The mercury is rising in the cold high Arctic of Canada as rival bidders slug it out for controlling the Baffinland Iron Mines. The US PE fund Energy and Minerals Group’s (EMG) acquisition vehicle – Nunavut Iron bettered the previous offer made by ArcelorMittal.
The latest offer of C$1.45 by Nunavut Iron puts the value of Baffinland at C$570. A day earlier, the world’s biggest steelmaker ArcelorMittal had offered C$1.40 for each share valuing Baffinland at $551 million. ArcelorMittal is seeking to buy the entire stake of Baffinland while EMG has offered to buy only 60 percent.
The Baffinland deposit can supply iron ores for 20 years at an annualized production target of 18 million tons. Baffinland plans to invest C$4 billion to fully develop the mine.
Nunavut’s Chairman Bruce Walter said its offer “remains the clearly superior choice for Baffinland shareholders”. Taking into consideration ArcelorMittal’s improved offer “Nunavut Iron is continuing to assess its options beyond the increase of the offer price”.
Resource Capital Funds, the US based biggest shareholder of Baffinland has agreed to sell its 23 percent stake to ArcelorMittal. Directors and managers have committed another 2.4 percent. EMG already holds 10.5 percent of Baffinland’s shares.