Wuhan Iron and Steel Group Corp (WISCO) is in discussion with several state departments regarding another overseas iron ore purchase, revealed WISCO Resource Department's deputy director Xiao Jinfa in Beijing on June 24.
One day earlier, Brazilian iron ore vendor MMX claimed to have signed a deal with WISCO in which the Chinese steel company would invest US$280 million in exchange for 9.09 percent of MMX's newly issued ordinary shares and 23 percent of MMX Sudeste's stake.
MMX is in possession of two operational units – MMX Corumba and MMX Sudeste; they are capable of yielding 10.8 million tons of iron ore per year. The expanded company will raise the output more than three folds to 40 million tons a year.
So far this year WISCO has made three overseas purchases including an April investment of US$240 million to become Canadian mining company Consolidated Thompson's largest single share holder. In May, WISCO signed a framework deal with Australian ore vendor Western Plains Resources Ltd (WPG) and became WPG's second largest stake holder in the joint exploration of a resource in central southern Australia.
WISCO insiders also suggest the central China's steel giant may sign another deal with Australia before long.
Analysts say WISCO's recent purchases will ensure the company's raw material supply, and bring down the cost as well, which directly benefits WISCO's listed company Wugang Steel (SH.600005). WISCO is the actual steel manufacturer who makes the bulk contribution to the group company.
For more information, please consult the original coverage in Chinese at:
http://www.21cbh.com/HTML/2009-6-25/HTML_P5KKF9OAF2D9.html
(China.org.cn by Maverick Chen, June 25, 2009)
