European steelmaker ArcelorMittal said on Friday it will sell a 15-per cent stake in its iron ore mining and infrastructure assets in Quebec, Canada, to a consortium led by South Korea's Posco and China Steel Corp (CSC) for about $1.1 billion.
"The consortium has acquired an 11.05 per cent interest in the joint venture for a total consideration of $810 million in cash, with ArcelorMittal's wholly-owned subsidiary ArcelorMittal Mines Canada retaining an 88.95 per cent interest in the joint venture," ArcelorMittal said in a statement from its Luxemburg headquarters.
"As part of ArcelorMittal's strategy to build strategic relationships with key customers, the joint venture has also entered into long-term iron ore off-take agreements with Posco and CSC proportionate to the consortium's joint venture interests.
"The second installment of the investment by the consortium, which will increase the consortium's interest in the joint venture to 15 per cent, remains subject to various conditions and is expected to close in the second quarter of 2013," the statement said.
ArcelorMittal Mines is one of Canada's leading suppliers of iron ore to steel markets around the world, generating some 40 per cent of Canada's total production. As both a mining and primary processing company, it operates extensive facilities in Quebec.
It operates two large open-pit mines, one in Mont-Wright, the largest in North America, and one in Fire Lake.
At Mont-Wright, the mining complex includes a concentrator, massive workshops and an automated concentrate train loading system. The site is linked by company rail to the Port-Cartier industrial complex, which comprises the pellet plant, storage areas and port facilities for shipping.
ArcelorMittal Mines Canada produces some 15 million tonnes of iron ore concentrate and over nine million tonnes of iron oxide pellets annually.
ArcelorMittal, the world's largest steelmaker, which has iron-ore projects in countries including Brazil, Guinea, Liberia, Russia and Senegal, produced nearly 51.4 metric tons of iron ore last year.
It recently expanded its iron ore business and has already secured about half its iron ore needs from its own iron ore mines and has plans to raise that share to 75-85 per cent by 2014.
But the company has now revised its iron ore plans due to a slowdown in the global economy and an overcapacity in the European steel industry.
ArcelorMittal, which is also burdened with a $22-billion debt, had said in July it that it would sell some non-core assets in order to reduce its huge debt burden.
Posco, South Korea's largest steelmaker, imports most of its iron ore needs, has invested around $2.6 billion last year on iron ore and coal, both key ingredients required in steel making.