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Rivals Make Bid For Arctic Iron Ore Deposit

ArcelorMittal, the world's largest steel producer, and Nunavut Iron Ore Acquisition said they will make a joint bid valued at $594 million for Baffinland Iron Mines Corp.

TORONTO (AP) -- ArcelorMittal and a rival bidder for a company that controls a massive iron ore deposit in Canada's Arctic are joining forces with a bid that values the company at $590 million Canadian (US$594 million).

Luxembourg-based ArcelorMittal, the world's largest steel producer, and Nunavut Iron Ore Acquisition said Friday they will make a joint bid of CA$1.50 per share for all of Baffinland Iron Mines Corp.

ArcelorMittal and Nunavut Iron had been in a takeover fight for Baffinland and its massive Mary River iron ore project that is viewed as one of the world's largest undeveloped iron ore assets. The project is expected to cost billions and could include a rail line, port and a specially built tanker that can navigate Arctic ice.

The offer is up from an earlier proposal by ArcelorMittal of CA$1.40 per share and an offer by Nunavut Iron of CA$1.45 per share.

ArcelorMittal will own 70 percent and Nunavut Iron will own 30 percent. ArcelorMittal had been seeking all of Baffinland, while Nunavut Iron only wanted to increase its roughly 10 percent stake in the company to 60 percent. Nunavut Iron, backed by U.S. private equity firm Energy & Minerals Group, made the first bid in September for 80 Canadian cents.

"Together with Nunavut Iron, we are providing a more attractive offer to Baffinland shareholders than either of us were prepared to provide on our own," Peter Kukielski, head of mining and member of the group management board of ArcelorMittal, said in a statement.

Baffinland says it has 365 million tons of proven and probable iron reserves at its Mary River property in Nunavut Territory on Baffin Island in northeastern Canada. The deal requires two-thirds shareholder approval.

Shares of Baffinland rose one cent to CA$1.53 in early afternoon trading on the Toronto Stock Exchange. The stock had traded for 56 cents in September, before it first announced Nunavut Iron's initial unsolicited offer for the company.

ArcelorMittal has been building up its iron ore reserves as it seeks to protect itself against price increases in the metal, which is a key raw material for steel.

The world's three biggest iron ore suppliers last year decided to price their contracts on a quarterly basis rather than an annual one, making steel producers more vulnerable to sudden price changes.
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