By Gong Zhengzheng (China Daily)
Updated: 2007-08-24 13:33

China's No 16 steel mill Jiuquan Iron & Steel Group has agreed to create a joint venture with a Kazakh miner, the latest Chinese steelmaker to pursue overseas iron ore to meet domestic demand.

The group's Shanghai-listed unit, Gansu Jiu Steel Group Hongxing Iron & Steel Co Ltd, said in a statement yesterday that the parent company would put all its steel-making assets, part of its mining assets and its entire 61.9 percent stake in the listed firm into the joint venture in return for a 51 percent share.

The Kazakh partner, International Mineral Resources BV, will hold the remaining 49 percent stake in cash. But the statement didn't reveal the size of the investment.

"International Mineral Resources BV promised to provide a stable supply of iron ore concentrate and pellets to Jiuquan and the joint venture at fair market prices," the statement said.

It said the venture will also seek opportunities to explore iron ore in Kazakhstan and other countries.

International Mineral Resources now owns a proven iron ore reserve of 3.41 billion tons and produces 15 million tons a year in the Central Asian country.

Lots of other steel mills from China, the world's top producer, are also keen to secure iron ore supplies abroad.

Shagang Group, the nation's fourth-biggest steelmaker, earlier this month bought a 90 percent stake in British steel and raw materials trader Stemcor Holdings Ltd's iron ore mine in Australia.

Anshan Iron & Steel Corp, the No 3 steelmaker, acquired a 12.9 percent stake of Australian iron ore provider Gindalbie Metals Ltd in June.

Li Xinchuang, vice-president of the China Metallurgical Industry Planning and Research Institute in Beijing, said: "Domestic steel companies should obtain more overseas mines for a reliable iron ore supply."

China's iron ore imports rose by 19 percent year-on-year to 222 million tons in the first seven months of this year, with the majority from the world's top three suppliers CVRD, Rio Tinto and BHP Billiton, which control three-quarters of the global sea trade of iron ore.

The three groups have raised iron ore prices in recent years, adding costs for Chinese steel firms.

State-owned Jiuquan in Northwest China's Gansu Province made 6.6 million tons of steel last year, up 17 percent from 2005.