Ontario, Canada-based steel manufacturer Essar Steel Algoma Inc. (Essar), a subsidiary of India-based Essar Group, announced Wednesday that it is making a US$129 million true-up payment to its iron ore supplier US-based mining company Cliff Natural Resources. Essar said that the supplier's claims represent the difference between amounts invoiced in 2010 and amounts due under the recent arbitration award with respect to a pricing dispute.
Essar pointed out that it is paying the amount, on a without prejudice basis, to ensure continuity of iron ore supply during the critical winter months.
As SteelOrbis previously reported, in a binding decision by the American Arbitration Association, an arbitration panel redefined world prices for blast furnace pellets in December, a factor used in determining annual price increases or decreases under the agreement. The redefinition currently entitles Cliffs to an increase in excess of 95 percent over 2009 prices for seaborne blast furnace pellets in the supply agreement's pricing formula.
Essar has filed a court application to vacate the arbitration award which, if successful, would result in a substantial rebate.