AK Steel has taken over a coal company for $36 million as per a statement it released this Tuesday. The American steel company also formed a joint venture with another company to produce iron ore concentrate.
They have acquired Solar Fuel Co. Inc in a deal where AK Steel Holding Corp will pay $24 million this year and the remaining balance over the next few years. The privately owned Solar Fuel Co. owns close to 20 million short tons of low volatility metallurgical coal in Pennsylvania.
The company will be renamed AK Coal Resources Inc. The steel maker is planning to spend close to $60 million in between 2013 to 2015 to help develop its new unit. The money will be spent to begin coal production which will help fuel its own iron making blast furnaces.
The iron ore joint venture is with Magnetation LLC, a Minnesota based mining company. AK Steel will have 49.9% ownership of the joint venture which is to produce iron ore pellets. These will be able to meet the need for iron ore at a cost lower than the current market prices.
Magnetation LLC has 441 thousand tons of annual iron ore concentrate capacity with plans for additional capacity and a pelletizing plant that will produce a total of 3.3 million tons of iron ore pellets by 2016. AK's investment in the project is $297.5 million, or about $90 per ton of annual production, with $100 million invested initially, $47.5 million in 2012, and $150 million in 2013 or later.