ArcelorMittal bags £670m from mining stake sale

The steel empire of the Queens Park Rangers co-owner Lakshmi Mittal (below) is set to rake in $1.1bn (£674m) from the sale of a stake in a Canadian iron-ore mine operator.

A consortium led by the South Korean steelmaker Posco and China Steel Corporation has agreed to take a 15 per cent stake in ArcelorMittal's Labrador Trough mine. The deal will help Mittal's group cut its debts, while the Asian consortium will have access to steel that its countries desperately need to cope with increasing consumption.

Peter Kukielski, the mining chief executive at ArcelorMittal, suggested that the deal would also ensure that there is a market-place for the steel.

He said: "This joint venture, incorporating a long-term off-take agreement, is consistent with our strategy to form strategic partnerships with key customers as we build our global mining business."

ArcelorMittal's Canadian division will retain an 85 per cent share of the venture. However, completion is dependent on China Steel receiving approval from the government of Taiwan, where its shares are traded.

Asian investors were cheered by the news, as both companies saw their shares rise when the plans were announced.

Canada has been increasingly protective of its key natural resources from foreign ownership, but minority stake deals are unlikely to be put under too much scrutiny.

Indeed, such sales are seen as the best way of encouraging investment in Canadian companies.