ArcelorMittal will sell 15 per cent stake in a Canadian subsidiary that owns Labrador Trough iron ore mine to a consortium led by Posco and China Steel Corporation (CSC) for $1.1 billion.

ArcelorMittal Mines Canada (AMMC), the world’s largest steel maker’s wholly-owned subsidiary, will retain the rest 85 per cent stake in the joint venture, ArcelorMittal said in a statement on Wednesday.

“As part of the transaction, Posco and CSC will enter into long-term off-take agreements proportionate to their joint venture interests,” it added.

AMMC, according to information on its website, produces around 15 million tonnes iron ore concentrate and over nine million tonnes of iron oxide pellets annually.

ArcelorMittal, which is facing challenges due to subdued demand in Europe, said the move to sale stake in the iron ore venture is part of its strategy to “build strategic relationships with key customers“.

Apart from Posco and CSC, the consortium has “certain” financial investors, but their identities were not disclosed.

Subject to various conditions, the deal is expected to be closed in two instalments in the first and second quarters of 2013.

“We are committed to growing ArcelorMittal’s mining business. This joint venture incorporating a long-term off-take agreement is consistent with our strategy to forge strategic relationships with key customers as we build our global mining business,” Peter Kukielski, Chief Executive, Mining at ArcelorMittal said.

ArcelorMittal had clocked USD 94 billion revenue in 2011 and produced 91.9 million tonnes of crude steel, representing approximately six per cent of world steel output.

The Group’s mining operations produced 54 million tonnes of iron ore and eight million tonnes of metallurgical coal.

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