Posco Studying Bid for ArcelorMittal Iron Ore Assets in Canada

Wednesday, 14 Nov 2012 08:47 AM

 

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Posco, Asia’s third-largest steelmaker, is considering buying a stake in ArcelorMittal Mines Canada Inc. after last month scrapping a bid for Australia’s Arrium Ltd.

“We are studying” a possible stake purchase in the iron ore asset in Canada, Seoul-based spokeswoman Kim Ji Young said by phone. “At the moment, nothing has been determined.”

A consortium including Posco may seek to buy about 10 percent in ArcelorMittal Mines Canada that may be worth $1 billion, MoneyToday reported earlier, citing investment banking officials it didn’t identify. Posco, which may invest as much as $300 million, hired Morgan Stanley to advise on the possible stake purchase, the Korean-language news provider said. The balance of funds would be raised from the consortium partners, which weren’t identified.

Luxembourg-based ArcelorMittal is considering selling about 30 percent of its Canadian iron ore unit, a person familiar with the matter said Oct. 20. ArcelorMittal is working with Goldman Sachs Group Inc. and Royal Bank of Canada, according to the person, who asked not to be named because the deliberations are private.

Posco was a member of a consortium with Noble Group Ltd. and Korean investors that terminated a A$1.2 billion ($1.25 billion) offer for Sydney-based Arrium last month after the target’s board refused to engage with the group. Arrium is an Australian steelmaker and iron ore producer.

ArcelorMittal Mines Canada produces about 15 million metric tons of iron ore concentrate a year and more than 9 million tons of iron oxide pellets, according to its website. It operates two open pit mines and produces about 40 percent of Canada’s iron ore output.

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