Wuhan Iron & Steel Group agreed with Canada’s Century Iron Mines Corp. to jointly develop mining projects, as China’s fourth-largest steelmaker seeks to cut its reliance on ore purchases from producers including BHP Billion Ltd., Rio Tinto Group and Vale SA.
Century Iron, formerly known as Century Iron Ore Holdings Inc., has three iron ore projects in Quebec, the Chinese steelmaker said today in an e-mailed statement, without giving more details of the agreement. This accord came two days after Wuhan Steel reached a separate deal with Adriana Resources Inc. to develop the Lac Otelnuk iron ore project in Canada.
Spot iron ore prices arriving in China’s Tianjin port have surged 50 percent in the past year, according to the Steel Index. Wuhan Steel wants to be “self-sufficient” in iron ore supplies in three to five years and reduce dependence on overseas suppliers, General Manager Deng Qilin said.
The investments “don’t only help secure raw-material supplies and cut production costs, but also break the miners’ oligopoly and help maintain our national interests,” Wuhan Steel said in the statement.
The steelmaker has now invested in eight iron ore projects - in Canada, Brazil, Australia, Liberia and Madagascar, securing “billions of tons” of iron ore resources and making it owner of the most mining resources among global mills, it said in the statement.
Wuhan Steel plans to boost steel production capacity to 60 million metric tons in 2011-2015 from 40 million tons, it said in July. It made 36.6 million tons last year.
The company didn’t give any financial details on the transaction. The Canadian miner will be soon listed on the Toronto Stock Exchange, Wuhan Steel said.