Afferro Mining has agreed to sell its 38.5 per cent interest in its Putu iron ore project in Liberia to Russia’s second biggest steelmaker.
Severstal, one of the world’s leading vertically integrated steel and steel-related mining companies, already owns the remaining 61.5 per cent of Putu through its subsidiary, Lybica Holdings.
Afferro will receive a cash payment of $65 million on completion of the deal. It said it would use the funds from the sale to accelerate its development strategy for its 100 per cent owned Nkout iron ore project in Cameroon.
Severstal already has assets in Russia, the US, the Ukraine, Latvia, Poland, Italy, Liberia and Brazil.
Commenting on the deal, Thomas Veraszto, senior vice president of Strategy and Corporate Development at Severstal, said:“We are pleased to announce this transaction which will strengthen Severstal’s position in the global iron ore market. The acquisition is in line with our key strategic goals of being a leading global steel and steel related mining company with high quality iron ore and coal assets across the world.
“Severstal will continue to develop Putu and consider the best strategic options to advance the project. We would also like to express our gratitude to Afferro Mining for successful partnership between our companies during the last three years.”
Luis da Silva, chief executive officer of Afferro, added: "This transaction demonstrates Afferro's ability to successfully generate significant returns for our shareholders. Divesting the minority stake in Putu to generate total cash proceeds of at least US$115 million allows the company to focus on its 100 per cent owned flagship Nkout project and minimises shareholder dilution.
“With the focus and cash, Afferro will be extremely well placed to enter a new and exciting phase of growth. We would like to thank Severstal for the successful partnership between our companies during the last three years."
In 2010 Severstal reported revenues of $13.5 billion, with crude steel production that year of 14.7 million tonnes.
