ArcelorMittal SA, the world’s largest steelmaker, is exploring a deal to merge its US operations with Cleveland-Cliffs Inc, the largest US producer of iron ore pellets, people familiar with the matter said on Sunday. The combination would signal a new push among steelmakers to consolidate and diversify their business, making it less vulnerable to swings in demand. It would come after Cleveland-Cliffs acquired AK Steel, a US maker of flat-rolled carbon steels, including stainless steel, for USD 3 billion, including debt, last March.

The latest deal could result in the merger of US assets of Luxembourg-based ArcelorMittal that are worth between USD 2 billion and USD 3 billion with Cleveland-Cliffs, one of the sources said. It would be transformative for Cleveland-Cliffs, which has a market value of USD 2.3 billion and had total long-term debt as of the end of June of USD 4.5 billion.

There is no certainty the negotiations will lead to a deal, the sources said. If, however, the talks prove successful, a deal could be announced in the coming days, one of the sources added. The sources requested anonymity because the matter is confidential. ArcelorMittal and Cleveland-Cliffs did not immediately respond to requests for comment.

ArcelorMittal’s US business has more than 18,000 employees and 25 facilities, including mines, steelmaking facilities and finishing operations, according to the company’s website. Headquartered in Cleveland, Cleveland-Cliffs employs about 11,000 people across mining and steel manufacturing operations in the United States and Canada.

ArcelorMittal said last year it was aiming to offload USD 2 billion of assets by the middle of 2021 to reduce its debt. In December, it agreed to sell a 50 percent stake in its shipping business, and has also sold its stake in Brazilian steelmaker Gerdau.

After it acquired AK Steel, which derived 66 percent of its revenue in 2019 from the automotive market, Cleveland-Cliffs experienced a drop in demand from its car manufacturing clients, which were forced to temporarily halt production earlier this year because of the COVID-19 pandemic.