The world's largest steelmaker is giving up part of its stake in Baffinland Iron Mines.

ArcelorMittal announced Thursday that it will no longer be majority owner of the company behind the Mary River project on northern Baffin Island.


Baffinland Iron Mines plans to develop an iron mine at Mary River, which is 160 km south of Pond Inlet, Nunavut. (CBC)

The Mary River project would be a massive open-pit iron mine about 160 kilometres south of Pond Inlet. Aboriginal Affairs and Northern Development Canada approved the project last week based on the recommendation of the Nunavut Impact Review Board.

ArcelorMittal had owned a 70 per cent stake in Baffinland, with Nunavut Iron Ore Incorporated holding the other 30 per cent. The new deal will see a 50-50 split between the two companies.

The announcement comes at a time when world steel prices are down and Arcelor Mittal has a high debt load. 

"I think the Mary River project has a good story going forward," said Peter Warrian, a researcher at the University of Toronto who focuses on the steel industry.

"It's possible even that the partners may change at some point, but I think right now this is more a story about the corporate debt of Arcelor than it is about the viability of the project itself."

Warrian said ArcelorMittal is carrying a lot of debt, and is under pressure to get rid of some. He said the downturn in the steel industry is having a big effect in Europe, where the company is based.

The financial details of the deal were not revealed but a release from ArcelorMittal said Nunavut Iron Ore will put more money towards developing the Mary River project.

The company said shareholders are still intent on developing the mine.