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Manufacturing & Industry

China’s Hebei to invest $195 million in Canada iron ore miner


Hebei Iron & Steel Group Co, China’s largest steel producer, is investing about C$194 million ($195 million) for a stake in Canada iron ore developer Alderon Iron Ore Corp., as Chinese steel makers look for cheaper ore to cut their production costs.

Hebei said it was the ideal time to invest in upstream assets as the broader market is taking a more cautious approach to iron ore demand.

The deal is part of efforts by Chinese steel producers to gain more control over foreign iron ore supplies, which is dominated by a handful of global miners.

Hebei will initially buy a near 20 percent stake in the Canadian company for C$88.3 million at C$3.42 per share, or a 0.6 percent discount to the last traded price, Hebei said in a statement on Friday.

Following that, Hebei will invest C$105.7 million, giving it the right to buy 25 percent interest in Alderon’s principal asset known as the Kami project.

The deal will also give Hebei the right to buy 60 percent of annual iron ore produced from the Kami project, the statement added.

Hebei’s investment into the iron ore sector also reflects the company’s optimistic outlook about China’s iron ore demand and comes at a time when iron ore miners, including BHP Billiton, Rio Tinto and Vale continue to bet on long-term demand growth from the world’s top buyer, China.

Bank of America Merrill Lynch was the exclusive financial adviser to Hebei in the transaction.

Denny Thomas
Reuters

About Craig Hill

General Manager at Craig Hill Training Services * Get an Australian diploma by studying in your own country * Get an Australian diploma using your overseas study and work experience * Diplomas can be used for work or study in Australia and other countries. * For more information go to www.craighill.net

Discussion

3 thoughts on “China’s Hebei to invest $195 million in Canada iron ore miner

  1. Reblogged this on Craig Hill.

    Like

    Posted by Craig Hill | April 14, 2012, 3:20 pm
  2. Have always said … that we have to watch the Chinese *smile … they take over step by step, but they do a good job with what ever they take over. Look at Volvo and the they keep the jobs going.

    Like

    Posted by viveka | April 14, 2012, 8:55 pm

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  1. Pingback: China’s Sino-Forest Feels Heat in Canada « China Daily Mail - May 23, 2012

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