Essar Steel today said its US subsidiary, Essar Steel Minnesota LLC (ESML), has entered into a 10-year agreement with ArcelorMittal USA for annual supply of 3.5 million tonnes (MT) of iron ore pellets.

Under the agreement, Essar will supply standard and fluxed iron ore pellets to ArcelorMittal’s North American operations and the supplies are expected to begin during the second half of 2013-14, ESML said in a statement.

However, the company did not disclose any financial details of the deal.

“This offtake agreement demonstrates the marketability of ESML’s high quality products to third parties in addition to Essar Steel Algoma, Canada,” ESML President and Chief Executive Officer Madhu Vuppuluri said.

He added that ESML’s diverse product portfolio includes standard, flux and DR grade iron ore pellets and the company “will be the only producer capable of producing all three types of pellets in the US”.

Commenting on the agreement, ArcelorMittal, USA’s Executive Vice-President for Finance, Planning and Procurement John Brett said: “This offtake agreement is consistent with our strategy of securing long-term supply of critical raw materials within the region, and it provides material that meets the stringent standards of our blast furnaces”.

Essar Steel Minnesota LLC has about 2 billion tonnes of measured, indicated and inferred magnetite resources located in the western end of the Mesabi Iron Range in Minnesota. Of this, about 1.7 billion tonnes are proven and probable reserves.

The company also has about 290 MT of hematite resources.

It is currently constructing a 7 mt per annum iron ore pellet plant at Nashwauk in Northern Minnesota, at an investment of $1.7 billion.

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