Taiwan's China Steel said Friday it will spend 95 million US dollars on a stake in Brazil's Namisa SA, its first investment in a foreign iron ore miner.
The island's largest steel producer made the decision in a bid to secure overseas supply amid expectations that a global recovery will eventually ratchet up demand, a China Steel spokesman said.
"The deal shows our determination to secure overseas iron ore supply, while global demand for steel products is on the rise," he told AFP.
The company's board of directors have approved the decision to buy a 0.5 percent stake in Namisa from Sumitomo Metal Industries and another 0.5 percent from Itochu Corp, at a total cost of 8.5 billion Japanese yen.
The spokesman said China Steel imports 16 million metric tonnes of iron ore every year with 71 percent of the imports from Australia and about a quarter from Brazil.
"Namisa is expected to supply 200,000 to 300,000 metric tonnes of iron ore to China Steel a year in the initial phase of the investment," he said.
"We hope the annual supply will rise to 500,000 metric tonnes in the long run."
The spokesman said China Steel may seek bank loans to finance the investment.
The investment deal still needs approval from Namisa's shareholders and regulators from Taiwan and Brazil, the spokesman said.
Copyright 2009 AFP Global Edition
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