Stelco Inc., a wholly-owned subsidiary of Stelco Holdings Inc. that’s based on Ontario, Canada, has entered an option agreement with U.S. Steel, granting Stelco a long-dated option to purchase a 25 percent ownership interest in a to-be-formed joint venture that will own 100 percent of U.S. Steel’s iron ore mine in Mt. Iron, Minnesota, and related infrastructure including the pellet plant.
The Minntac Mine, a fully-integrated iron ore mine operated by U.S. Steel, is the largest iron ore operation in the U.S., with annual production capacity of up to 16 million tons per year of iron ore pellets.
Stelco will pay $100 million, in cash, to U.S. Steel in consideration for the option, and the option is exercisable by Stelco at any time following the initial consideration payment until Jan. 31, 2027. The initial consideration is payable in five $20 million installments, with the first installment paid upon closing of the option agreement and the remaining four installments payable every two months thereafter.
Upon the exercise of the option, Stelco would pay a net exercise price of $500 million.