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Arcelor Mittal, Senegal Sign Mining Deal

Arcelor and Mittal Steel , which have agreed on a deal to form the world's largest steelmaker, said Friday they have signed agreements worth $2.2 billion with the government of Senegal to mine iron ore in the West African nation.

They said the project, due to start in 2011, would include developing the mine, building a new port near Dakar and laying 467 miles of railway to link the mine and the port.

When the mine becomes fully operational, it should produce between 15 million and 25 million metric tons a year. Total estimated iron ore reserves are around 750 million metric tons at four locations in the Faleme region of southeast Senegal.

The agreements will only enter force when the Senegalese government fulfills certain conditions, the companies said, without specifying what those were.

"Once completed, the Faleme project will prove to be an important and competitive source of iron ore supplies for our European plants," Arcelor Mittal Chief Executive Lakshmi Mittal said.

"This project is an important step in our strategy of creating West Africa as a mining hub for iron ore supplies to our steel plants around the world."

Mittal has proposed paying about $33.4 billion for Arcelor in a deal that the companies hope to complete in July after securing regulatory approval. The combined company will have a 10% share of the world steel market and will be known as Arcelor Mittal.

Arcelor Mittal also plans to develop an iron ore mine in western Liberia, largely ruined after its 1989-2003 civil war. The companies will spend some $900 million building the mine, railway and port infrastructure.

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