,982
Income tax expense	(29)		(10)		(118)		(404)
Income from continuing operations	274		165		587		1,578
Income from discontinued operations, net of tax	1		—		2		2
Net income	275		165		589		1,580
Income attributable to noncontrolling interest	(11)		(13)		(35)		(31)
Net income attributable to Cliffs shareholders	$	264	$	152	$	554	$	1,549

Earnings per common share attributable to Cliffs shareholders - basic
Continuing operations	$	0.52	$	0.30	$	1.08	$	2.98
Discontinued operations	—		—		—		—
	$	0.52	$	0.30	$	1.08	$	2.98
Earnings per common share attributable to Cliffs shareholders - diluted
Continuing operations	$	0.52	$	0.29	$	1.08	$	2.95
Discontinued operations	—		—		—		—
	$	0.52	$	0.29	$	1.08	$	2.95


			☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


			☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


(In millions)	Number of Common Shares Outstanding	Par Value of Common Shares Issued		Capital in Excess of Par Value of Shares		Retained Earnings		Common Shares in Treasury		AOCI		Non-controlling Interests		Total
December 31, 2022	513.3	$	66	$	4,871	$	1,334	$	(310)	$	1,830	$	251	$	8,042
Comprehensive income (loss)	—	—		—		(57)		—		(179)		15		(221)
Stock and other incentive plans	1.8	—		(39)		—		30		—		—		(9)

Net distributions to noncontrolling interests	—	—		—		—		—		—		(19)		(19)
March 31, 2023	515.1	$	66	$	4,832	$	1,277	$	(280)	$	1,651	$	247	$	7,793
Comprehensive income (loss)	—	—		—		347		—		(8)		9		348
Stock and other incentive plans	0.1	—		9		—		3		—		—		12
Common stock repurchases, net of excise tax	(6.5)	—		—		—		(95)		—		—		(95)
Net distributions to noncontrolling interests	—	—		—		—		—		—		(14)		(14)
June 30, 2023	508.7	$	66	$	4,841	$	1,624	$	(372)	$	1,643	$	242	$	8,044
Comprehensive income	—	—		—		264		—		4		11		279
Stock and other incentive plans	—	—		9		—		—		—		—		9
Common stock repurchases, net of excise tax	(3.9)	—		—		—		(59)		—		—		(59)
Net distributions to noncontrolling interests	—	—		—		—		—		—		(9)		(9)
September 30, 2023	504.8	$	66	$	4,850	$	1,888	$	(431)	$	1,647	$	244	$	8,264


(In millions)	Number of Common Shares Outstanding	Par Value of Common Shares Issued		Capital in Excess of Par Value of Shares		Retained Earnings (Deficit)		Common Shares in Treasury		AOCI		Non-controlling Interests		Total
December 31, 2021	500.2	$	63	$	4,892	$	(1)	$	(82)	$	618	$	284	$	5,774
Comprehensive income	—	—		—		801		—		97		13		911
Redemption of convertible debt	24.2	3		(28)		—		—		—		—		(25)
Stock and other incentive plans	1.3	—		(16)		—		11		—		—		(5)
Common stock repurchases	(1.0)	—		—		—		(19)		—		—		(19)
Net distributions to noncontrolling interests	—	—		—		—		—		—		(28)		(28)
March 31, 2022	524.7	$	66	$	4,848	$	800	$	(90)	$	715	$	269	$	6,608
Comprehensive income (loss)	—	—		—		596		—		(57)		5		544
Stock and other incentive plans	0.1	—		7		—		1		—		—		8
Common stock repurchases	(7.5)	—		—		—		(157)		—		—		(157)
Net distributions to noncontrolling interests	—	—		—		—		—		—		(9)		(9)
June 30, 2022	517.3	$	66	$	4,855	$	1,396	$	(246)	$	658	$	265	$	6,994
Comprehensive income	—	—		—		152		—		152		13		317
Stock and other incentive plans	—	—		9		—		—		—		—		9


Common stock repurchases	(2.0)	—		—		—		(34)		—		—		(34)
Net distributions to noncontrolling interests	—	—		—		—		—		—		(18)		(18)
September 30, 2022	515.3	$	66	$	4,864	$	1,548	$	(280)	$	810	$	260	$	7,268



	(In Millions)
	Nine Months Ended September 30,
	2017			2016
OPERATING ACTIVITIES
Net income	$	53.2		$	118.5
Adjustments to reconcile net income to net cash provided (used) by operating activities:
Depreciation, depletion and amortization	66.3			88.9
(Gain) loss on extinguishment/restructuring of debt	165.4			(164.1		)
(Gain) loss on deconsolidation	16.3			(3.2		)
Gain on derivatives	(47.5		)	(22.6		)
Other	19.0			31.6
Changes in operating assets and liabilities:
Receivables and other assets	68.9			137.5
Inventories	(26.1		)	21.6
Payables, accrued expenses and other liabilities	(108.8		)	(136.1		)
Net cash provided by operating activities	206.7			72.1
INVESTING ACTIVITIES
Purchase of property, plant and equipment	(78.9		)	(45.8		)
Other investing activities	(5.5		)	6.3
Net cash used by investing activities	(84.4		)	(39.5		)
FINANCING ACTIVITIES
Proceeds from issuance of senior notes	1,057.8			—
Debt issuance costs	(12.0		)	(5.2		)
Net proceeds from issuance of common shares	661.3			287.6
Repurchase of debt	(1,720.7		)	(301.0		)
Repayment of equipment loans	—			(95.6		)
Borrowings under credit facilities	—			105.0
Repayment under credit facilities	—			(105.0		)
Acquisition of noncontrolling interest	(105.0		)	—
Distributions of partnership equity	(53.0		)	(52.5		)
Other financing activities	(17.0		)	(19.3		)
Net cash used by financing activities	(188.6		)	(186.0		)
EFFECT OF EXCHANGE RATE CHANGES ON CASH	3.7			0.4
DECREASE IN CASH AND CASH EQUIVALENTS	(62.6		)	(153.0		)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	323.4			285.2
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	260.8		$	132.2



~~Name~~	~~Location~~	~~Ownership Interest~~	~~Operation~~	~~Status of Operations~~
~~Northshore~~	~~Minnesota~~	~~100.0%~~	~~Iron Ore~~	~~Active~~
~~United Taconite~~	~~Minnesota~~	~~100.0%~~	~~Iron Ore~~	~~Active~~
~~Tilden~~¹	~~Michigan~~	~~100.0%~~	~~Iron Ore~~	~~Active~~
~~Empire~~¹	~~Michigan~~	~~100.0%~~	~~Iron Ore~~	~~Indefinitely Idled~~
~~Koolyanobbing~~	~~Western Australia~~	~~100.0%~~	~~Iron Ore~~	~~Active~~

¹~~During the third quarter of 2017, our ownership interest in Tilden and Empire changed. Refer to the~~ ~~Noncontrolling Interests~~ ~~section below for additional information.~~



	($ in Millions)
	Nine Months Ended September 30, 2017
				Estimate
Financial Statement Line Impacted	As Reported			Adoption of ASU No. 2017-07			As Adjusted
Cost of goods sold and operating expenses	$	(1,328.3	)	$	1.3		$	(1,327.0	)
Selling, general and administrative expenses	$	(77.8	)	$	(5.8	)	$	(83.6	)
Miscellaneous - net	$	3.0		$	(1.2	)	$	1.8
Operating income	$	326.2		$	(5.7	)	$	320.5
Other non-operating income	$	2.3		$	5.7		$	8.0
Net Income (Loss)	$	53.2		$	—		$	53.2



	(In Millions)
	September 30, 2017						December 31, 2016
Segment	Finished Goods		Work-in Process		Total Inventory		Finished Goods		Work-in Process		Total Inventory
U.S. Iron Ore	$	151.3	$	18.6	$	169.9	$	124.4	$	12.6	$	137.0
Asia Pacific Iron Ore	29.4		8.4		37.8		23.6		17.8		41.4
Total	$	180.7	$	27.0	$	207.7	$	148.0	$	30.4	$	178.4


(In millions)
Debt Instrument	Issuer1	Annual Effective Interest Rate	September 30, 2023		December 31, 2022
Senior Secured Notes:
6.750% 2026 Senior Secured Notes	Cliffs	6.990%	$	829	$	829
Senior Unsecured Notes:
7.000% 2027 Senior Notes	Cliffs	9.240%	73		73
7.000% 2027 AK Senior Notes	AK Steel	9.240%	56		56
5.875% 2027 Senior Notes	Cliffs	6.490%	556		556
4.625% 2029 Senior Notes	Cliffs	4.625%	368		368
6.750% 2030 Senior Notes	Cliffs	6.750%	750		—
4.875% 2031 Senior Notes	Cliffs	4.875%	325		325
6.250% 2040 Senior Notes	Cliffs	6.340%	235		235
ABL Facility	Cliffs2	Variable3	325		1,864
Total principal amount			3,517		4,306
Unamortized discounts and issuance costs			(59)		(57)
Total long-term debt			$	3,458	$	4,249



1 Unless otherwise noted, references in this column and throughout this NOTE 7 - DEBT AND CREDIT FACILITIES to "Cliffs" are to Cleveland-Cliffs Inc., and references to "AK Steel" are to AK Steel Corporation (n/k/a Cleveland-Cliffs Steel Corporation).
2 Refers to Cleveland-Cliffs Inc. as borrower under our ABL Facility.
3 Our ABL Facility annual effective interest rate was 7.148% and 5.602%, respectively, as of September 30, 2023 and December 31, 2022.


(In millions)	September 30, 2023
Available borrowing base on ABL Facility1	$	4,750
Borrowings	(325)
Letter of credit obligations2	(94)
Borrowing capacity available	$	4,331

1 As of September 30, 2023, the ABL Facility has a maximum available borrowing base of $4.75 billion. The borrowing base is determined by applying customary advance rates to eligible accounts receivable, inventory and certain mobile equipment.
2 We issued standby letters of credit with certain financial institutions in order to support business obligations, including, but not limited to, workers' compensation, operating agreements, employee severance, environmental obligations, and insurance.



(In Millions)
			Gain (Loss) on Extinguishment¹
	Debt Extinguished		Three Months Ended September 30, 2017			Nine Months Ended September 30, 2017
Secured Notes
$540 Million 8.25% 2020 First Lien Notes	$	540.0	$	(88.6	)	$	(93.5	)
$218.5 Million 8.00% 2020 1.5 Lien Notes	218.5		—			45.1
$544.2 Million 7.75% 2020 Second Lien Notes	430.1		—			(104.5		)
Unsecured Notes
$400 Million 5.90% 2020 Senior Notes	136.7		—			(7.8		)
$500 Million 4.80% 2020 Senior Notes	114.4		—			(1.9		)
$700 Million 4.875% 2021 Senior Notes	171.0		—			(2.8		)
	$	1,610.7	$	(88.6	)	$	(165.4	)

¹ This includes premiums paid related to the redemption of our notes of $62.4 million and $110.0 million for the three and nine months ended September 30, 2017, respectively.


2023		2024		2025		2026		2027		Thereafter		Total
$	—	$	—	$	—	$	829	$	685	$	2,003	$	3,517



	(In Millions)
	Maturities of Debt
2017 (October 1 - December 31)	$	—
2018	—
2019	—
2020	211.3
2021	138.4
2022	—
2023 and thereafter	1,373.4
Total maturities of debt	$	1,723.1



	(In Millions)
	September 30, 2017
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	$	40.0	$	37.0	$	—	$	77.0
Derivative assets	—		—		89.5		89.5
Total	$	40.0	$	37.0	$	89.5	$	166.5
Liabilities:
Derivative liabilities	$	—	$	—	$	9.3	$	9.3
Total	$	—	$	—	$	9.3	$	9.3



	(In Millions)
	Level 3 Assets
	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Beginning balance	$	72.5		$	25.8		$	31.6		$	7.8
Total gains (losses)
Included in earnings	60.6			14.6			156.0			62.6
Settlements	(43.6		)	(12.0		)	(98.1		)	(42.0		)
Ending balance - September 30	$	89.5		$	28.4		$	89.5		$	28.4
Total gains for the period included in earnings attributable to the change in unrealized gains on assets still held at the reporting date	$	0.1		$	8.2		$	53.4		$	24.7



	(In Millions)
	Level 3 Liabilities
	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Beginning balance	$	(20.9	)	$	(2.6	)	$	(0.5	)	$	(3.4	)
Total gains (losses)
Included in earnings	(19.3		)	(2.9		)	(64.9		)	(12.8		)
Settlements	30.9			2.8			56.1			13.5
Ending balance - September 30	$	(9.3	)	$	(2.7	)	$	(9.3	)	$	(2.7	)
Total gains (losses) for the period included in earnings attributable to the change in unrealized losses on liabilities still held at the reporting date	$	6.0		$	(2.7	)	$	(14.8	)	$	(2.7	)


Balance Sheet Location (In millions)	September 30, 2023		December 31, 2022
Other current assets	$	2	$	15
Other non-current assets	4		30
Other current liabilities	(79)		(87)
Other non-current liabilities	(23)		(10)



Grant Date	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)
February 21, 2017	$	11.67	2.86	92.1%	1.51%	—%	$	19.69	168.72%
June 26, 2017	$	6.64	2.51	92.8%	1.45%	—%	$	10.74	161.75%



	(In Millions)
	Capital Leases		Operating Leases
2017 (October 1 - December 31)	$	6.1	$	1.8
2018	19.3		5.9
2019	10.7		2.9
2020	9.7		2.9
2021	9.0		3.0
2022 and thereafter	0.7		—
Total minimum lease payments	$	55.5	$	16.5
Amounts representing interest	9.0
Present value of net minimum lease payments¹	$	46.5

¹ The total is comprised of $17.0 million and $29.5 million classified as Other current liabilities and Other liabilities, respectively, in the Statements of Unaudited Condensed Consolidated Financial Position at September 30, 2017.



(In Millions)
Derivatives Not Designated as Hedging Instruments	Location of Gain (Loss) Recognized in Income on Derivative	Amount of Gain (Loss) Recognized in Income on Derivative
		Three Months Ended September 30,					Nine Months Ended September 30,
		2017			2016		2017			2016
Customer Supply Agreements	Product revenues	$	54.3		$	7.1	$	123.9		$	26.8
Provisional Pricing Arrangements	Product revenues	(13.1		)	4.5		(32.9		)	22.9
Commodity Contracts	Cost of goods sold and operating expenses	—			—		(1.3		)	—
Total		$	41.2		$	11.6	$	89.7		$	49.7



	(In Millions)
	Cliffs Shareholders’ Equity (Deficit)			Noncontrolling Interest (Deficit)			Total Equity (Deficit)
December 31, 2016	$	(1,464.3	)	$	133.8		$	(1,330.5	)
Comprehensive loss
Net income (loss)	57.1			(3.9		)	53.2
Other comprehensive income	4.2			1.1			5.3
Total comprehensive income (loss)	61.3			(2.8		)	58.5
Issuance of common shares	661.3			—			661.3
Stock and other incentive plans	13.5			—			13.5
Acquisition of noncontrolling interest	(89.1		)	(15.9		)	(105.0		)
Distribution of partnership equity	(16.0		)	(116.7		)	(132.7		)
Distributions to noncontrolling interest	—			1.8			1.8
September 30, 2017	$	(833.3	)	$	0.2		$	(833.1	)



	(In Millions)
	Changes in Pension and Other Post-Retirement Benefits, net of tax			Unrealized Net Gain (Loss) on Foreign Currency Translation			Accumulated Other Comprehensive Loss
December 31, 2016	$	(260.6	)	$	239.3		$	(21.3	)
Other comprehensive income (loss) before reclassifications	3.3			(12.7		)	(9.4		)
Net loss reclassified from accumulated other comprehensive loss	6.4			—			6.4
March 31, 2017	$	(250.9	)	$	226.6		$	(24.3	)
Other comprehensive loss before reclassifications	(0.1		)	(1.5		)	(1.6		)
Net loss reclassified from accumulated other comprehensive loss	6.5			—			6.5
June 30, 2017	$	(244.5	)	$	225.1		$	(19.4	)
Other comprehensive income (loss) before reclassifications	(18.7		)	0.5			(18.2		)
Net loss reclassified from accumulated other comprehensive loss	6.8			—			6.8
September 30, 2017	$	(256.4	)	$	225.6		$	(30.8	)



	(In Millions)
	Changes in Pension and Other Post-Retirement Benefits, net of tax			Unrealized Net Gain (Loss) on Securities, net of tax			Unrealized Net Gain (Loss) on Foreign Currency Translation			Net Unrealized Gain (Loss) on Derivative Financial Instruments, net of tax			Accumulated Other Comprehensive Loss
December 31, 2015	$	(241.4	)	$	0.1		$	220.7		$	2.6		$	(18.0	)
Other comprehensive income (loss) before reclassifications	(1.5		)	(0.1		)	4.4			(3.4		)	(0.6		)
Net loss reclassified from accumulated other comprehensive loss	6.3			—			—			—			6.3
March 31, 2016	$	(236.6	)	$	—		$	225.1		$	(0.8	)	$	(12.3	)
Other comprehensive income (loss) before reclassifications	(0.4		)	—			(2.7		)	0.1			(3.0		)
Net loss reclassified from accumulated other comprehensive loss	6.3			—			—			—			6.3
June 30, 2016	$	(230.7	)	$	—		$	222.4		$	(0.7	)	$	(9.0	)
Other comprehensive income (loss) before reclassifications	(0.5		)	—			0.9			—			0.4
Net loss reclassified from accumulated other comprehensive income (loss)	6.7			—			—			0.7			7.4
September 30, 2016	$	(224.5	)	$	—		$	223.3		$	—		$	(1.2	)



	(In Millions)
Details about Accumulated Other Comprehensive Income (Loss) Components	Amount of (Gain)/Loss Reclassified into Income												Affected Line Item in the Statement of Unaudited Condensed Consolidated Operations
	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Amortization of pension and postretirement benefit liability:
Prior service credits¹	$	(0.2	)	$	(0.4	)	$	(0.4	)	$	(1.2	)
Net actuarial loss¹	7.0			7.1			20.1			20.4
Total before taxes	6.8			6.7			19.7			19.2
	—			—			—			—			Income tax benefit
	$	6.8		$	6.7		$	19.7		$	19.2

Unrealized gain (loss) on derivative financial instruments:
Treasury lock	$	—		$	1.2		$	—		$	1.2		Gain (loss) on extinguishment/restructuring of debt
	—			(0.5		)	—			(0.5		)	Income tax benefit
	$	—		$	0.7		$	—		$	0.7		Net of taxes

Total reclassifications for the period, net of tax	$	6.8		$	7.4		$	19.7		$	19.9

¹ These accumulated other comprehensive income components are included in the computation of net periodic benefit cost (credit). Refer to NOTE 7 - PENSIONS AND OTHER POSTRETIREMENT BENEFITS for further information.



Mine	Cleveland-Cliffs Inc.		ArcelorMittal		U.S. Steel
Hibbing	23.0	%	62.3	%	14.7	%



	(In Millions)
	Balance Sheet Location	September 30, 2017			December 31, 2016
Amounts due from related parties	Accounts receivable, net	$	4.5		$	46.9
Amounts due from related parties	Other current assets	3.4			—
Customer supply agreements and provisional pricing agreements	Derivative assets	88.5			26.8
Amounts due to related parties	Other current liabilities	(45.3		)	(8.7		)
Amounts due to related parties	Derivative liabilities	(5.4		)	—
Amounts due to related parties	Other liabilities	(44.2		)	—
Net amounts due from related parties		$	1.5		$	65.0



~~Item~~
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



	(In Millions)
	Nine Months Ended September 30,
	2017					2016
Tax at U.S. statutory rate of 35%	$	21.0		35.0	%	$	41.1		35.0	%
Increases/(Decreases) due to:
Percentage depletion	(21.6		)	(36.0	)	(21.9		)	(18.7	)
Worthless stock deduction	—			—		(45.4		)	(38.7	)
State taxes	1.1			1.8		2.7			2.4
Impact of foreign operations	3.8			6.3		(0.9		)	(0.8	)
Non-taxable income related to noncontrolling interest	0.4			0.7		(4.3		)	(3.7	)
Valuation allowance build (reversal) on current year operations	(5.7		)	(9.4	)	28.4			24.2
Other items - net	—			(0.1	)	0.8			0.7
Income tax expense (benefit) and effective income tax rate before discrete items	(1.0		)	(1.7	)	0.5			0.4
Discrete Items:
Valuation allowance (reversal) on prior year assets	—			—		(23.9		)	(20.4	)
Tax uncertainties	(1.2		)	(1.9	)	0.7			0.6
Prior-year adjustments made in current year	(4.6		)	(7.7	)	21.0			17.9
Income tax benefit and effective income tax rate including discrete items	$	(6.8	)	(11.3	)%	$	(1.7	)	(1.5	)%



	(In Millions)
							Changes due to:
	Three Months Ended September 30,						Revenue and cost rate			Sales volume			Idle cost/production volume variance		Freight and reimburse-ment			Total change
	2017			2016			Revenue and cost rate			Sales volume			Idle cost/production volume variance		Freight and reimburse-ment			Total change
Revenues from product sales and services	$	596.7		$	428.3		$	100.5		$	41.5		$	—	$	26.4		$	168.4
Cost of goods sold and operating expenses	(439.5		)	(361.8		)	(29.5		)	(31.2		)	9.4		(26.4		)	(77.7		)
Sales margin	$	157.2		$	66.5		$	71.0		$	10.3		$	9.4	$	—		$	90.7



	(in Millions)
	Three Months Ended September 30,
Per Ton Information	2017		2016		Difference			Percent change
Realized product revenue rate¹	$	90.50	$	73.50	$	17.00		23.1	%
Cash cost of goods sold and operating expense rate^1,2	60.87		57.37		3.50			6.1	%
Depreciation, depletion & amortization	2.81		3.56		(0.75		)	(21.1	)%
Total cost of goods sold and operating expenses rate	63.68		60.93		2.75			4.5	%
Sales margin	$	26.82	$	12.57	$	14.25		113.4	%

Sales tons³ (In thousands)	5,863		5,287
Production tons³(In thousands)
Total	6,048		5,722
Cliffs’ share of total	4,265		3,857

¹ Excludes revenues and expenses related to domestic freight, which are offsetting and have no impact on sales margin. Revenues and expenses also exclude venture partner cost reimbursements.
² Cash cost of goods sold and operating expense rate is a non-GAAP financial measure. Refer to "Non-GAAP Reconciliation" for reconciliation in dollars back to our consolidated financial statements.
³ Tons are long tons.