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. Last Updated: 07/27/2016

Arcelor in $2.2Bln Mine Deal

BRUSSELS -- Arcelor Mittal, the world's largest steelmaker, said Friday that it would invest $2.2 billion to develop iron ore mining in Senegal, pursuing a strategy of increasing the share of metal supply it directly owns.

"Once completed, the Faleme project will prove to be an important and competitive source of iron ore supplies for our European plants," Arcelor Mittal majority owner and chief executive Lakshmi Mittal said in a statement.

South Africa's Kumba Iron Ore may undermine a potential deal, however, with the threat of legal action over its claim for a participation in the Faleme project.

Africa's biggest iron ore producer exercised an option to acquire a controlling stake in the project some time ago. Senegal put this interest in dispute in 2005.

Kumba, majority owned by Anglo American, asked for urgent clarification from the government Friday.

Senegal confirmed later that it had awarded the Faleme project contract to Arcelor. "We'd renounced the contract with Kumba some time ago. ... Yes, we've signed with Mittal for $2.2 billion," Senegal's Energy and Mines Minister Madicke Niang said.

The investment would be a major boost for Senegal's infrastructure and for the government of President Abdoulaye Wade. It came two days before Sunday's presidential election in the former French colony.