Annual report pursuant to Section 13 and 15(d)

Related Parties

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Related Parties
 12 Months Ended
Dec. 31, 2011
Related Parties [Abstract]  
Related Parties

NOTE 18 — RELATED PARTIES

We co-own three of our five U.S. iron ore mines and one of our two Eastern Canadian iron ore mines with various joint venture partners that are integrated steel producers or their subsidiaries. We are the manager of each of the mines we co-own and rely on our joint venture partners to make their required capital contributions and to pay for their share of the iron ore pellets that we produce. The joint venture partners are also our customers. The following is a summary of the mine ownership of these iron ore mines at December 31, 2011:

Mine

    Cliffs Natural
Resources		      ArcelorMittal      U. S. Steel
Canada		      WISCO  

Empire

      79.0         21.0         —           —     

Tilden

      85.0         —           15.0         —     

Hibbing

      23.0         62.3         14.7         —     

Bloom Lake

      75.0         —           —           25.0   

ArcelorMittal has a unilateral right to put its interest in the Empire Mine to us, but has not exercised this right to date.

Product revenues to related parties were as follows:

 

     (In Millions)  
      2011     2010     2009  

Product revenues to related parties

    $ 2,192.4      $ 1,165.5      $ 593.8   

Total product revenues

      6,551.7        4,416.8        2,216.2   

Related party product revenue as a percent of total product revenue

      33.5 %      26.4 %      26.8 % 

Amounts due from related parties recorded in Accounts receivable and Derivative assets, including customer supply agreements and provisional pricing arrangements, were $180.4 million and $52.4 million at December 31, 2011 and 2010, respectively. Amounts due to related parties recorded in Other current liabilities, including provisional pricing arrangements and liabilities to minority parties, were $43.0 million at December 31, 2011.

In 2002, we entered into an agreement with Ispat that restructured the ownership of the Empire mine and increased our ownership from 46.7 percent to 79 percent in exchange for assumption of all mine liabilities. Under the terms of the agreement, we indemnified Ispat from obligations of Empire in exchange for certain future payments to Empire and to us by Ispat of $120.0 million, recorded at a present value of $26.5 million and $32.8 million at December 31, 2011 and 2010, respectively. Of these amounts, $16.5 million and $22.8 million were classified as Other non-current assets at December 31, 2011 and 2010, respectively, with the balances current, over the 12-year life of the supply agreement.

Supply agreements with one of our customers include provisions for supplemental revenue or refunds based on the customer's annual steel pricing for the year the product is consumed in the customer's blast furnace. The supplemental pricing is characterized as an embedded derivative. Refer to NOTE 3 — DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES for further information.