On December 17, Cleveland, US-based miner Cliffs Natural Resources Inc. announced that the pricing dispute regarding its blast furnace pellet supplies to Indian company Essar Group's Ontario, Canada-based steelmaker subsidiary Essar Steel Algoma, Inc. has been successfully resolved in its favor.
According to a Cliffs release, in a binding decision by the American Arbitration Association, an arbitration panel redefined world prices for blast furnace pellets, a factor used in determining annual price increases or decreases under the agreement. The redefinition currently entitles Cliffs to use an increase in excess of 95 percent over 2009 prices for seaborne blast furnace pellets in the supply agreement's pricing formula.
Cliffs said that it anticipates collecting a cash payment in the near term from Essar Steel Algoma for the portion of revenue from 2010 pellet sales that were disputed in the arbitration.
Meanwhile, Essar Steel Algoma intends to file a court application to vacate the award on the basis that the Arbitration Panel exceeded its jurisdiction.
In a statement, the company recalled that it had previously reported in its second quarter report that the true-up payment to September 30, 2010 could be as much as US$175 million. Essar Steel Algoma does not expect to make any true-up payments until the completion of its application to vacate the award.