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Arcelor Mittal signs $2.2billion mining deal with Senegal.

Last Updated: 2/23/2007 10:32:45 PM

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Arcelor Mittal, the world's largest steel maker announced today it a had signed a deal worth $2.2 billion with the Senegalese government.....


Senegal signs $2.2 billion  mining deal
Senegal signs $2.2 billion mining deal

Arcelor Mittal have revealed that they have signed a $2.2 billion deal with the government of Senegal. The deal provides Arcelor Mittal rights to vast iron ore deposits in four locations in the Faleme region in the southeast of Senegal. In return Arcelor Mittal has committed to developing a port on the outskirts of the capital, Dakar. It will also build a 467 mile railway between the mines and the port.

The project is expected to start in 2011 and when fully operational it will produce between 15 and 25 million tons of iron ore a year. The chief executive of Arcelor Mittal. Lakshmi Mittal, was quoted as saying "Once completed, the Alee project will prove to be an important and competitive source of iron ore supplies for our European plants,"

"This project is an important step in our strategy of creating West Africa as a mining hub for iron ore supplies to our steel plants around the world. We are confident Senegal will prove to be a strategic location to extend our existing footprint in the promising West African markets."

The deal however not without controversy. Rights to the deposits are being contested by Kumba Iron Ore Limited, a subsidiary of the South African mining conglomerate Anglo American plc. In a statement issued today, Kumba Iron Ore Ltd claims it had an option to acquire controlling interest in the Alee project. It had attempted to exercise the option but the Senegalese government put the matter in dispute.

The statement goes on to add "as recently as a fortnight ago, Kumba has been involved in negotiations with the Government of Senegal to find an amicable solution. Kumba has accordingly requested the Government of Senegal for urgent clarification. If in fact Kumba has been denied its rightful participation in the Faleme project, the Company will take all legal actions necessary to preserve its contractual rights including international arbitration."

Arcelor Mittal was formed in 2006 through a merger between Arcelor SA and Mittal Steel co. The company is the largest steel producer in the world, accounting for about 10% of the total world steel production. This deal if completed would expand Arcelor Mittal's presence in West Africa. The then Mittal Steel in 2005 had acquired rights to Liberian iron ore deposits in a highly controversial deal with Liberia's transitional government. The deal has since been reviewed by the new government of Ellen Johnson-Sirleaf.



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