July 2nd (The Gazette) – ArcelorMittal, the world’s largest steelmaker, said today it would be interested in buying Iron Ore Co. of Canada from Rio Tinto Group as it builds up its own “captive” sources of iron ore to a target level of 70 per cent of its needs. ArcelorMittal, which owns neighbouring Quebec Cartier Mining, said acquiring IOC, the biggest Quebec-Labrador producer, would be “a natural fit… we share a lot of infrastructure.” But Rio said IOC is “a good operation and is not on our short list of possible dispositions.”

Rio, parent of Canada’s Alcan and one of the world’s top three iron ore producers, owns 59 per cent of IOC. In March it said it would invest $500 million to expand IOC’s annual capacity from 16 million tonnes to 22 million tonnes of concentrates.


June 30th (MSN Money/Reuters) – Lakshmi Mittal is looking at entering the takeover battle for the Rio Tinto mining group, the Financial Times reported on Monday, quoting people familiar with the situation.

Mittal, main shareholder in steelmaker ArcelorMittal as well as being chairman and chief executive, was keen to secure larger supplies of iron ore, said the newspaper.

Rio, one of the world’s major producers, is the subject of a contested bid by Australian mining group BHP Billiton, worth about $160 billion at present share prices. The deal is being scrutinized by anti-trust regulators.

The Financial Times said Mittal’s thinking emerged as his adviser Goldman Sachs announced he had joined the board of the Wall Street bank.

“Mr Mittal has considered some involvement in the takeover, such as the idea of taking a stake in Rio through buying from existing shareholders,” it quoted an unnamed banker as saying.

“On the other hand, he could wait until later, when quite possibly some of the iron ore assets (of Rio) go on sale as a result of demands by anti-trust regulators,” said the banker.

The Financial Times said bankers believed Rio’s iron ore assets were currently worth about $50 billion. But this figure could fall sharply in the next few months, particularly if the boom in steelmaking starts to peter out.

No immediate comment was available from ArcelorMittal on the report.

June 26th (Steel Guru) – PTI reported that ArcelorMittal has formally applied for iron ore mines, ahead of submitting the detailed project report for its proposed Greenfield project in Orissa’s Keonjhar district.

Though ArcelorMittal had not mentioned the name of any specific iron ore reserve, it had applied for PL for mines including Mankadanachha, Malangtoli and Thakurani in Keonjhar district and Badamgadapahad and Balipahada spread over both Keonjhar and Sundargarh districts. ArcelorMittal, which requires 7,750 acres for setting up its plant, CPP and township, was also working on the forest diversion proposal.

Mr Sanak Mishra ArcelorMittal chief for Greenfield projects said that “We have 10% of the total land which required forest diversion clearance.”

Official source said that ArcelorMittal, which is expected to submit its detailed project report to the state government by June end or early July 2008, had applied for a prospecting license as well as mining lease for its proposed 12 million tonnes per annum steel mill. It added that the state government, which was busy in hearing applications for PL over Khandadhar iron ore reserve in Sundargarh district, would begin hearing on other mines after July 2008.

June 9th (Bloomberg) – ArcelorMittal, the world’s largest steelmaker, secured a permit to mine iron ore needed for a planned project in the eastern Jharkhand state almost three years after the company announced the $10 billion venture.

The permit allows Luxembourg-based ArcelorMittal to mine 500 acres of land in Jharkhand, according to a statement today on the Ministry of Mines Web site. The eastern state holds 17 percent of India’s iron ore reserves.

Land disputes and bureaucratic delays faced by steelmakers in India underscore the growing gap with China, the fastest- growing major economy, and India, the second-fastest. India may have produced 55.5 million metric tons of steel in the year ended March, about a tenth of China’s output, according to government estimates.

The ArcelorMittal plant in Jharkhand, announced in October 2005, would have capacity of 12 million tons a year. In 2006 the company announced a similar sized project in neighboring Orissa.

The Indian states Jharkhand, Orissa and Chhattisgarh account for 70 percent of the nation’s coal reserves and 55 percent of its iron ore, according to McKinsey & Co.

June 4th (Commodity Online) – What is Arcelor Mittal’s latest adventure. According to reports, Arcelor Mittal has purchased the rights to develop the old Liberian-Swedish-American mining company Lamco’s facilities in Liberia.

According to The Wall Street Journal, the mine was closed in 1989 during the first of many civil wars and coups to blight the country in the 90s.

The why did Mittal buy this? If you can’t buy them, build them, seems to be the new mantra of steel majors now.

Mittal sees this as one component of a hub of West African mining operations strategically placed to feed both their European and North American steel mills.

The challenges are significant, since railway lines, bridges and roads have been lost over the last 20 years of strife.

Prospective miners will need to rebuild the infrastructure before they can move one tonne of iron ore. Project costs have already escalated from $900m to $1.5bn, and the mine isn’t due to start production before next year.

Still, no one doubts Mittal will succeed. The question on consumers’ lips is, will it make any difference to the price of steel?

Producers are already under fire for allegedly inflating price increases beyond what is necessary to cover rising raw material input costs.

Reports from suppliers to the North American industry support this view. The reports said many steel producers are on long term — by which they mean 3-7 year — iron ore contracts and the prices they are currently paying are significantly below the inflated world market prices paid on recently concluded contracts.

May 30 (The Wall Street Journal) – A complex plan by ArcelorMittal to rehabilitate an abandoned iron-ore mine in Liberia is shaping up to be a crucial test for the global steel company and the Liberian government.

Liberia, recovering from two decades of civil war and instability, desperately needs to establish its credibility with investors as, five years after the end of hostilities, aid agencies and donors begin to wind up their projects.

For ArcelorMittal, which seeks to insulate its steel business from surging iron-ore prices, the Liberian mining project is its most ambitious to date. It is an acid test of whether the company can execute the difficult new mining projects that underpin its expansion plans.

As the cornerstone of a new iron-ore supply hub for the company in West Africa, the Liberian project would carve out a stake in one of the few regions that haven’t already been locked down by one of the big three global miners: Brazil-based Cia. Vale do Rio Doce and Anglo-Australian Rio Tinto PLC and BHP Billiton Ltd. The three control more than 75% of the world’s seaborne iron-ore trade.

ArcelorMittal has plenty of experience operating in countries with problems. Chief Executive and Chairman Lakshmi Mittal built the company into the world’s largest steelmaker by snapping up aging steel mills and mines from Kazakhstan to Bosnia and turning them around. The strategy culminated in the 2006 merger of Mittal Steel and Europe’s Arcelor SA.

But whereas earlier acquisitions were often rundown assets in inhospitable regions, they were still functioning. In Liberia, ArcelorMittal plans to take over an old mining project that was abandoned by a Liberian-Swedish-American company, Lamco, in 1989 during the country’s first civil war. The operation will have to be rebuilt nearly from scratch.

In previous projects, “we went in and made them more efficient, profitable, but most of the wheels were still working,” Joseph Mathews, CEO of ArcelorMittal Liberia, said in an interview. “In Liberia, none of the wheels are running.”

Liberian President Ellen Johnson Sirleaf, who took office two years ago, faces the difficult task of weaning the country off foreign aid and replacing it with private investment. ArcelorMittal’s $1.5 billion projected investment would be the largest ever for Liberia; in comparison, the country’s estimated gross domestic product last year was $730 million, according to World Bank data. Much of ArcelorMittal’s investment will go to fill the huge infrastructure gaps.

Robert Ferguson, an ex-defense attache formerly posted at the U.S. Embassy in Monrovia during the civil war, is ArcelorMittal’s project manager for Liberia. Based in this port city, from where the iron ore will be exported, his to-do list includes the rehabilitation of a 186-mile railway through dense jungle, the reconstruction of Buchanan’s port to accommodate iron-ore carriers, and the construction of a 250-megawatt power plant to supply an iron-ore processing facility.

Death threats because of the company’s refusal to pay bribes to local officials, the pillaging of scrap metal and spiraling costs are among the problems he cites. Mr. Ferguson’s current quandary is how to build a power plant requiring a 250-ton generator.

“The road and bridges can’t take it. We’d have to rebuild the entire highway to the mine” at Yekepa, near the border of Guinea, Mr. Ferguson says. The various additional expenses have lifted the total investment to $1.5 billion from the $900 million originally planned, he says.

Production at the mine is set to begin next year, initially at 500,000 metric tons a year and gradually ramping up to as much as 25 million tons by 2011. If successful, it will boost by more than half ArcelorMittal’s current captive iron-ore supply of 46 million tons a year.

This expansion is critical to ArcelorMittal’s growth strategy as raw-material costs have soared; iron-ore prices have more than quadrupled since 2003. Scrap metal, the other substitute raw material for steel production, is in short supply, creating a growing demand for new iron-ore exploration and production, experts say.

Mr. Mittal has said he envisions creating an iron-ore mining hub in West Africa. Mining licenses are still available in the region, and it is more conveniently situated for markets in Europe, the Middle East and the U.S. than for current major exporters such as Western Australia or Brazil.

In addition, the company is developing a $2.2 billion iron-ore project in Senegal, also from scratch, to produce as much as 25 million tons a year and has signed a preliminary agreement for a mine in Mauritania, which could produce 12 million tons a year.

Liberian President Johnson Sirleaf says the investment is crucial for her country. “We have thousands and thousands of ex-combatants or war-affected youth who today don’t have the skills training to compete. They need employment to … reduce their vulnerability to recruitment that would take us back to war,” she said in an interview.