Arcelor Mittal gives up 20 per cent of Nunavut-based Baffinland Iron Mines

Baffinland employees, in an undated file photo, do exploration work at the Mary River iron mine site on north Baffin Island. (FILE PHOTO)

Faced with slumping steel prices and a rising debt-load, Arcelor Mittal has transferred a big chunk of the Baffinland Iron Mines Corp. to Nunavut Iron Ore Inc., a private firm that until now has been a minority partner in the joint venture.

Arcelor Mittal will sell 20 per cent of its interest in Baffinland to Nunavut Iron Ore, Arcelor Mittal said Dec. 13.

Combined with its existing 30 per cent interest in Baffinland, Nunavut Iron Ore will now control 50 per cent of the company that’s planning to develop the Mary River iron project on north Baffin Island.

Nunavut Ore is backed financially by a private equity firm called the Energy and Minerals Group, based in Houston, Texas.

The Reuters news agency reported Dec. 13 that because of declining steel prices, the Moody’s credit rating agency has downgraded its rating of Arcelor Mittal’s debt to “junk” status.

“Junk” status means the firm’s debt is given a “BB” standing or lower, and is deemed to be at a higher risk of default.

Arcelor Mittall said in its news release that Nunavut Iron Ore will now increase its share of spending on the development of Mary River.

“Now, with these arrangements, we have secured additional shareholder support for the project,” Tom Paddon, the CEO of Baffinland, said in the release.

Arcelor Mittal, however, did not disclose how much money changed hands in its deal with Nunavut Iron Ore.

The London- and Luxembourg-based Arcelor Mittal said it will continue to manage the development of the Mary River project.

According to worldsteelprices.com, the composite global price of steel stood at US $711 per tonne in November 2012.

That’s down from a high of US $860 per tonne in July 2011.

The northern development minister, John Duncan, approved the Mary River project Dec. 3.

The Nunavut Impact Review Board will hold a project certificate workshop on Mary River Dec. 18 and Dec. 19 in Iqaluit.