North America’s largest iron-ore producer,Cliffs Natural Resources Inc. (CLFAnalyst Report), reached an agreement with steel giant ArcelorMittal (MTSnapshot Report) to settle disputes over price reopener entitlements for 2009 and 2010 and pellet. Cliffs will get a payment of around $250 million to $270 million after reaching an agreement with ArcelorMittal.

In addition, as part of the settlement, Cliffs and ArcelorMittal have agreed to replace the previous pricing mechanism with a world market-based pricing mechanism beginning in 2011 and through the remainder of the contract for one of the iron ore supply agreements that Cliffs has with ArcelorMittal. As a result of the new pricing feature, going forward, the parties also agreed to forgo future price reopeners.

Earlier in January 2011, Cliffs agreed to buy Canada’s Consolidated Thompson Iron Mines Ltd. for about C$4.9 billion ($4.95 billion) or C$17.25 per share, to expand iron ore sales to Asia.

After the acquisition, Cliffs will manage and operate Consolidated Thompson’s the Bloom Lake open-pit iron ore mine and two adjacent properties in Quebec. This will result in cost savings of around $75 million in terms of transportation and port costs.

Cliffs is the largest producer of iron ore pellets in North America with a 45% share, besides being a major supplier of metallurgical coal in North America with a 30% share. The company operates six iron ore mines in Michigan, Minnesota and Eastern Canada as well as three coking coal mines in West Virginia and Alabama.

The three reportable segments of Cliffs are North American Iron Ore, North American Coal and Asia-Pacific Iron Ore. Cliffs competes with the likes of CONSOL Energy Inc. (CNXAnalyst Report), Massey Energy Co. (MEEAnalyst Report) and Peabody Energy Corp. (BTUAnalyst Report).