Mesabi Trust said Cleveland-Cliffs is not seriously working toward a solution for the royalty payments that it cited for idling mining operations in Babbitt and Silver Bay.
Last week, Cliffs announced it would temporarily halt Northshore Mining operations at the two northern Minnesota sites this spring, saying the royalties it must pay to the trust are "ridiculous."
But Mesabi fired back in a U.S. securities filing Monday, suggesting Cliffs has not made an earnest attempt to resolve the dispute.
"Cliffs has not recently requested any changes to the royalty structure, which is governed by a 1989 royalty agreement," Mesabi Trust's corporate trustee wrote in the latest Securities and Exchange Commission filing, "and Cliffs has historically failed to engage in meaningful negotiations requested by Mesabi Trust to address the interpretations of the royalty structure."
Cliffs Chief Executive Lourenco Goncalves said Friday that "mainly due to the ridiculous royalty structure we have in place with the Mesabi Trust, we will be idling all production at our Northshore mine this spring."
Mesabi Trust was formed in 1961 to derive income from the Peter Mitchell mine near Babbitt, Minn. The publicly traded trust pays out royalty revenue to shareholders — based largely on taconite shipments — through dividends.
The trust is due a roughly $1 million minimum royalty payment regardless of production levels, according to Monday's SEC filing.
Cliffs made $63 million in royalty payments to the trust last year. The Ohio-based iron ore and steel company reported a $3 billion profit on $20.4 billion in revenue last year.
