Annual report pursuant to Section 13 and 15(d)

RELATED PARTIES

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RELATED PARTIES
 12 Months Ended
Dec. 31, 2012
Related Party Transactions [Abstract]  
RELATED PARTIES
NOTE 18 - RELATED PARTIES
Three of our five U.S. iron ore mines and one of our two Eastern Canadian iron ore mines are owned 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 and concentrate 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, 2012:
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 from related parties were as follows:
 
(In Millions)
 
Year Ended December 31,
 
2012
 
2011
 
2010
Product revenues from related parties
$
1,660.8

 
$
2,192.4

 
$
1,165.5

Total product revenues
5,520.9

 
6,321.3

 
4,218.5

Related party product revenue as a percent of total product revenue
30.1
%
 
34.7
%
 
27.6
%

Amounts due from related parties recorded in Accounts receivable, net and Derivative assets, including customer supply agreements and provisional pricing arrangements, were $149.8 million and $180.4 million at December 31, 2012 and 2011, respectively. Amounts due to related parties recorded in Other current liabilities, including provisional pricing arrangements and liabilities to minority parties, were $20.2 million and $43.0 million at December 31, 2012 and 2011, respectively.
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 79.0 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 $19.3 million and $26.5 million at December 31, 2012 and 2011, respectively. Of these amounts, $9.3 million and $16.5 million were classified as Other non-current assets at December 31, 2012 and 2011, 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.