WEST CHESTER, Ohio (AP) -- AK Steel Holding Corp. said Tuesday that it has acquired a coal company for $36 million and, separately, it has formed a joint venture to produce iron ore concentrate.
Management said the deals would contribute to the steelmaker's earnings next year and enhance the company's financial results as raw material production increases.
The acquisition of Solar Fuel Co. Inc. calls for AK to pay $24 million this year and the balance over the next years. Privately held Solar Fuel Co. controls, via ownership and lease, some 20 million short tons of low-volatility metallurgical coal in Pennsylvania.
AK plans to rename the company AK Coal Resource Inc. and spend about $60 million, most between 2013 and 2015, to develop the new unit's mining operations and begin coal production. The steelmaker plans to use the coal to fuel its iron-making blast furnaces and anticipates that will help cut its costs.
The separate joint venture is with Magnetation Inc., a company based in Nashwauk, Minn., that recovers high-purity iron concentrate from previously mined ore deposits using magnetic separation technology.
AK, which owns 49.9 percent of the venture, said will pay $297.5 million over several years for its interest, beginning with $100 million this year.
The venture, dubbed Magnetation LLC, produces about 400,000 metric tonnes of iron ore concentrate annually from a plant near Keewatin, Minn. It expects to expand to produce about 3.5 million metric tonnes annually by 2016, with a total of four concentrate plants, AK said.
Shares of AK Steel rose 11 cents to $6.43 in aftermarket trading. The shares had gained 55 cents, or 9.5 percent, to end regular trading Tuesday at $6.32. They remain near the bottom of their 52-week trading range of $5.51 to $17.88.