The Hamilton-based steelmaker also has an option to acquire a 25 per cent interest in the Minntac mine in Minnesota, which has annual production capacity of up to 16 million tons.
Stelco will pay US$100 million cash for the option, which expires Jan. 31, 2027, and then US$500 million should move ahead.
In advance of Tuesday’s release of its first-quarter results, Stelco said it earned $20 million in adjusted EBITDA (earnings before interest, depreciation and amortization) on $445 million of revenues after selling out of 621,000 tons of steel.
“This transaction represents a major milestone for Stelco as it secures a long-term supply of high-quality iron ore pellets and a highly valuable future option to acquire a 25% ownership interest in the Minntac Mine, one of, if not the, best assets on the iron range,” said Alan Kestenbaum, Stelco’s executive chairman and chief executive officer.
This report by The Canadian Press was first published April 30, 2020.
Companies in this story: (TSX:STLC).