Cleveland-Cliffs' Fateful Flaw

Cleveland-Cliffs Inc. forgot to get just one thing before unveiling its $10 billion deal for Alpha Natural Resources Inc. -- Phil Falcone's permission.

As a result, the Cleveland iron-ore producer may have inadvertently put itself into play.

Within two days of the deal's July 16 announcement, Harbinger Capital, Mr. Falcone's hedge fund and Cleveland-Cliffs' largest shareholder, said it opposed the move, leaving the transaction in doubt. With a 16% stake in Cliffs, Mr. Falcone effectively has enough power to block any transaction.

Behind the scenes, the Harbinger chief has begun pushing for Cleveland-Cliffs to take advantage of the global steel ...