Kam Hing joins Wuhan Steel in Madagascar iron ore venture

Mainland steelmaker Wuhan Iron & Steel (Group), seeking overseas supplies of iron ore, has teamed up with an unlikely partner - a diversifying Hong Kong-listed textile manufacturer - to invest 400 million yuan in a mine in Madagascar.

Wisco Kam Hing Resources, a joint venture between Wuhan Steel and Kam Hing International Holdings, will engage in the exploration and recovery of iron and titanium in the Bekisopa region of the African island nation of Madagascar, Kam Hing chief financial officer Elmen Wong Wai-kong said.

Kam Hing, which chanced upon the mining project as Madagascar's biggest employer, will contribute the mining rights it obtained late last year over a 287 sq km site in return for a 40 per cent stake in the joint venture.

Wuhan Steel, which owns the balance of the venture, will be responsible for setting up and overseeing production.

The company has also committed to purchasing all the metallic resources the mine yields at prevailing international market prices, according to the agreement reached on January 18.

Hubei-based Wuhan Steel imports about 80 per cent of its iron ore to meet steel production needs. Company spokesman Bai Fang said the Bekisopa mine would help it secure a supply of the principal steelmaking ingredient.