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China Steel Cos. Buying Ore Field Stake
Moving to Secure Iron Ore Supplies, Chinese Steel Cos. to Buy Stake in Australian Ore Field

The Associated Press



SHANGHAI, China April 20 — Moving to secure long-term iron ore supplies, four big Chinese steel makers have tentatively agreed on a $9 billion deal to acquire a 40 percent share in a mine owned by Australian-based iron ore producer BHP Billiton, one of the steel companies said Tuesday.
The deal for the stake in the BHP Billiton's Jimblebar Mine, near Newman in northern Western Australia, would be the largest ever between Chinese iron and steel makers and a foreign company.





It would assure a total annual supply of 12 million metric tons of ore over a 25-year period, said the deputy secretary of the board for Magang Holdings, one of the four Chinese partners in the venture. He gave only his surname, Hu.

However, he said, the contract has not yet been finalized and "relevant ministries" have not yet given their approval.

The deal is aimed at ensuring a stable, long-term supply of iron ore amid shortages due to soaring demand. It follows other Chinese acquisitions of overseas supply bases for scarce resources, including natural gas and crude oil.

The Chinese partners, an unnamed Japanese steel maker and BHP Billiton plan to set up a joint mining company, Hu said. Each Chinese steel maker would "most likely" hold a 10 percent stake, he said.

Apart from Magang Holdings which is the listed company of Ma'anshan Iron and Steel Co. Ltd. the other Chinese partners are: Wuhan Iron and Steel (Group) Corp., Jiangsu Shagang Group Co. Ltd. and Tangshan Iron and Steel (Group) Co. Ltd.

About a fifth of the iron ore imported by China is mined by Chinese companies operating overseas, and that figure is expected to rise in the near future, the government's Xinhua News Agency said in its report on the deal.