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China Baosteel, Sinosteel ink raw materials deal |
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administrator |
DATE |
2007-12-06 09:25:17 |
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China Baosteel, Sinosteel ink raw materials deal
Wed Dec 5, 2007
BEIJING, Dec 5 (Reuters) - China\'s Sinosteel Group and Baosteel Group have signed a strategic cooperation agreement for supply of iron ore and other raw materials, state media said.
China\'s largest steel trading firm and its largest steel maker would step up cooperation in the supply of raw materials including iron ore and chromium, as well as ferrochrome and ferronickel, the official Xinhua news agency said on Wednesday.
\"As we enter the 21st century, Chinese steel mills face greater pressure as international steel giants speed their expansions. We can turn from a large steel producer into a strong steel producer only by improving our technology and core competitiveness,\" Baosteel chairman Xu Lejiang was quoted by Xinhua as saying during the signing ceremony on Wednesday.
\"We hope this strategic agreement will improve our two firms\' ability to specialise, reduce costs, improve efficiency in raw materials and increase global competitiveness.\"
Chinese steel mills have been seeking a response to BHP Billiton\'s (BLT.L: Quote, Profile , Research) (BHP.AX: Quote, Profile , Research) proposed takeover of rival Australian miner Rio Tinto (RIO.L: Quote, Profile , Research) (RIO.AX: Quote, Profile , Research), which together supply about 40 percent of China\'s iron ore imports. Rio has so far rejected the proposal.
Speculation is rife that Baosteel together with other mills and Chinese state investment bodies could participate in the merger, either by partnering with BHP to help it sweeten its bid, or by taking a stake in Rio Tinto to help it block the take-over. Chinese steel executives have not officially confirmed either of these strategies.
Baosteel is China\'s largest steel maker and the most influential in setting industry policy. It is almost totally reliant on iron ore imports, but has been less active than its large domestic rivals in investing in mines overseas.
Baosteel plans a steel plant in Brazil with Companhia Vale do Rio Doce, or CVRD, (RIO.L: Quote, Profile , Research) (VALE5.SA: Quote, Profile , Research), and has term purchase agreements from a nickel project in New Caledonia.
State-owned iron ore and steel trader Sinosteel is one of the most internationally-minded firms in China\'s steel industry.
It has invested in chrome projects in Africa and iron ore mines in Australia, and is developing iron ore and steel projects in India, in addition to its iron ore mines and steel plants in China.
The two would work together to develop resources domestically and overseas, exchange engineering technology, and bring together the strengths of a steel maker and steel industry services provider, Xinhua cited Sinosteel president Huang Tianwen as saying.
Xinhua gave no financial details the cooperation, or specify whether the two would take direct stakes in each other.
Beijing has been pushing consolidation among its steel firms to create internationally competitive giants, but mergers have gone slowly due to opposition from local governments.
Baosteel was one of eight firms that together bought 200 million shares in a private placement by the nation\'s second-largest ship plate maker, Xinhua Metal Products Co., the smaller firm said in a stock exchange filing on Wednesday. It paid 200 million yuan ($27 million) for its 1.44 percent stake.
($1=7.3880 yuan)
(Reporting by Jason Subler and Lucy Hornby; Editing by Chris Johnson)
Resource: www.steelonthenet.com |
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