Coal and metals processing firm Coal of Africa has announced that the world's largest steelmaker ArcelorMittal has bought a 16 percent stake in the company at a cost of $130 million. The deal also involves an offtake agreement for up to five million tons of coaking coal annually.
With this new deal, ArcelorMittal will be able to use the supply of South African coal to replace its coal imports from Australia. The purchase will improve South Africa's trade balance by up to $1 billion a year.
Under the agreement with ArcelorMittal, Coal of Africa will deliver at least 2.5 million tons of coal a year from its Thuli Coal and Baobab projects. ArcelorMittal can raise this quantity to five million tons.
Sudhir Maheshwari, executive vice president of ArcelorMittal, said this deal was in line with the firm's strategy of vertical integration into raw materials.