Quarterly report pursuant to Section 13 or 15(d)

RELATED PARTIES

v3.19.2
RELATED PARTIES
 6 Months Ended
Jun. 30, 2019
Related Party Transactions [Abstract]  
RELATED PARTIES
NOTE 18 - RELATED PARTIES
One of our four operating mines, Hibbing, is a co-owned joint venture with companies that are integrated steel producers or their subsidiaries. We are the manager of Hibbing 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. In 2018, we tendered our resignation as the mine manager of the Hibbing mine and plan to transition this role to the majority owner in August 2019. The following is a summary of the mine ownership of the co-owned iron ore mine at June 30, 2019:
Mine
 
Cleveland-Cliffs Inc.
 
ArcelorMittal
 
U.S. Steel
Hibbing
 
23.0
%
 
62.3
%
 
14.7
%

Product revenues from related parties were as follows:
 
(In Millions)
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2019
 
2018
 
2019
 
2018
Product revenues from related parties
$
415.8

 
$
409.4

 
$
456.9

 
$
471.1

Total product revenues
$
697.4

 
$
672.0

 
$
842.8

 
$
841.2

Related party product revenue as a percent of total product revenue
59.6
%
 
60.9
%
 
54.2
%
 
56.0
%

The following table presents the classification of related party assets and liabilities in the Statements of Unaudited Condensed Consolidated Financial Position:
 
 
(In Millions)
Balance Sheet Location
 
June 30, 2019
 
December 31, 2018
Accounts receivable, net
 
$
139.3

 
$
176.0

Derivative assets
 
116.2

 
89.3

Partnership distribution payable
 
(44.1
)
 
(43.5
)
Other current liabilities
 
(2.7
)
 
(1.8
)
 
 
$
208.7

 
$
220.0


A supply agreement with one customer provides for supplemental revenue or refunds to the customer based on the average annual daily market price for hot-rolled coil steel at the time the product is consumed in the customer’s blast furnaces. The supplemental pricing is characterized as a freestanding derivative. Refer to NOTE 13 - DERIVATIVE INSTRUMENTS for further information.
During 2017, our ownership interest in Empire increased to 100% as we reached an agreement to distribute the noncontrolling interest net assets of $132.7 million to ArcelorMittal, in exchange for its interest in Empire. The net assets were agreed to be distributed in three installments of $44.2 million each, the first of which was paid upon the execution of the agreement, the second of which was paid in August 2018 and the final of which is due in August 2019. The remaining installment is reflected in Partnership distribution payable in the Statements of Unaudited Condensed Consolidated Financial Position as of June 30, 2019 and December 31, 2018.