LONDON â€" The European steel maker ArcelorMittal agreed on Wednesday to sell a 15 percent stake in a Canadian iron ore unit to a consortium of Asian investors for $1.1 billion.
Under the terms of the deal, the group - including Posco, the largest steel maker in South Korea, along with China Steel and a number of unnamed financial investors - will acquire the combined stake in ArcelorMittal's Labrador Trough iron ore project in Canada.
The Asian investors also have signed long-term supply contracts with ArcelorMittal to gain access to the iron ore deposits from the Canadian mining site, according to company statements.
The agreement will allow Posco and China Steel to gain greater control over the raw materials needed to produce steel. Despite a slowdown in the economies of fast-growing emerging markets, analysts expect demand to gradually return for a number of commodities, including iron ore.
The sale of a 15 percent stake in one of its Canadian i ron ore assets also will help ArcelorMittal to repay debts that have been hit by the weakening demand for commodities from developing economies. The European steel maker said it would retain a majority holding in the Canadian mining unit.
Last year, the ratings agencies Moody's Investors Service and Standard & Poor's both cut ArcelorMittal's credit rating to junk because of its worsening debt situation and a downturn in the global steel industry. ArcelorMittal's net debt reached $23 billion as of Sept. 30, the latest figures available.
‘‘We are committed to growing ArcelorMittal's mining business,'' Peter Kukielski, chief executive of the company's mining division, said in a statement.
Shares in ArcelorMittal rose 3.9 percent in morning trading on Wednesday in Europe.
The deal is expected to close in two installments during the first and second quarters of this year.
