Baosteel's plan to buy a minor stake in an Australian iron ore miner, would in no way impact the ongoing iron ore price negotiations, the steelmaker said on Friday.
The company had earlier said it plans to invest $240 million to purchase a 15 percent stake in Aquila Resources, the Western Australian-based iron ore miner, to develop its iron ore, coal and manganese projects.
"Baosteel, as a large-sized State-owned enterprise, is also a steelmaker with independent business operations, and the move will in no way impact the price-setting talks," Zhang Chi, spokesperson, Baosteel, told China Daily on Friday.
The deal, pending regulatory approvals both in
Baosteel will also have a preferential opportunity to directly invest in and co-develop most of Aquila's projects, according to an
In a statement filed on Friday, Shanghai-based Baosteel said the purchase has been made through standard operation in the international capital market, adding that the management has immense faith in the growth potential of
"The deal will enable Baosteel to further diversify the importing channels of raw materials, but it won't change the overall landscape of the iron ore trade," said an analyst from Soochow Asset Management Co who declined to be named, adding that Baosteel still needs to rely heavily on the "Big Three" iron ore miners, Australia's Rio Tinto, BHP Billiton and Brazil's Vale, for iron ore imports.
"The deal, however, would raise the bargaining power of Baosteel in negotiating with these companies on the final price," he said.
Wang Zhe, analyst, CITIC Securities, told China Daily that most of the Chinese steelmakers have been stepping up pace in the last two years to secure overseas assets like
"Baosteel may get several million tons of iron ore annually from the deal, but it is still miniscule when compared to its huge overall imports. So in real terms the impact is relatively small," he said, adding that the move may prompt more Chinese steelmakers to acquire stakes in overseas mining firms.
Aquila's deposits lie in the
Shares of Baosteel dropped 3.77 percent to close at 6.9 yuan in
(Source from China Daily)