Essar Steel on Wednesday announced that its U.S. subsidiary, Essar Steel Minnesota LLC (ESML), had signed a 10-year agreement with ArcelorMittal U.S. for annual supply of 3.5 million tonnes of iron ore pellets.

Under the agreement, Essar will supply standard and fluxed iron ore pellets to ArcelorMittal’s North American operations and the supplies are expected to begin during the second-half of 2013-14, Essar Steel Minnesota LLC said in a statement issued here. “This offtake agreement demonstrates the marketability of ESML’s high quality products to third parties in addition to Essar Steel Algoma, Canada,’’ ESML President and CEO Madhu Vuppuluri said in a statement.

ESML’s diverse product portfolio includes standard, flux and DR grade iron ore pellets and the company will be the only producer capable of producing all three types of pellets in the U.S., the statement added.

ArcelorMittal, US Executive Vice-President for Finance, Planning and Procurement John Brett said: “This offtake agreement is consistent with our strategy of securing long term supply of critical raw materials within the region, and it provides material that meets the stringent standards of our blast furnaces.”

Essar Steel Minnesota LLC has about 2 billion tonnes of measured, indicated and inferred magnetite resources located in the western-end of the Mesabi Iron Range in Minnesota. Of this, about 1.7 billion tonnes are proven and probable reserves. The company also has about 290 million tonnes of hematite resources. It is now constructing a 7 million tonnes per annum iron ore pellet plant at Nashwauk in Northern Minnesota, at an investment of $1.7 billion.

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