Angang denies plans to invest in Liaoning deposit

PUBLISHED : Saturday, 27 June, 2009, 12:00am
UPDATED : Saturday, 27 June, 2009, 12:00am

Angang Steel said yesterday the company and its state-owned parent had no plans to invest in the Benxi iron ore mine to exploit a newly discovered deposit that local officials touted as the biggest in Asia.

The clarification came after mainland media reported that Angang's parent company, Anshan Iron and Steel Group, and rival Benxi Iron and Steel Group, both based in Liaoning province, the home of the new find, would invest in the deposit.

In a statement filed with the Hong Kong and Shenzhen stock exchanges, Angang said the company and its parent company 'have not considered' and 'have not begun any negotiations' in relation to exploring the deposit or investing in a mine. Bengang Steel Plates, the listed arm of Benxi Steel Group, said in a statement that its parent was considering participating with a consortium in initial exploration and development.

However, the company did not hold any stake in the deposit, nor had it signed any agreement with Shenzhen Yizongxin or the Liaoning Geological Bureau to invest in initial exploration and development.

Some mainland newspapers said Benxi Steel would take a 20 per cent stake in the deposit and Shenzhen Yizongxin would get 60 per cent, while the remainder would be held by the local geological bureau.

Shares of the two listed steelmakers surged their 10 per cent daily limit in Shenzhen on Wednesday on news of the discovery of the deposit, as investors bet the companies' parents would gain the mining rights.

The two stocks were suspended from trading on Thursday.

Shares in Bengang Steel rose 9.2 per cent yesterday after resuming trading, and Angang gained 3.7 per cent.

Liaoning officials claimed the deposit had iron ore reserves of more than 3 billion tonnes, with iron content of 25 to 62 per cent.

However, analysts said it was uncertain how much of it could be economically mined, as it was located more than 1,000 metres below ground and the iron ore content was lower than that of mines in Australia and Brazil.