ArcelorMittal South Africa (ArcelorMittal SA), the South African unit of the world's largest steelmaker and also the biggest steel producer in Africa, has acquired a 16.3 percent stake in Coal of Africa Ltd (CoAL) for ZAR 404.5 million ($44.98 million) in cash.
According to a statement released by ArcelorMittal SA, the purchase will secure the company's future needs for coal, a key steelmaking ingredient, mitigating one of the company's key variable input costs through the local acquisition of this raw material.
As part of the transaction, ArcelorMittal SA has an option to enter into an off-take agreement with CoAL for the supply of an annual 2.5 million mt of metallurgical coking coal.
The 16.3 percent stake makes ArcelorMittal SA CoAL's second largest shareholder after the 17.3 percent owned by Africa Management Limited.