Annual report pursuant to Section 13 and 15(d)

RELATED PARTIES

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RELATED PARTIES
 12 Months Ended
Dec. 31, 2013
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, 2013:
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
 
82.8
%
 
—

 
—

 
17.2
%

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,
 
2013
 
2012
 
2011
Product revenues from related parties
$
1,664.8

 
$
1,660.8

 
$
2,192.4

Total product revenues
5,346.6

 
5,520.9

 
6,321.3

Related party product revenue as a percent of total product revenue
31.1
%
 
30.1
%
 
34.7
%

Amounts due from related parties recorded in Accounts receivable, net and Other current assets, including customer supply agreements and provisional pricing arrangements, were $132.0 million and $149.8 million at December 31, 2013 and 2012, respectively. Amounts due to related parties recorded in Other current liabilities, including provisional pricing arrangements and liabilities to related parties, were $25.1 million and $20.2 million at December 31, 2013 and 2012, 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 the 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 $11.3 million and $19.3 million at December 31, 2013 and December 31, 2012, respectively. At December 31, 2013, the remaining balance of $11.3 million was recorded in Other current assets and at December 31, 2012, $10.0 million of the remaining balance was recorded in Other current assets. The fair value of the receivable of $11.9 million and $21.3 million at December 31, 2013 and December 31, 2012, respectively, is based on a discount rate of 1.28 percent and 2.85 percent, respectively, which represents the estimated credit-adjusted risk-free interest rate for the period the receivable is outstanding.
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.