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ArcelorMittal and Canadian Ore Business Update

Posted at: 10/22/2012 9:59 AM

ArcelorMittal is exploring selling a stake in its $10-billion (U.S.) Canadian iron ore business, as the world’s biggest steel company struggles to cope with the downturn in its key commodity.

People familiar with the matter said ArcelorMittal had appointed advisers and had been sounding out potential buyers of a stake in the business, formerly known as Québec Cartier Mining.

The entire business, which produced about 15 million tonnes of iron ore concentrate last year, could be worth between $8-billion and $10-billion, the people added.

ArcelorMittal is considering selling a minority stake, probably about 30 per cent. Some Chinese companies and commodities trading houses had expressed an interest in investing in the business, the people said. A

rcelorMittal and the banks declined to comment.

The steel maker has expanded its iron ore business in recent years, increasing in-house output as a way of controlling input costs for its steel production.

But, since the financial crisis, the group has come under pressure, as the global steel industry battles a prolonged period of overcapacity caused by a collapse in European demand and slowing growth in Chinese consumption.

Lakshmi Mittal, the chairman, chief executive and main owner of ArcelorMittal, said in July that he saw no lifting of the gloom around the steel industry and the company has been closing or mothballing plants around Europe.