POSCO consortium eyes $1 billion stake in ArcelorMittal Canada mine: Report

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

A group including Posco may seek to buy about 10% of ArcelorMittal Mines Canada that’s worth about $1 billion, MoneyToday reported earlier, citing unidentified banking officials. 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 partners, which weren’t identified.

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. ArcelorMittal declined to comment. The Luxembourg-based steelmaker fell 0.3% in Amsterdam trading.

ArcelorMittal has lowered the dividend, is selling assets and moving output to cheaper sites to help cut $23.2 billion of debt. ArcelorMittal’s rating was reduced to junk by Moody’s Investors Service on November 8, which said the debt reduction required by the steelmaker to keep its investment grade was “so large as to be unachievable.”

Standard & Poor’s cut its rating to junk on Aug.2. CFO Aditya Mittal said last month that while the company isn’t planning to offload mining assets it’s not ruling out selling stakes in its iron ore assets. 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.