At work at an
ArcelorMittal steel
project
 
Johannesburg, South Africa — MININGREVIEW.COM  — 21 April 2008 – The world’s largest steel company, ArcelorMittal, is acquiring a 16% shareholding in ASX-, JSE-, and AIM-listed Coal of Africa Limited (CoAL) – a coal development company operating in South Africa.

A company announcement today confirmed that ArcelorMittal will subscribe for up to 60 million million new ordinary shares @ £1.11 per share, raising £66.7 million (more than R1 billion and representing approximately 16 % of CoAL’s issued capital.

It adds that ArcelorMittal will enter into an off-take agreement with CoAL to secure a minimum 2.5million tonnes per annum of coking coal from CoAL’s 100% owned Baobab and 74%-owned  Thuli coal projects in nthe Limpopo province of South Africa.

ArcelorMittal also has an option to increase its coal off-take to 5 million tones per annum, says the statement.

The placement shares will be issued in two tranches – the first increasing the steel giant’s holding to 14.9%, and the second allowing for a stake of up to 20%.

Further announcements on the completion of the first and second tranches will be made in  due course.

Terms and conditions of the off-take agreement are subject to final negotiations and formal documentation, however it has been agreed in principle that the coal will be delivered to the town of Musina in the Limpopo province.

CoAL managing director Simon Farrell commented: “This is the most significant event in our short history of operating in the coal industry. We are very glad to welcome ArcelorMittal as a significant shareholder and first customer, which reinforces CoAL’s status as an emerging mid-tier coal producer.”

Executive vice president Sudhir Maheshwari of ArcelorMittal said: “This investment reinforces ArcelorMittal’s strategy of vertical integration into raw materials, and further strengthens our commitement to South Africa.”