ArcelorMittal, the world's largest steelmaker, has inked a preliminary agreement with its Turkish partner Dayen to set up a steel mill in Northern Iraq to serve the construction industry in the region.

The mini-mill, which will use locally sourced scrap metal to make steel reinforcing bars, is set to cost the two companies $100 million to $130 million in total, and could produce as much as 500,000 tonnees per year, Arcelor said in a statement on Tuesday.

Following the signing of the memorandum of understanding with Dayen, construction of the mill should start in the second quarter of 2010 and production is planned to commence early in the fourth quarter of 2011.

'There are many opportunities for ArcelorMittal to assist in the development of the country,' said Christophe Cornier, member of the group management board.

'There is great demand for steel products for the local construction industry, which we aim to meet, working closely with our partner Dayen and the local government in Northern Iraq'. - Reuters