Baosteel plans to expand cooperation with FMGJun. 2, 2008 (China...

Baosteel plans to expand cooperation with FMG

Jun. 2, 2008 (China Knowledge) - Considering the rising price of iron ore, Baosteel Group Corp plans to expand cooperation with Australia's Fortescue Metals Group Ltd (FMG) to meet the huge demand in the world's fast growing major economy, according to sources.

With 170,000 tons of iron ore unloaded at the Majishan Harbor on May. 29, FMG had become a major iron ore supplier for Baosteel. Last year, FMG and Baosteel Resources Co, a subsidiary under Baosteel Group, had signed a 10-year iron ore supply contract. Under the terms of agreement, the former will provide 20 million tons of iron ore to the latter annually.

Baosteel may consider buying part of FMG's shares if the two can reach agreements on mutual aims, development strategies and market positioning, said Xu Lejiang, president of Baosteel.

China's steel industry is now seeking more channels for iron ore imports, with the hope to gain the upper hand in negotiations with Brazilian and Australian miners.