Kazakh miner pays 10.4b yuan for steel stake
Kazakhstan mining company International Mineral Resources (IMR) has agreed to pay 10.4 billion yuan (HK$11.81 billion) to form a steel-making joint venture on the mainland, aiming to join ArcelorMittal to tap into the world's biggest market.
Gansu-based Jiuquan Iron & Steel Group (Jiugang), ranked 16th on the mainland by output, will inject its 10.8 billion yuan worth of steel and mining assets, including a 61.9 per cent stake in Shanghai-listed unit Gansu Jiu Steel Group Hongxing Iron & Steel, into the venture for a 51 per cent share.
IMR, a unit of Kazakhstan's powerful conglomerate Eurasian Industrial Association (EIA) and controlled by Patokh Chodiev, Alijan Ibragimov and Alexander Machkevitch, will own the rest.
'The co-operation will allow Jiugang to buy iron ore in the nearby central Asian country and generate the synergy of combining the upstream iron ore mining and downstream steel-producing business,' said Xu Xiangchun, the chief information officer of steel information provider Beijing Ganglian Maidi E-commerce.
Eyeing the country's surging demand for the metal, foreign companies have been buying stakes in mainland steelmakers or forming ventures. Mainland steel mills are hoping foreign tie-ups will help them secure iron ore abroad.
ArcelorMittal, the world's largest steelmaker, owns 33.02 per cent of Shenzhen-listed Hunan Valin Steel Tube and Wire and 29.63 per cent of Hong Kong-listed mainland steelmaker China Oriental Group.
It has also expressed interest in buying 25 per cent of Hong Kong-listed Angang Steel. However, it has dropped a bid to buy a 38.41 per cent stake in Shanghai-listed Laiwu Steel as Beijing, wary of foreign control in key domestic mills, stalled giving approval to the deal.
ArcelorMittal's plan to boost its stake in China Oriental to 73.13 per cent also failed to get Beijing's antitrust clearance in May.
Mr Xu said he was more optimistic about the Jiugang-IMR venture as the two complemented each other. 'ArcelorMittal is not the same. It is actually a strong competitor of mainland steelmakers.'
The joint-venture plan has won approval from the Gansu provincial government but is still subject to consent from the State-owned Assets Supervision and Administration Commission, the Ministry of Commerce and the National Development and Reform Commission.
Dutch-registered IMR owned metal assets in Africa, including Zambia and South Africa, Hongxing Steel said in August last year when it first revealed the possible co-operation.
EIA's other unit, Eurasian Natural Resources Corp, owns proven iron ore reserves of 3.41 billion tonnes and produces 15 million tonnes a year in Kazakhstan.
Jiugang, the largest steel mill in Gansu, produced 7.37 million tonnes of steel last year.