By Alex MacDonald

LONDON--Steel titan ArcelorMittal (MT) said Friday it has agreed to purchase a near 50% effective stake in Guinea's Mount Nimba iron-ore project, signalling its continued interest in growing its mining business despite tumbling prices for steel-making raw ingredients.

Luxembourg-based ArcelorMittal agreed to buy out two shareholders in the project, BHP Billiton Ltd. (BHP) and Areva SA (AREVA.FR), for an undisclosed sum that would give the world's largest steelmaker a 56.5% stake in Euronmiba Ltd., a company that holds a 95% stake in the Mount Nimba deposit. ArcelorMittal may reduce the stake to 50% if Newmont Mining Corp. (NEM), the sole remaining shareholder, exercises an option granted by the steelmaker to equalize their holdings.

The deal is contingent upon the Guinean government granting permission for ArcelorMittal to ship the ore across the border into Liberia. The deposit lies 40 kilometers from ArcelorMittal's existing Liberian iron-ore mine, which means the steelmaker could take advantage of its existing rail and port infrastructure in Liberia to lower the costs of developing the project.

The deposit is also high quality with 935 million tons of resources that can be directly shipped, without processing, at an average grade of 63.5% ferrous content.

Aditya Mittal, ArcelorMittal's chief financial officer, declined to comment on the price tag or how long it might take to close the transaction but said the approval to ship iron ore through Liberia was "critical" to the transaction. He also said it was too early to discuss any project details such as development cost or production capacity.

For BHP, the deal is in line with the company's strategy to exit West Africa and focus on developing much larger assets such as its existing iron-ore operations in the Pilbara region of Western Australia. BHP has been looking to sell its 43.5% stake in Euronimba for nearly two years.

The Mount Nimba project is effectively 41.3% owned by BHP and 41.3% owned by Newmont Mining. France's Areva owns a 12.4% stake.

-Write to Alex MacDonald at alex.macdonald@wsj.com

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