Beijing: Four large Chinese steel mills have formed a joint investment company to explore overseas resources and escape what local experts termed foreign “manipulation” of iron ore prices, state media said on 24 May.
Baosteel, China’s biggest steel maker, will own 20% of the joint venture, with Wuhan Iron and Steel Group Corp, based in the central province of Hubei, holding 50%, the Shanghai Securities News reported.
The remaining 30% will be divided equally between Anshan Iron and Steel Group Corp and Shougang Group, the report said, giving no financial details.
The new investment company is expected to increase China’s bargaining power in setting global iron ore prices, it said. “In recent years Chinese steel enterprises have suffered a lot from manipulation by foreign iron ore suppliers,” the newspaper said, citing unnamed experts. “Upstream iron ore supplies have long been controlled by others.”
The formation of the company highlights China’s efforts to secure overseas resources of raw materials to feed an economy that has grown by double digits for four consecutive years.
The new company’s first overseas project will be an investment in an iron ore mine in Cambodia, with a reserve estimated to be 200 million tonne, according to a report in the China Securities Journal on 24 May.
It added that there are only 580 million tonne of overseas iron ore resources directly under the control of Chinese enterprises, equivalent to just 17.8% of China’s iron ore imports last year.
Iron ore prices have been under pressure from soaring Chinese demand, with the main producers -- Australia, Brazil and India able to get large price increases as a result.