MITTIMATALIK/POND INLET - The deal isn't official yet, but the company that could potentially take over the $4-billion Mary River iron ore project near Pond Inlet says it will honour previous commitments made by current owner Baffinland Iron Mines to ensure Nunavummiut benefit from the multi-generational mine.

ArcelorMittal, the world's largest steelmaker, has posted a friendly $433 million takeover bid for Baffinland's Mary River project, located 160 km south of Pond Inlet. Baffinland's board of directors has recommended the bid to shareholders, but the deal won't become official for another month, leaving the door open for another competitive bid. - photo courtesy of Baffinland

Early last week, Baffinland announced it had received what it considered a superior takeover bid for May River worth $433 million (or $1.10 per share) from ArcelorMittal, the world's largest steelmaker.

That bid – which has the support of Baffinland's board of directors – tops a previous 80-cents-a-share, $274-million offer made one month ago by private equity firm Nunavut Iron Ore Acquisition Inc.

In response to ArcelorMittal's offer, Nunavut Iron Ore, a subsidiary of Energy and Minerals Group, has extended its offer until Nov. 22.

ArcelorMittal's deal will not become official for another month, leaving the door open for yet another bid. Baffinland's share price closed at $1.18 on Wednesday.

In an e-mail to News/North, ArcelorMittal – which is based in London and Luxembourg – said it will continue where Baffinland left off when it comes to maximizing Northern opportunities at Mary River.

"Upon successful acquisition of Baffinland, ArcelorMittal aims to maintain a proactive dialogue with all stakeholders, including (the Qikiqtani Inuit Association), with the aim of developing the project to not only benefit ArcelorMittal but all stakeholders," wrote Giles Read, head of media relations for ArcelorMittal.

In addition to training and preferential employment opportunities, "The development of the Mary River project would provide ancillary socio-economic benefits through the development of transportation links, new infrastructure and services that will benefit the wider community."

Baffinland's feasibility study on Mary River, released in early 2008, posited a minimum 20-year mine life. But as Richard McCloskey, president and CEO of Baffinland, recently told News/North, exploration work at Mary River suggests there are as many as seven deposits that could support a mine life as long as 100 years.

While cautious about ArcelorMittal's still-pending friendly takeover bid, the Government of Nunavut said the acquisition of Mary River would be a good fit for ArcelorMittal, which has several similar-sized iron ore operations in Canada.

ArcelorMittal would benefit from the development work already done by Baffinland, which has been advancing the project since 2006, said Eric Prosh, director of minerals and petroleum for the GN.

"(Baffinland is) well advanced in their environmental review, they're well advanced in IIBA (Inuit impact and benefit agreement) negotiations with the Qikiqtani Inuit Association, so these are commitments and obligations that are already in process and it's the norm for potential new operators to inherit all of those commitments and conditions," said Prosh.

That being said, Prosh isn't discounting the possibility of another bid.

"An argument could be made that that (bid) might be (undervaluing Mary River). The Baffinland directors don't currently think so."

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