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A worker uses his mobile phone during a break at a steel works in Seoul Oc. 23, 2012. POSCO is the world’s fourth-largest steel maker.

Kim Hong-ji/Reuters

A consortium that includes South Korea's biggest steel maker is buying a $1.1-billion (U.S.) stake in Montreal's ArcelorMittal Mines Canada Inc., the latest sign of international enthusiasm for Canada's resource sector.

A person familiar with the deal said South Korea's Posco is "one of the more important players" in the consortium, which also includes Taiwan's China Steel Corp. The consortium is taking a 15-per-cent stake in ArcelorMittal Mines – the second time in as many years that Posco has bought into a Canadian mining firm.

While Prime Minister Stephen Harper clamped down on foreign acquisition rules in December, it is expected that the minority-stake investment is among the types of transactions he was hoping to encourage in order to fund the expansion of Canadian businesses.

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Paul Boothe, a past Industry Canada senior associate deputy minister, said that in the case of a resource-sector portfolio investment such as this, "the administration of the Investment Canada Act appears unchanged," meaning such a deal should not face any harsh setbacks in the form of an economic review.

ArcelorMittal Mines Canada, among the country's leading suppliers of iron ore for steel markets, would increase Posco's access to its essential commodity. The Montreal company, which has two large open-pit mines in Quebec, says it produces about 15 million metric tonnes of iron ore concentrate annually, as well as nine million tons of iron oxide pellets.

Highly indebted parent company ArcelorMittal, the world's largest steel maker, has been struggling with weak steel prices, and cut its dividend by 73 per cent last fall to 20 cents a share. The miner also reduced its 70-per-cent stake in the massive Mary River Arctic iron ore project to 50 per cent in December shortly after it was approved by Ottawa.

ArcelorMittal Mines Canada has been mulling the sale of a minority stake since October, and reports in early December indicated that POSCO was negotiating for it. A spokesperson for Seoul-based Posco did not immediately return a request for comment.

Posco has a history of interest in Canadian resources, having spent $181-million in 2011 for a 20-per-cent stake in Fortune Minerals Ltd.'s British Columbia-based Mount Klappan coal project, much of which went to developing the mine.

The federal government has the option to review the deal under the national security provisions of the Investment Canada Act, but a source familiar with such acquisitions said that this is unlikely. Industry Canada officials did not immediately return requests for comment. "As a country, we need foreign investment to develop our resources," said Wenran Jiang, an Alberta-based professor and consultant who advises the provincial government on energy transactions with Chinese state-owned enterprises.

When the federal government allowed CNOOC Ltd. to take over Nexen Inc. in December, it simultaneously barred further foreign SOE takeovers in the oil sands. While Mr. Jiang feels that minority investments by SOEs are still encouraged, he points to the lack of clarity in the new rules, which don't have such provisions for industries outside the oil sands. "The government is basically trying to make policy on the go," Mr. Jiang said.

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