Top Chinese Steelmakers Set Up Jv For Cambodian Iron Ore Project

Top Chinese steelmakers set up JV for Cambodian iron ore project

Wuhan Iron and Steel Group (WISCO), Baoshan Iron and Steel Group (Baosteel Group), Anshan Iron and Steel Group (Angang) and Shoudu Iron and Steel Group (Shougang) have formed a joint venture for an iron ore project in Cambodia, a WISCO official told Interfax Thursday.

The group signed the agreement in Beijing Wednesday, which marks the first time a group of domestic Chinese steelmakers have joined hands on an overseas iron ore project. WISCO holds a 50 percent stake in the joint venture, Baosteel Group holds 25 percent, Angang, 15 percent, and Shougang, 15 percent.

The current cooperation between the four big steelmakers still depends on the due diligence of the iron ore project, which is located in the northern province of Preah Vihear near the Thai border, WISCO's head of media relations, Bai Fang, said.

"The result of the due diligence matters considerably, and if it turns out to be ideal, this will enable further collaboration between the four companies," Bai said. Bai said he expected the due diligence to be completed shortly.

Once the project enters the development stage, the four are likely to set up another joint venture with a Cambodian company. Bai would not disclose the name of the potential Cambodian partner nor the investment value of the project.

Bai said the efforts of the China Iron and Steel Association had helped get the joint venture off the ground.

A senior official from CISA, Chen Xianwen, said the possible consortium between the four companies would set a positive example to other domestic steelmakers, and help revitalize the current "disorderly state" and high costs incurred on overseas mining projects by domestic steelmakers.

A second WISCO official, surnamed Wang, said the company was confident the JV would go further than the Cambodian iron ore project.

Domestic steelmakers have been urged to develop overseas mines in order to secure iron ore supplies and relieve future resource shortages in China.

The government has encouraged domestic steelmakers to cooperate in overseas projects to develop high-grade mines that are rich in reserves, easy to develop and close to seaports and railroads.

It has advised steelmakers to show caution and long-term vision, as well as considering the political stability of the host country to minimize risks.