(Interfax China)
Updated: 2007-03-07 14:20

China Special Steel Holding Co Ltd, a Hong Kong-listed steel mill, announced yesterday that they would acquire an Indonesian mining company for HK$2.73 billion ($349.27 million), in order to secure iron ore and nickel supplies.

The Indonesian mining company named S.E.A. Mineral Limited (S.E.A.), recently signed a 14-year contract with Indonesian Yiwan Mining Ltd for exclusive rights to mined metal ore from their iron ore and nickel mine.

The mine is located in Southern Kalimantan Province, in Indonesia, and contains 150 million tons of iron ore and nickel.

According to the announcement, Yiwan Mining will provide at least 1 million tons of metal ore to S.E.A. in the first year of the agreement, and will continue to provide no less than 3 million tons per year starting from the second year.

The acquisition will ensure a stable supply of iron ore and nickel at appropriate prices.

China Special Steel will issue 1.34 billion shares at a price of HK$1.73 ($0.22) per share in order to raise a fund of HK$2.318 billion ($296.57), which will be used to finance the acquisition. Deutsche Bank AG has already subscribed to 56.1 million shares.

Special Steel plans to issue HK$625 million ($79.96 million) worth of convertible bonds to Deutsche Bank AG, with a conversion price of HK$2.25 ($0.29) per convertible bond.

Net proceeds from the share subscription and the convertible bonds subscription amount to approximately HK$700 million ($89.56 million).

China Special Steel is based in central China's Zhengzhou City, in Henan province, and mainly produces bearing steel and spring steel that is used extensively in the automobile and construction industry. The company issued 180 million shares in the Hong Kong IPO, in May 2005.