Following the agreement between Rio Tinto and BHP Billiton in Western Australia’s Pilbara iron ore, the latter is in initial discussions with ArcelorMittal to potentially combine their respective iron ore mining and infrastructure interests in Liberia and Guinea. The iron ore interests of the two companies in Liberia and in Guinea are proximate and could be significantly more competitive if brought together in a combined operation.
The parties say they “will be working together over the coming months to assess the merits of a partnership and will also work closely with the governments involved.” BHP-Billiton says “each firm’s execution capabilities and financial strength would provide an excellent platform on which to build an iron ore business in West Africa of world-class scale and scope and bring meaningful benefits to the region.”
ArcelorMittal is the world’s leading steel company, with operations in more than 60 countries. It is the leader in all major global steel markets, including automotive, construction, household appliances and packaging, with leading R&D and technology, as well as sizeable captive supplies of raw materials and distribution networks. With an industrial presence in over 20 countries spanning four continents, the company covers all of the key steel markets, from emerging to mature. In 2008, ArcelorMittal had revenues of $124.9 billion and crude steel production of 103.3 Mt, representing approximately 10% of world steel output.
ArcelorMittal is focusing on its mining activities, in accordance with its integrated business model. This is part of a strategy to actively develop the raw material base, thereby raising the level of iron ore self-sufficiency to 75%. Its iron ore assets straddle the Guinea-Liberia border. Mining there is restarting since the end of the civil war in Liberia, but is not currently active. First shipments are expected in 2011.
Last year BHP-Billiton continued exploration activities and concept studies in Guinea at its Nimba deposit to determine the economic viability, sustainability impacts and management implications of a potential mine development in this area. In addition, it was carrying out exploration activities on various exploration leases it holds in Liberia.