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GFG Alliance continues planned expansion in North America with bid for high-value iron ore business
British-based GFG Alliance, which includes global industrial and metals group Liberty House plus the resources and energy group SIMEC, has stepped up its North American expansion programme with a consortium bid to acquire all the assets of Mesabi Metallics Company LLC – formerly known as Essar Steel Minnesota LLC – and ESML Holding Inc.
This includes a 7m tonnes-a-year iron ore pellet plant at Nashwauk Minnesota with an expansion potential to 14m tonnes a year, plus magnetite resources estimated at 1.968 billion tonnes, with reserves of 1.679 billion tonnes, and hematite mineral resources estimated to be around 352 million tonnes.
The bid, which is being made with ERP Iron Ore and institutional investors working together as the Chippewa Capital Partners, would complete construction of the long-awaited iron ore pellet plant at Nashwauk and add production facilities for higher-value DRI alongside.
The move follows closely upon the announcement last week that Liberty has reached agreement with ArcelorMittal to buy the Georgetown steelworks in South Carolina with its electric arc furnace and rod mill.
GFG Alliance companies, including the group’s financial services arm, Wyelands Capital, have a stated strategy to expand across North America. This replicates the group’s extensive growth in the UK where it is now a key player in the industrial, energy, property and financial sectors. The GFG Alliance is also expanding in Australia where Liberty and SIMEC are at an advanced stage in the process to secure major mining, recycling and steel assets.
The bid to acquire Mesabi Metallics fits with the GFG strategy to develop end-to-end integrated and sustainable businesses in North America, encompassing mining and energy production through to recycling, steel making and engineering, underpinned by the group’s financial services operation.
Under the Mesabi Metallics plan SIMEC would concentrate on the mining side of the business while Liberty would focus on developing the direct reduced iron (DRI) and hot briquetted iron (HBI) plants, whose products would be used in its electric arc furnaces in America and globally.
Sanjeev Gupta; executive chairman of the GFG Alliance said: “We are very pleased to team up with our partners in the Chippewa Capital Partners consortium to put forward this exciting proposal. We see this as a time of renewed opportunity for growth of American industry, and we have the breadth and depth of skill and experience to capitalise on that opportunity.”
Commenting on the consortium’s plans to broaden the scope of the Nashwauk project, ERPI executive Tom Clarke commented: “With electric-arc furnaces representing two-thirds of North America’s steel production it is critical for the revitalisation of the Iron Range to transition to the production of value-added products such as DRI, HBI. Simply adding another pellet producer does not expand the potential of the iron range.”
Jay Hambro, GFG’s Chief Investment Officer and CEO of SIMEC Mining, who has extensive international experience in the iron ore sector, said: “With current volatility in the iron ore price, it is important to focus on a low cost operation and on value-added products that have a long-term demand base. The Mesabi assets need a well-considered built-out programme under the leadership of a group investing with a view to long-term ownership.”
GFG’s international operations include: recycling, steelmaking and downstream products, power generation, natural resources, and trading business with 2017 revenues in excess of $9 billion. Liberty is the largest producer of steel and downstream engineered steel products in the UK with its products sold in over 50 countries. Liberty’s global trading operations include the sale of iron ore pellets, DRI and HBI through offices located on five continents.
ERPI is a part of the ERP Group which provides coking coal and coke to the steel industry throughout the world. The ERP group is the second largest producer of coking coal in North America with projected 2017 revenues in excess of $2 billion.
The consortium partners have a demonstrated commitment to the environment and the reduction of carbon dioxide emissions. GFG’s GREENSTEEL programme is focused on producing steel from recycled materials using renewable energy while the ERP Group operates a voluntary 10% percent offset of expected carbon dioxide emissions from the sale of its products through large-scale reforestation initiatives.
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