BS reported that ArcelorMittal is eyeing a stake in the Kolkata based steel and wire producer Ramsarup Industries.

Sources in Ramsarup said the company is in discussion with global companies, including ArcelorMittal, for a strategic stake in their company. An ArcelorMittal spokesperson said that “We don’t comment on market rumors.”

The spokesman said that the deal, if it happens, could have a mezzanine structure, where convertible warrants would be issued and on conversion would translate into 25% equity. Later, the strategic investor could raise holding in the company.

Industry sources said that for ArcelorMittal the mining leases would make more sense than acquiring a small steel and wire producer. In 2008, ArcelorMittal was allocated a mining lease in the Karampada iron ore deposit for its steel plant. However, the Karampada deposit has reserves of only 65 million tonnes and ArcelorMittal’s requirement is 600 million tonnes over a 30 year period.

Ramsarup’s two iron ore mines in Orissa have reserves of 7.1 million tonnes and 45 million tonnes. Iron ore production is likely to start from April 2011. ArcelorMittal has a 12 million tonne steel project in Orissa and the company is yet to bag any iron ore mine in the state.

(Sourced from BS)