ArcelorMittal SA acquires 16.3-per cent stake in Coal of Africa

08 April 2009

ArcelorMittal South Africa, a subsidiary of the world's largest steel maker, ArcelorMittal Group, has bought a 16.3-per cent stake in Coal of Africa (CoAL) for 404.5 million rand ($44 million) on Tuesday, in an all-cash deal.

The price is based on the previous 15-day volume weighted average share price of CoAL on the Johannesburg Stock Exchange (JSE). ArcelorMittal SA purchased the shares from CoAL's parent company.

The deal would secure part of ArcelorMittal SA's future coal needs, which is one of the primary raw materials for steel production and a key variable in input costs. The company has an option to enter into an off-take agreement with CoAL for the supply of 2.5 million tones of coking coal annually which at present is close to half of the company's requirement of 5.2 million tones, apart from ensuring adequate quality of the raw material.

Nku Nyembezi-Heita, ArcelorMittal South Africa CEO said, ''This transaction ensures secure supplies of a key input material for the steelmaking process and is an important step in our strategy to pursue raw material backward integration''.

CoAL is a leading mining company engaged in acquisition, exploration and development of thermal and metallurgical coal projects in South Africa apart from owning NiMag a special alloy processing company.

CoAL (formerly GVM Metals Ltd) was incorporated in Australia and listed on the Australian Stock Exchange (ASX), London's Alternative Investment Market (AIM) apart from JSE.