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Quarterly report pursuant to Section 13 or 15(d)

RELATED PARTIES

v3.7.0.1
RELATED PARTIES
6 Months Ended
Jun. 30, 2017
Related Party Transactions [Abstract] Ìý
RELATED PARTIES
NOTE 16 - RELATED PARTIES
Two of our four operating U.S. iron ore mines and our indefinitely-idled Empire mine are co-owned joint ventures with companies 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. One of the joint venture partners is also our customer. The following is a summary of the mine ownership of these iron ore mines at JuneÌý30, 2017:
Mine
Ìý
Cliffs Natural Resources
Ìý
ArcelorMittal
Ìý
U.S. Steel Corporation
Empire
Ìý
79.0
%
Ìý
21.0
%
Ìý
—

Tilden
Ìý
85.0
%
Ìý
—

Ìý
15.0
%
Hibbing
Ìý
23.0
%
Ìý
62.3
%
Ìý
14.7
%

As part of a 2014 extension agreement between us and ArcelorMittal, which amended certain terms of the Empire partnership agreement, certain distributions of the partners' equity amounts were required to be made on a quarterly basis beginning in the first quarter of 2015. These equity distributions were made through the termination of the partnership agreement on December 31, 2016. We paid $8.7 million in January 2017 related to 2016 distributions. During the three and six months ended JuneÌý30, 2016, we recorded distributions of $24.4 million and $41.4 million, respectively, under this agreement of which $17.0 million was paid as of JuneÌý30, 2016. In addition, we paid $11.1 million in January 2016 related to 2015 distributions. ArcelorMittal's equity balance in the Empire partnership as of December 31, 2016 was approximately $132.7 million.
During the second quarter of 2017, the partners reached an agreement in principle regarding the final distribution of partnership equity. We expect the partnership equity distribution to be made per the partnership agreement in three equal installments over a period of 24 months, commencing upon the finalization of the agreement. This agreement is expected to be finalized during the third quarter of 2017.
Product revenues from related parties were as follows:
Ìý
(In Millions)
Ìý
Three Months Ended
June 30,
Ìý
Six Months Ended
June 30,
Ìý
2017
Ìý
2016
Ìý
2017
Ìý
2016
Product revenues from related parties
$
227.5

Ìý
$
241.6

Ìý
$
336.9

Ìý
$
345.0

Total product revenues
512.0

Ìý
452.8

Ìý
924.8

Ìý
728.4

Related party product revenue as a percent of total product revenue
44.4
%
Ìý
53.4
%
Ìý
36.4
%
Ìý
47.4
%

The following table presents the classification of related party assets and liabilities in the Statements of Unaudited Condensed Consolidated Financial Position as of JuneÌý30, 2017 and DecemberÌý31, 2016:
Ìý
(In Millions)
Ìý
Balance Sheet
Location
Ìý
June 30, 2017
Ìý
December 31, 2016
Amounts due from related parties
Accounts receivable, net
Ìý
$
18.8

Ìý
$
46.9

Customer supply agreements and provisional pricing agreements
Other current assets
Ìý
68.0

Ìý
26.8

Amounts due to related parties
Other current liabilities
Ìý
15.9

Ìý
8.7


Certain supply agreements with one U.S. Iron Ore customer provide for supplemental revenue or refunds to the customer based on the customer’s average annual steel pricing or 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 furnace. The supplemental pricing is characterized as a freestanding derivative. Refer to NOTE 13 - DERIVATIVE INSTRUMENTS for further information.