Hebei Steel given go-ahead to buy Alderon stake
Hebei Iron & Steel Group, China’s largest steelmaker, has received the nod from the country’s top economic planner to go ahead with its plans to buy a stake in Canadian iron ore company Alderon Iron Ore Corp.
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The National Development and Reform Commission confirmed this in a statement on Friday July 6.
Hebei Steel agreed in April 2012 to invest C$194 million ($190 million) in Alderon for a 19.9% stake in the Canadian company and a 25% stake in its Kami iron ore project.
The steelmaker will offtake up to 60% of the planned production of Kami project, that is up to 4.8 million tonnes for the first 8 million tonnes of 65.5% Fe iron ore concentrate produced from the project per year.
Hebei Steel’s go-ahead for the acquisition came after iron ore prices plummeted by 25% from last September’s $180 per tonne cfr level to the current $135 per tonne cfr, but the project is still in line with the steelmaker’s strategy to secure more overseas iron ore supplies.
Alderon said in June that the Kami project, which has iron ore deposits next to the mining towns of Wabush, Labrador City and Fermont in Canada, will generate C$1.6 billion in income.