ArcelorMittal, the world's largest integrated metals and mining company, has announced that it has agreed to acquire 100 percent of the issued share capital of the Brazilian-based iron ore miner London Mining South America Limited (London Mining Brazil) from UK-based London Mining plc (London Mining) for a total cash consideration of $809.9 million.
Located in the Iron Quadrangle, state of Minas Gerais, London Mining Brazil is focused on the exploration, development and production of iron ore resources. Its Central, Eastern and Western Claims contain an estimated 1,059 million mt of measured, indicated and inferred iron ore resources. Moreover, the iron ore from the London Mining Brazil mine has an average Fe grade of 38.0 percent and contained Fe of 402.6 million mt under Brazilian Reporting Standards.
London Mining Brazil's annual production of iron ore concentrate and lump ore is estimated at 1.4 million mt, which is to be expanded to 3.2 million mt by 2009 due to the operation of a recently commissioned sinter feed plant. Furthermore, after some technical analyses, ArcelorMittal is to invest up to $700 million to increase production in the medium term to 10 million mt per year.
Moreover, in order to export iron ore from the London Mining Brazil mine to its steel facilities in the Atlantic basin, ArcelorMittal has reached an agreement with Canadian-based Adriana Resources Inc. (Adriana) for the development of an iron ore port facility in the State of Rio de Janeiro, Brazil.
According to the agreement, ArcelorMittal will acquire 80 percent of the port for a total consideration of approximately $40.5 million, and up to 19.9 percent of Adriana's common shares. The parties will each fund their pro rata portion of the port development costs estimated at approximately $250 million for the first 10 million mt per year of capacity, and will share in the capacity of the port in proportion to their ownership.
The above transactions are subject to receipt of the necessary approvals.