Essar Steel Algoma has settled its contract dispute with Cliffs Natural Resources for the supply of iron ore pellets to its Sault Ste. Marie steel plant.
According to a news release, the settlement, which resolves all claims between the parties, is subject to documentation and requisite court approval.
Pursuant to the settlement, the parties have agreed to reinstate the contract. Cliffs will resume supply of iron ore pellets to Essar Steel Algoma for a portion of the company's remaining 2016 requirements and then return to the contract's existing terms in 2017 and beyond.
“We are very pleased to have this litigation behind us, and are grateful for the focused efforts of all involved in facilitating a speedy resolution,” said the company’s CEO, Kalyan Ghosh, in a release.
“In light of the current Sale and Investment Solicitation Process, this agreement provides interested parties with assurance of supply of quality iron ore, and ensures Algoma can remain a low-cost producer.”
In January 2015, Cliffs filed a US$90-million lawsuit against Essar, accusing the company of breach of contract. Essar filed a US$164-million counter claim against Cliffs, saying it was owed credit payment by the company.
Then last October, Cliffs ended its taconite pellet agreement with Essar, leaving Essar scrambling to find an alternate pellet supplier. It has been getting its supply from mines owned by U.S. Steel in northern Minnesota.
A month later, Essar filed for bankruptcy protection and has been operating under a Sale and Investment Solicitation Process in an effort to find a buyer or new investors. The company is currently operating with US$200 million in debtor-in-possession financing, which expires on Sept. 1.
It has said it’s received offers of interest from “several” parties, but has declined to name the number or names of those parties. It has now moved into the second phase of the process, during which bidders will tour the facility and meet with management.
Essar Steel Algoma’s Sault Ste. Marie plant manufactures and sells hot and cold rolled steel products, including sheet and plate.
