September 06, 2008

Baosteel may take stake in FMG – Report

Caijing magazine, citing industry sources, reported that China's top steelmaker Baosteel Group is in a slow waltz to take a stake in new Australian iron ore producer Fortescue Metals Group Limited.

Caijing said that no agreement has yet been reached between Fortescue and Baosteel, who already has agreements to buy iron ore from mines that opened this year. Baosteel has long been rumored as a potential investor in Fortescue.

Caijing said that, in late 2004, Chinese firms led by China Metallurgical Construction Group had pulled out of a deal to construct facilities in Fortescue, because the National Development & Reform Commission was insisting that the Chinese firms take an 85% stake. Later, in 2006, Fortescue offered Chinese investors a 20% stake, which the NDRC also took because it wanted control.

Meanwhile, Mr Luo Bingsheng secretary general of China Iron & Steel Association said that Fortescue had only been interested in financing for its project, not a strategic investor.