ArcelorMittal expands in Mauritania and Venezuela

ArcelorMittal, the world's largest steelmaker has signed an agreement to acquire a 30 per cent stake in Mauritania's Societe Nationale Industrielle et Miniere (SNIM) to develop an iron ore mining project. The deal gives ArcelorMittal the option to raise its stake to 70 per cent on completion of the project.

The Luxembourg-based Mittal group company and SNIM will jointly develop a large iron ore mining project, using the El Agareb Iron ore resource in Mauritania. This forms part of ArcelorMittal's plan to expand its iron ore production to 75 per cent of its consumption in the near future.

ArcelorMittal aims to mine 25 tonnes of iron ore annually at El Agareb. That is more than double SNIM's current output. The El Agareb site is reported to have over 1 billion tonnes of rich-grade magnetite. Aditya Mittal, group CFO, described the location as "an ideal choice for iron ore supplies to ArcelorMittal's European steel mills".

The steelmaker has been expanding in Latin America, Africa, Eastern Europe, Russia and Central Asia in order to implement its plan to increase its steel output by more than a fifth from 2006 to 2012.

While the Mittal company has not indicated its planned investment in the Mauritania mines, the sums will be large. In February 2007, ArcelorMittal had said it would invest around $2.2 billion to develop an iron ore mine at Falémé in Senegal. In 2006, it had announced plans to spend more than $1 billion on an iron ore mine in western Liberia. Investments often include the cost of railways and port infrastructure besides the spending on the mines themselves.

ArcelorMittal, formed though a $33 billion merger in 2006, has been a buying iron ore from SNIM for two decades. SNIM, one of the oldest iron ore-producers in Africa, was formed through the nationalisation of the Société des Mines de Fer de Mauritanie in 1975.

The Luxembourg-based steelmaker also has a 50:50 joint venture with South African development company Kalagadi Manganese. In addition, it has an agreement to develop mining and steel production facilities in Mozambique.

In December 2007, ArcelorMittal acquired Argentina's largest steel distributor, M.T. Majdalani y Cia SA. In the same month it also announced that it would invest up to $1.75 billion to acquire Brazilian specialty steel company ArcelorMittal Inox Brasil SA. Just before that, in October, it paid $542 million for a one-third stake in steel company Acindar of Argentina that it did not already own. In Europe, ArcelorMittal has purchased steel distributor NSD Ltd of the UK.