(Corrects the lead and fifth paragraph to say the Posco venture is with Chongqing Iron & Steel Group in a story first published on July 4. The initial information came from the South Korean government.)
July 4 (Bloomberg) -- Chongqing Iron & Steel Co., the listed unit of a Chinese group that’s opening up to private partners, saw its shares surge after its parent agreed with South Korea’s Posco to jointly invest $3.3 billion in a steel venture.
Chongqing’s shares rose as much as 10 percent in Shanghai, the daily limit, after the South Korean government announced the mining, production and technology agreement with its largest steelmaker. The stock closed up 6.3 percent at 2.55 yuan, its highest level since December last year.
The state-owned parent, Chongqing Iron & Steel Group, is also looking for private investment in its iron ore project in Australia, the Chongqing State-owned Supervision and Administration Commission said June 30.
The steelmaker is joining companies from Aluminum Corp. of China Ltd. to PetroChina Co. in following Premier Li Keqiang’s call to attract private capital into state-controlled industries and speed up the development of mixed-ownership entities. The listed unit, based in the southwestern city of Chongqing, last year incurred its biggest annual loss since 1997 as industry overcapacity and slowing economic growth weighed on steel prices.
Posco and Chongqing Iron & Steel Group’s memorandum of understanding is centered on Posco’s steelmaking technology Finex, cold-rolled steel and mining development, according to the South Korean statement, which didn’t give further details.
The two companies will jointly build a steel plant using Finex technology and a separate cold-rolling automotive steel project, Chongqing Iron & Steel Co. said in an exchange filing July 6.
Chongqing Iron & Steel Group agreed to buy the magnetite iron ore project in Western Australia for as much as A$280 million ($262 million), the official Xinhua News Agency reported in November 2009. First-phase development of the project may need about $2 billion, Xinhua said at the time.
Three calls each to You Xiaoan, board secretary of Chongqing Steel, and to the parent company’s publicity office went unanswered on July 4.
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