South Korea-based Posco and its partners have decided to purchase a 15% interest in ArcelorMittal Mines Canada for a total consideration of $1.1bn.
The steel producer has expressed its intention to attract potential investors to join a consortium that includes China Steel Corporation (CSC) to acquire the stake in the ArcelorMittal-controlled iron ore mines in Canada.
China Steel executive vice president Steve Lee told Bloomberg that the Taiwan-based steelmaker would buy 3.68% of the unit comprising two iron ore mines for $270m, while Posco would also acquire an undisclosed interest.
Global steelmaking major ArcelorMittal also announced its intention to sell a 30% stake in the company's Canadian unit, primarily to reduce debt.
China Steel, Posco and the consortium of financial investors will now sign a joint venture partnership with ArcelorMittal to buy assets in Labrador Trough iron ore mining and infrastructure.
Under the terms of the transaction, China Steel and Posco will sign long-term iron ore off-take agreements proportionate to the combined joint venture interests.
The transaction is scheduled to complete in two installments in the first and second quarters of 2013 and is subject to certain conditions including regulatory approvals from the government of Taiwan.
ArcelorMittal's mines in Canada contribute about 40% of the country's total iron ore production and the deal would provide China Steel and Posco access to these resources.
The mines generate nearly 15 million tonnes of iron ore concentrate and approximately nine million tonnes of iron oxide pellets a year.
Image: Posco aims to tap into more iron ore reserves, used in steelmaking. Photo: Posco.