 INVESTOR
PRESENTATION AUGUST 2008 Filed by Cleveland-Cliffs Inc Commission File No. 1-8944 Pursuant to Rule 425 under the Securities Act of 1933 and deemed filed pursuant to Rule 14a-12 under the Securities Exchange Act of 1934 Subject Company: Alpha Natural Resources, Inc. Commission File No. 1-32423 CLIFFS NATURAL RESOURCES |
 “Safe
Harbor” Statement under the Private Securities Litigation Reform Act of 1995 A number of the matters discussed in this document that are not historical or current facts deal
with potential future circumstances and developments, in particular, information
regarding expected synergies resulting from the merger of Cleveland-Cliffs and
Alpha, combined operating and financial data, the combined company’s plans, objectives, expectations and intentions and whether and when the transactions contemplated by the merger agreement will be consummated. The discussion of such matters is qualified by the inherent risks and uncertainties surrounding future
expectations generally, and also may materially differ from actual future experience
involving any one or more of such matters. Such risks and uncertainties include: the risk that the businesses will not be integrated successfully; the risk that the cost savings and any other synergies from the transaction may not be fully realized or may take longer to realize than
expected; changes in demand for iron ore pellets by North American integrated steel
producers, or changes in Asian iron ore demand due to changes in steel utilization
rates, operational factors, electric furnace production or imports into the United States and Canada of semi-finished steel or pig iron; the impact of consolidation and rationalization in the steel industry; timing of
changes in customer coal inventories; changes in, renewal of and acquiring new
long-term coal supply arrangements; inherent risks of coal mining beyond the
combined company’s control; environmental laws, including those directly affecting coal mining production, and those affecting customers' coal usage; competition in coal markets; railroad, barge, truck and other
transportation performance and costs; the geological characteristics of Central and
Northern Appalachian coal reserves; availability of mining and processing equipment and
parts; the combined company’s assumptions concerning economically recoverable coal reserve estimates; disruption from the transaction making it more difficult to maintain relationships with customers,
employees or suppliers; the failure to obtain governmental approvals of the transaction
on the proposed terms and schedule, and any conditions imposed on the combined company
in connection with consummation of the merger; the failure to obtain approval of the merger by the stockholders of Cleveland-Cliffs and Alpha and the failure to satisfy various other
conditions to the closing of the merger contemplated by the merger agreement; and the risks that are described from time to time in Cleveland-Cliffs’ and Alpha’s respective reports filed with the SEC, including each of Cleveland-Cliffs’ and Alpha’s annual report on Form 10-K for the year ended December 31, 2007 and quarterly report on Form 10-Q for the quarter ended March 31, 2008,
as such reports may have been amended. This document speaks only as of its date,
and Cleveland-Cliffs and Alpha each disclaims any duty to update the information
herein. |
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Additional Information and Where to Find It In connection with the proposed transaction, a registration statement on Form S-4 will be filed
with the SEC. CLEVELAND- CLIFFS AND ALPHA SHAREHOLDERS ARE ENCOURAGED TO READ
THE REGISTRATION STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, INCLUDING THE JOINT PROXY STATEMENT/PROSPECTUS THAT WILL BE PART OF THE REGISTRATION STATEMENT, WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT THE PROPOSED MERGER. The final joint proxy statement/prospectus
will be mailed to shareholders of Cleveland-Cliffs and shareholders of Alpha.
Investors and security holders will be able to obtain the documents free of charge at the SEC’s web site, www.sec.gov, from Cleveland-Cliffs Inc, Investor Relations, 1100 Superior Avenue, Cleveland, Ohio 44114-2544, or call (216) 694-5700, or from Alpha Natural Resources, Inc., One Alpha Place,
P.O. Box 2345, Abingdon, Virginia 24212, attention: Investor Relations, or call (276)
619-4410. Participants In Solicitation Cleveland-Cliffs and Alpha and their respective directors and executive officers and other
members of management and employees may be deemed to be participants in the solicitation
of proxies in respect of the proposed merger. Information concerning Cleveland-Cliffs’ participants is set forth in the proxy statement dated March 26, 2008, for Cleveland-Cliffs’ 2008 annual meeting of shareholders as filed with the SEC on Schedule 14A. Information concerning Alpha’ participants is set forth in the proxy statement, dated April 2, 2008, for Alpha’s 2008 annual meeting of stockholders as
filed with the SEC on Schedule 14A. Additional information regarding the interests
of participants of Cleveland-Cliffs and Alpha in the solicitation of proxies in respect of the proposed merger will be included in the registration statement and joint proxy
statement/prospectus and other relevant materials to be filed with the SEC when they
become available. Important Information for Investors and Shareholders |
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Creates a leading independent supplier of critical raw materials to the robust North American steel industry and a major global player — Core iron ore and met coal businesses strongly correlated Capitalizes on strong outlook for iron ore, metallurgical and thermal coal Shared culture and core values of both companies, including a focus on safety Strong financial outlook positions company for ongoing growth opportunities — Pro forma 2008E EBITDA of $1.9bn 1 , increasing to $4.7bn 1 in 2009E — Pro forma leverage (Debt/2008E EBITDA) of 1.2x 1 Compelling value creation for Cleveland-Cliffs and Alpha Natural Resources shareholders
Transaction Highlights 1 Management estimates ~ ~ ~ ~ ~ ~ |
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Largest US met coal supplier Strong management team with 20+ years of industry experience Supply/demand metrics in coal market Unique blending and coal optimization capabilities drive meaningful synergy
potential Meaningfully increases exposure to export market given
infrastructure and sales network Well diversified production profile with 8
business units and met/steam sales mix Why Alpha?
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Overview: Cleveland-Cliffs (“CLF”) to acquire 100% of Alpha Natural Resources (“ANR”) for cash and stock Purchase Price: Equity purchase price of approximately $10 billion 1 Premium: Based on Cliffs’ closing price on July 15, 2008, Alpha stockholders would receive a premium of 35% Consideration: Alpha stockholders would receive 0.95 Cleveland-Cliffs common shares plus $22.23 in cash for each share of Alpha stock they owned Ownership: Upon completion of the transaction, Alpha stockholders would own approximately 40% of the combined company, and Cliffs shareholders would own approximately 60% percent on a fully-diluted basis Key Conditions: The transaction is subject to approval by Cliffs and Alpha shareholders, as well as the satisfaction of customary closing conditions and regulatory approvals Timing: The transaction is expected to close by the end of 2008 Transaction Summary 1 Based on Cliff’s closing price on July 15, 2008 |
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Shared core values — Best-in-class safety standards and practices — Both companies recognize that the processing of the earth’s mineral resources must be
accomplished in a socially responsible manner Integrated Management and Board structure — Following the close of the transaction, Cleveland-Cliffs’ Board of Directors will be expanded by two seats to be filled by two current Alpha Natural Resources directors, Michael Quillen and Glenn
Eisenberg — Joseph Carrabba will serve as Chairman and Chief Executive Officer — Michael Quillen will serve as non-executive Vice Chairman — Kevin Crutchfield will become President of the combined company’s Coal division — Donald Gallagher will become President of the combined company’s Iron Ore division — Laurie Brlas will serve as Executive Vice President and Chief Financial Officer Shared Cultural Commitment to Integrity, Safety & Environment |
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The Right Platform – Supplier to the Steel Industry |
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Steel is a Large, Growing, Global Business UK 1200 1000 800 600 400 200 0 Purchasing Power Parity GDP/Capita 0 10 20 30 40 50 Germany Canada US Australia Japan Korea Russia China Overall, China’s steel consumption is three times that of the US On a per capita basis, however, China only consumes half as much as the US The US remains a net importer of steel Approx. 50mm tonnes Note: Size of bubbles represent size of absolute steel consumption 2007 in each
respective country BRIC economic growth is substantial and appears
inevitable Brazil India Steel consumption potential (2007) |
 10 Robust Steel Demand Drives this Combination Global steel demand (millions of tonnes) 0 500 1,000 1,500 2,000 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010E 2015E Post World War II reconstruction and Japanese industrialization CAGR 1950-1973: 5.9% Post-oil crisis slow down CAGR 1973-1995: 0.4% BRIC cycle CAGR 1995-2015: 4.4% Source: IISI, Metal Strategies |
 11 US Steel Industry is Particularly Well-Positioned Source: FactSet, Metal Strategies, AME Dollar vs. Euro ($/€) Market share of top 3 US producers (%)
0.50 0.75 1.00 1.25 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 US steel consumption (millions of tonnes) 0 25 50 75 100 125 150 2000 2002 2004 2006 2008E US steel consumption US steel imports HRC prices ($/tonne) 0 200 400 600 800 1,000 1996 2000 2004 2008E 0% 20% 40% 60% 80% 100% HRC Plate CRC Tin Mill 2000 2006 • Mitigates imports and strengthens exports • US is a net importer • US is becoming a low cost producer • US steel industry continues to attract foreign investment |
 12 All others 32% Consol 6% Patriot Coal 10% Jim Walter Resources 11% Massey Energy 16% Cliffs Natural Resources 25% U.S. Steel 24% Iron Ore Company of Canada 16% Arcelor Mittal 15% Cliffs Natural Resources Managed 45% CNR will be the Leading Supplier to the Robust North American Steel Industry Source: Company data, EIA 1 2007 coal production of US companies with meaningful met coal production Cliffs Natural Resources will be well-positioned to optimize operations from the combined company’s asset base NA iron ore pellet production Coal production mix 1 (million of tons) US met coal production (%) 3 9 13 5 6 31 40 6 22 66 Pro forma Cliffs Massey Walter Patriot CONSOL Met Coal Steam Coal 13 9 6 5 3 |
 13 More Than 80% of Revenue Driven by Steel Industry ~$6bn Met coal 34.0% Iron ore 46.7% Brokered coal 6.7% Steam coal 12.5% Pro forma revenue 1 & production (2008E) Source: Company data 1 Excludes revenue from freight & other 2 Per Alpha Natural Resources’ latest annual filing, steam/met mix related to mine geology Iron ore 52.3% Steam coal 8.6% Steam / Met coal² 23.6% Iron ore: 1bn tons Coal: 915mm tons Pro forma global reserves (2007) Met coal 15.5% Hibbing Taconite United Taconite Northshore Mining Empire Mine Tilden Mine Oak Grove Mine Cliffs Corporate Headquarters Pinnacle Complex Pinnacle Mine Green Ridge Mine AMFIRE Kingwood Brooks Run Welch Enterprise Paramont Dickenson-Russell Callaway Cliffs North America Wabush Mine Iron ore assets Coal assets ~72mm tons Met coal 23.4% Iron ore 50.6% Brokered coal 7.8% Steam coal 18.2% |
 14 Strong Iron Ore Trends 0 25 50 75 100 125 150 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008E Pellets Lump Fines Iron ore prices ($/tonne) Source: Tex Reports Recently announced iron ore pellet contracts at $140/tonne ~ ~ |
 15 The Right Time – Coal Fundamentals are Attractive |
 16 Strong Coal Pricing Trends 0 20 40 60 80 100 120 140 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008E Note: CAPP steam coal index – CSX, 12,500 Btu, 1# Rail Source: Bloomberg, Platts Met coal prices ($/tonne) Steam coal prices ($/ton) 0 50 100 150 200 250 300 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008E Source: Metal Strategies, equity research Alpha recently announced met coal contracts for between $300- $305/tonne at the port These contracts are for 3 mt and equate to $250/ton at the mine Steel producers are currently seeking to negotiate 2009 met coal contracts early Alpha recently announced 2.7 mt of steam coal contracts for 2008/2009 delivery at $102/ton ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ |
 17 Favorable Met Coal Outlook Demand driven by strong expected continued growth in global steel production—both domestically
and abroad — Weak dollar and availability of iron and met coal favorable for US production outlook — US is swing supplier for export met coal markets to meet global demand Greater than 50% growth in met export supply YTD Meaningful port capacity — Hampton Roads, DTA, etc. Supply constraints increasingly challenging — Specific events, such as floods in Australia, highlight tight market — China export limitations — Long capital equipment lead times — Aging workforce and availability of new labor — Difficulty in obtaining permits — Identified additional sizable reserves limited Recent accidents at major coking coal mines in Eastern Europe have raised concerns about the
safety/security of indigenous supply (Ukraine, Russia, Kazakhstan, Poland)
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 18 Favorable Met Coal Outlook Global seaborne met coal supply / demand (millions of tonnes) US met coal exports (millions of tonnes)
Few substitutes for coking coal — Scarcity of high quality met coal — Limitations on use of PCI & semi-soft coal in blast furnaces Large international steel companies securing sources of supply — POSCO and ArcelorMittal acquire meaningful position in Macarthur — ArcelorMittal acquired privately-held met coal producers Mid Vol and Concept Coal — Several other met coal M&A situations drawing attention of international steel producers +3 +12 -3 -2 -10 Source: Equity research, EIA 2006 2007 2008E 2009E 2010E Import Demand Export Supply 2006 2007 2008E 2009E 2010E 182 193 204 219 225 185 205 201 217 215 Import Demand Export Supply 24.3 26.0 24.9 29.2 41.7 |
 19 Demand Shifted as China Became Net Importer of Met Coal in 2007 As China grew, its met coal exports and imports shifted by nearly 17 million tonnes 2007 net imports: 3.7 2002 net exports: 13.0 Source: McCloskey’s 0 2 4 6 8 10 12 14 2002 2003 2004 2005 2006 2007 Exports Imports AME Mineral Economics: net imports will increase further to at least 10 million tonnes by 2013 Imports/exports balance (millions of tonnes) |
 20 Strong Demand for Met Coal is Expected to Continue New battery construction outside of China creating 52 million tonnes of incremental met coal
demand Note: Metric tonnes in millions Source: Alpha management estimates from various studies & published
sources 2.9 9.5 1.4 14.7 11.2 6.6 5.7 0 2 4 6 8 10 12 14 16 2004 2005 2006 2007 2008 2009 2010 + 25 +27 Estimated new met coal demand from announced coke batteries (ex-China) (million of tonnes) |
 21 Coal is Well Positioned in US Energy Market Natural gas prices near historic highs 1 ($/mm Btu) Crude oil prices near historical highs¹ ($/barrel) US coal production² (mm short tons) Electricity generated by coal is growing 3 • YTD 2008, US coal production is up 0.7% • YTD 2008, coal fired electricity generation is up 1.8% 1,128 1,094 1,072 1,112 1,133 1,163 1,147 1,150 900 950 1,000 1,050 1,100 1,150 1,200 2001 2002 2003 2004 2005 2006 2007 LTM 1 Source: Bloomberg. From 01/01/03 through 07/25/08 2 Source: EIA. Data through June 2008 as of 07/24/08 report 3 Source: EIA. Data through February 2008 as of 07/10/08 report $124.65 $9.33 Average: $59.85 Average: $7.07 Coal 51% Nuclear 20% Natural Gas 19% Hydroelectric 6% Other 4% 2003 2004 2005 2007 2008 2006 2003 2004 2005 2007 2008 2006 $3 $6 $9 $12 $15 $0 $30 $60 $90 $120 $150 $180 |
 22 Attractive Steam Coal Fundamentals Global seaborne steam coal supply / demand (millions of tonnes) US steam coal exports (millions of tonnes) China factor — Power supplies tight — Domestic prices capped — Export volumes limited by quotas Country-specific export impediments — Australian infrastructure expansion delays — Power rationing in South Africa Strong import demand from India, Japan, Korea U.S. fundamentals sound — Production growth ~1% YTD — Thermal export growth greater than 50% YTD — Utility stockpiles are stable +31 +14 -14 -22 -7 Source: Equity research, EIA 2006 2007 2008E 2009E 2010E Import Demand Export Supply 2006 2007 2008E 2009E 2010E 442 465 484 507 502 473 479 471 485 495 Import Demand Export Supply 19.2 19.3 20.0 24.5 35.7 |
 23 Value Creation |
 24 History of Successful and Well-Timed Investments Cleveland-Cliffs share price performance ($) Source: FactSet, company data. Adjusted for 2-for-1 stock split on
May 16, 2008 March 31, 2005 Acquires 68.7% of Portman for $372mm April 19, 2005 Raises stake in Portman to 80.4% for $62mm March 5, 2007 Acquires 30% interest in Amapa Project for $133mm April 18, 2007 Invests $120mm in Sonoma Coal Project September 1, 2006 Joe Carrabba named President and CEO of Cleveland-Cliffs +783% CAGR: 85% $0 $25 $50 $75 $100 $125 $150 Jan 2005 Jul 2005 Jan 2006 Jul 2006 Jan 2007 Jul 2007 Jan 2008 Jul 2008 Portman Ltd Acquisition • January 11, 2005]
Launched all-cash offer for Portman Ltd, a Western Australia-based iron ore producer & a key supplier to Chinese and Japanese steel producers • By April 2005, Cleveland-Cliffs had acquired 80.4% of Portman for A$3.85 per share • Current share price of A$17.50 represents an increase of 355% PinnOak Resources Acquisition • July 31, 2007]
Acquired PinnOak Resources, a US-based met coal producer with operations in West Virginia & Alabama • Total acquisition cost of $610mm • Key supplier of metallurgical coal for North American steel industry |
 25 Successful and Well-Timed International Investments in Fast Growing Regions Source: Company data Amapa Project Iron ore assets Coal assets Portman Koolyanobbing Portman Cockatoo Island Sonoma Cliffs Asia Pacific Cliffs Latin America International highlights Portman stake provides crucial access to the Asian market Production expected to reach 8 million tonnes in 2008 and has over 90 million tonnes of reserves 45% interest in the Sonoma Coal Project in Queensland, Australia Production is expected to reach 2 million tonnes of coal in 2008 and 3-4 in 2009 and beyond and has 27 million tonnes of reserves 30% interest in the Amapa Project in northern Brazil Production of iron ore is predicted to reach 3 million tonnes of iron ore in 2008 and 6.5 million in the following years |
 26 Alpha’s Pro Forma Contribution Accelerates in ’09 and Beyond with the Strong Met Coal Outlook Pro forma EBITDA 1,2 ($ billion) Source: FactSet, company data, management estimates 1 2007A based on company filings 2 Approximate midpoints of management estimates 3 Based on stock prices as of close on July 15, 2008 Financial multiples 2 Cleveland-Cliffs — 2009E EBITDA $2.75bn — EV/2009E EBITDA³ 4.6x Alpha Natural Resources — 2009E EBITDA $1.95bn — EV/2009E EBITDA³ 5.0x Cleveland-Cliffs 60% Alpha Natural 40% Pro forma EBITDA 2 (2009E) 0 1 2 3 4 5 2007A 2008E 2009E ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ |
 27 Undervalued Relative to Large-Cap Iron Ore, Coal and Diversified Peers Firm Value / 2009E EBITDA vs. Peers Source: FactSet, company data, approximate midpoints of management guidance Note:Based on stock prices as of close on July 15, 2008;Forward data per Wall Street consensus
estimates except for Cliffs which is per management guidance; Pro
forma Cliffs Natural Resources calculated as Cliffs price as of 07/15/08 times pro forma fully diluted shares outstanding plus net debt and other firm value adjustments (excluding transaction costs) divided by the approximate midpoint of
management guidance for 2009E EBITDA 4.8x 5.2x 5.3x 5.4x 6.5x 7.3x 7.7x 8.6x 8.7x 0x 2x 4x 6x 8x 10x Peabody Fortescue CONSOL Arch Coal Rio Tinto Xstrata BHP Vale Pro forma Cliffs Natural Resources Iron Ore / Diversified Coal |
 28 Strong Financial Position Financials Revenue $6.5bn $10.2bn EBITDA $1.9bn $4.7bn Margin (%) 28% 47% Leverage Total debt $2.1bn $1.9bn Debt/EBITDA 1.2x 0.4x Estimated annual synergies of $200 million beginning in 2010 Pro forma 2008E Pro forma 2009E Source: Management estimates ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ |
 29 Creates a leading independent supplier of critical raw materials to the robust North American steel industry and a major global player — Core iron ore and met coal businesses strongly correlated Capitalizes on strong outlook for iron ore, metallurgical and thermal coal Shared culture and core values of both companies, including a focus on safety Strong financial outlook positions company for ongoing growth opportunities — Pro forma 2008E EBITDA of $1.9bn 1 , increasing to $4.7bn 1 in 2009E — Pro forma leverage (Debt/2008E EBITDA) of 1.2x 1 Compelling value creation for Cleveland-Cliffs and Alpha Natural Resources shareholders
Transaction Highlights 1 Management estimates ~ ~ ~ ~ ~ ~ |
 INVESTOR PRESENTATION AUGUST 2008 CLIFFS NATURAL RESOURCES |