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Cliffs Reaches Negotiated Settlement with ArcelorMittal USA
04/12/2011 - Cliffs Natural Resources has reached a negotiated settlement with ArcelorMittal USA and related parties regarding price reopener entitlements for 2009 and 2010 and pellet nominations for 2010 and 2011.
Cliffs Natural Resources Inc. has reached a negotiated settlement with ArcelorMittal USA Inc., and related parties, with respect to the companies' arbitrations and litigation regarding, among other matters, price reopener entitlements for 2009 and 2010 and pellet nominations for 2010 and 2011.
Under the settlement, the two companies agreed to specific pricing levels for 2009 and 2010 pellet sales and related sales volumes. Cliffs will receive a cash payment of approximately $250 to $270 million as a pricing "true-up" for pellet volumes delivered to certain ArcelorMittal steelmaking facilities in North America during both years.
As part of the settlement, Cliffs and ArcelorMittal have also agreed to replace the previous pricing mechanism with a world market-based pricing mechanism beginning in 2011 and through the remainder of the contract for one of the iron ore supply agreements that Cliffs has with ArcelorMittal. As a result of the new pricing feature, going forward, the parties also agreed to forgo future price reopeners.
Based on the settlement, Cliffs said it anticipates providing an update to its previously disclosed 2011 North American Iron Ore business segment outlook when the company reports first quarter results on April 28, 2011.
Cliffs Natural Resources Inc., an international mining and natural resources company, is a major global iron ore producer and a significant producer of high- and low-volatile metallurgical coal. Cliffs' strategy is to continually achieve greater scale and diversification in the mining industry through a focus on serving the world's largest and fastest-growing steel markets.
The company is organized through a global commercial group responsible for sales and delivery of Cliffs products and a global operations group responsible for the production of the minerals the company markets. Cliffs operates iron ore and coal mines in North America and two iron ore mining complexes in Western Australia. The company also has a 45% economic interest in a coking and thermal coal mine in Queensland, Australia. In addition, Cliffs has a major chromite project, in the pre-feasibility stage of development, located in Ont., Canada.
