ArcelorMittal to sell stake in Labrador

Jan 02 2013 11:20

Company Data


Last traded 5
Change 0
% Change 0
Cumulative volume 253148
Market cap 0

Last Updated: 01/01/0001 at 12:00. Prices are delayed by 15 minutes. Source: McGregor BFA

Related Articles

ArcelorMittal takes $4.3bn writedown

ArcelorMittal pulls bid for EU project

Arcelor Mittal in the firing line

Hong Kong – ArcelorMittal [JSE:ACL] the world's biggest steelmaker, will sell a $1.1bn stake in a Canadian iron ore mine operator to a consortium that includes South Korean steelmaker Posco and Taiwan-listed China Steel Corp, China Steel said in a statement.

ArcelorMittal, formed in 2006 when India-born Lakshmi Mittal's steel business bought European peer Arcelor for $33bn, is battling sluggish steel demand and is looking to offload assets to cut debt.

The sale of a 15% stake in Canada's Labrador Trough iron ore mining and infrastructure asset is part of the company's debt cutting process.

Posco, China Steel and ArcelorMittal Mines Canada will own Labrador Trough through a joint venture and will enter into long-term iron ore supply agreements, China Steel said in the statement on its Website.

The transaction is subject to approval from the Taiwanese government, and is expected to close in two installments in the first and second quarters of 2013, the statement said.

The deal will give Posco, the world's fourth-biggest steelmaker, access to iron ore and coal used to make steel, as it currently imports nearly all of its key raw materials. 

Posco already owns a 12.5% stake in Australia's $10bn Roy Hill project.

A South Korean wire service Yonhap Infomax reported on 2 January that China Steel and Posco would jointly contribute $540m, while the remainder was expected to be paid by financial investors including the National Pension Service.

A Posco spokesperson confirmed a consortium involving Posco signed a stock purchase agreement to acquire a stake in the iron ore mine operator, but declined to elaborate on details.

ArcelorMittal is one of Canada's top exporters of iron ore to steel markets around the world and its operations account for about 40% of Canada's iron ore output. It operates two large open-pit mines in the province of Quebec, where it also owns the Port-Cartier industrial complex that includes a pellet plant, storage areas and port facilities for shipping.

Last month, ArcelorMittal wrote down the value of its European business by $4.3bn, underscoring gloom about prospects for the region's recession-hit manufacturers.

A source had previously told Reuters that Posco was seeking to buy the stake with South Korea's National Pension Service and other investors.

Credit agency Fitch has cut ArcelorMittal's long-term issuer default rating to BB+, just below investment grade, due to the challenging outlook for Western European steel markets in 2013.

ArcelorMittal says demand in Europe had fallen 29% since 2007 when the financial crisis started.

Goldman Sachs and RBC Capital Markets were advising ArcelorMittal on the deal, while Morgan Stanley is advising the Posco consortium.


Follow Fin24 on Twitter, Facebook, Google+ and Pinterest.

arcelormittal  |  steel



Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Comments have been closed for this article.

Company Snapshot

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

Are you participating in #BackFriday sales?

Previous results · Suggest a vote