UPDATE 1-ArcelorMittal makes Nunavut equal partner in Baffinland
* ArcelorMittal hands over 20 percent stake
* Cutting costs after credit rating downgrade
BRUSSELS Dec 13 (Reuters) - The world's largest steelmaker ArcelorMittal has ceded part of its stake in Canada's Baffinland Iron Ore Mines to Nunavut as it seeks to cut costs in a sluggish global market.
Luxembourg-based ArcelorMittal, which has a high debt load, said on Thursday that it had handed over a 20 percent Baffinland stake to Nunavut, a privately held company backed by U.S. private equity firm Energy & Minerals Group.
No financial details were disclosed.
The deal leaves each of the two companies with half of Baffinland, which offers vast undeveloped iron ore deposits in Canada's Arctic.
The collapse in world steel markets led credit ratings agency Moody's to cut its rating on ArcelorMittal debt to "junk" status with a negative outlook last month.
The downgrade underlined the difficulty ArcelorMittal has faced in reducing debt and raising cash through the sale of assets.
Both Nunavut and ArcelorMittal bid for Baffinland in January 2011, with ArcelorMittal acquiring a 70 percent stake and Nunavut 30 percent.
ArcelorMittal is also exploring the sale of a minority stake in its Canadian iron ore business, sources familiar with the situation said in October, with an announcement expected by the end of the year.
The company's net debt rose by $1.2 billion during the third quarter to $23.2 billion at September 30. It has forecast a full-year core profit of about $7 billion.