Domestic

Wuhan Steel to invest $57m in CIMC

By Zhang Qi and Guo Rui (China Daily)
Updated: 2011-02-18 13:25

A worker walks on a steel beam at a construction site for a bridge across the Yellow River near Zhongwei, in the Ningxia Hui autonomous region. Wuhan Iron & Steel Group announced it will invest C$56 million ($57 million) to acquire a stake in a Canadian mining company. [Photo / Agencies]

BEIJING - Wuhan Iron & Steel Group, China's third-largest steelmaker, agreed to invest C$56 million ($57 million) in a Canadian mining company Century Iron Mines Corp (CIMC) to acquire a stake and jointly develop iron ore projects, a top executive of CIMC said on Thursday.

Sandy C.K. Chim, chief executive officer of CIMC, said Wuhan Steel will have a 25 percent stake in the company after it lists in a month.

Sandy said that CIMC also have plans to raise between C$300 and C$500 million through an additional public float.

CIMC, formerly known as Century Iron Ore Holdings Inc, has three iron ore projects in Quebec. "We have explored reserves of one billion tons of magnetite iron ore, with ore content of 25 to 26 percent," said Sandy.

The agreement came two days after Wuhan Steel signed a formal deal with Canada-listed Adriana Resource Inc (ADI) for a stake in the Lac Otelnuk iron ore project in Quebec.

In January, Wuhan Steel and ADI signed a binding agreement that Wuhan Steel would pay ADI $120 million for a 60 percent stake in a joint venture company to develop iron ore in the Lac Otelnuk and December Lake iron ore properties in Northern Quebec. The deal also gives Wuhan Steel a 19.9 percent stake in ADI.

The Lac Otelunk ore project has more than 6 billion tons of ore reserves with a 29 percent ore content, available for exploitation.

Wuhan Steel has been on the frontlines in investing in several iron ore assets overseas in order to cut its reliance on expensive imports.

Wuhan Steel's Chairman Deng Qilin said earlier that the company aims to be self-sufficient in iron ore supplies within the next five years.

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In July 2010, Wuhan paid $240 million to acquire 19.9 percent stake in Canadian ore company called CLM.

In May 2010, it received approval from the National Development and Reform Commission for two acquisitions in Africa that are expected to contribute nearly 2 billion tons of iron ore deposits.

In December 2009, the company agreed to buy more than 40 million tons of iron ore under a seven-year contract with a Venezuelan company Venezolana de Guayanathe Corp. In the same month, Wuhan Steel paid $400 million to acquire a 21.52 percent stake in Brazilian iron ore miner MMX Mineracao e Metalicos SA.