Johannesburg, South Africa — MININGREVIEW.COM — 08 April 2009 – Arcelor-Mittal South Africa – the South African unit of the world’s No. 1 steel maker – has acquired a 16.3% stake in Coal of Africa Ltd. (CoAL) for R404.5 million in cash.
The company said in a statement here that the purchase would help it secure its future coal needs – a key steel-making ingredient – mitigating one of the company’s key variable input costs by acquiring the coal locally.
CoAL is involved in the exploration and development of thermal and metallurgical coal projects in South Africa.
The statement added that, as part of the transaction, ArcelorMittal South Africa had an option to enter into an off-take agreement with CoAL for the supply of 2.5 million tonnes of metallurgical (coking) coal annually.
Last year ArcelorMittal South Africa purchased 5.2 million tonnes of coal, which made it one of the largest input raw materials for the company.
The 16.3% stake makes ArcelorMittal South Africa CoAL’s second largest shareholder, after the 17.3% owned by Africa Management Limited – a company owned by black investors associated with the Mvelaphanda Group.
The price paid for the stake was based on the previous 15-day volume weighted average share price of CoAL on the Johannesburg Securities Exchange.