ArcelorMittal offers $431 million for Baffinland

London: ArcelorMittal South Africa, a unit of the world’s largest steelmaker, agreed to pay about $431 million for Baffinland Iron Mines Corp to secure supplies of the steelmaking input iron ore. ArcelorMittal offered C$1.10 a share, its Luxembourg- based parent said on Monday.

That’s a 16% premium to the closing price on November 5 and 38% higher than an 80 cent bid from Nunavut Iron Ore Acquisition on September 22, according to a separate statement from Toronto-based Baffinland, which recommended the steelmaker’s proposal.

ArcelorMittal, the parent, said it would spend $4 billion to boost iron ore output to 100 MT by 2015. It’s seeking to raise self-sufficiency after prices for iron ore and coal rose this year on demand from China. BHP Billiton, Vale and Rio Tinto Group, the three biggest iron ore exporters, also switched to quarterly supply contracts instead of annual agreements.

“The offer is in line with ArcelorMittal’s strategy of expanding its mining portfolio and selectively adding to its existing pipeline of high quality development projects,” Chief Executive Officer Aditya Mittal said in the statement.

Baffinland’s Mary River project contains reserves of 365 million tonnes of iron ore, ArcelorMittal said in the statement.