US Steel Canada Inc., a wholly owned subsidiary of US Steel Corporation, has entered into an agreement with Montreal-based Consolidated Thompson Iron Mines Limited and ArcelorMittal Dofasco providing for the purchase by Consolidated Thompson of US Steel Canada's 44.6 percent interest and ArcelorMittal's 28.6 percent interest in the Wabush Mines Joint Venture, which owns and operates iron ore mining and pellet facilities in Newfoundland and Labrador and Quebec, Canada.
While US Steel has not released the terms of the transaction, ArcelorMittal said that it will receive a consideration of $34.28 million for its stake in Wabush Mines, whereas Consolidated Thompson said that it will acquire their interests for approximately $88 million in cash.
However, the third owner of Wabush Mines, Ohio-based Cliffs Natural Resources Inc, said that it plans to exercise its right of first refusal and acquire US Steel Canada's 44.6 percent interest and ArcelorMittal Dofasco's 28.6 percent interest in the Wabush Mines. By exercising its right of first refusal, Cliffs is entitled to receive the same terms and conditions contained in the agreement with Consolidated Thompson and thus increase its ownership stake in Wabush Mines to 100 percent. With Wabush Mines' 5.5 million mt of rated capacity, acquisition of the 73.2 percent would increase Cliffs' North American Iron Ore rated equity production capacity by approximately 4.0 million mt.
With regard to the definitive agreement signed to divest its minority interest in Wabush Mines, the world's largest steelmaker said in a statement, "ArcelorMittal's stake in Wabush Mines is no longer a core part of the company's mining strategy. The mine represented 31 million tons of iron ore reserve and 1.2 million tons of iron ore produced for ArcelorMittal in 2008."
In March 2008, ArcelorMittal took legal action against the other owners, US Steel Canada and Cliffs Natural Resources, saying they had reneged on a 2007 agreement to sell their stakes. The two US steelmakers had also promised to sell their stakes to Consolidated Thompson, an agreement they likewise ditched. ArcelorMittal, as a co-owner since 2006, at the time, claimed that it had priority in buying the stakes.
"After the disposal ArcelorMittal continues to have significant mining operations and resources in Canada including ArcelorMittal Mines Canada, formerly Quebec Cartier Mining. Canada also remains an important jurisdiction for ArcelorMittal's future growth strategy in both mining and steelmaking," added ArcelorMittal in its statement.