China Steel Corp., one of Taiwan's leading steel makers, said Wednesday that it has agreed to acquire iron ore assets in Canada to secure its supply of raw material.
In a statement, China Steel said that CSC Steel Australia Holdings Pty Ltd., one of its units, will spend US$270 million (NT$7.9 billion) on a 3.68 percent stake in each of the two subsidiaries of ArcelorMittal Mines Canada Inc. (AMMC) to gain access to the Canadian company's iron ore and infrastructure assets.
China Steel said that after the acquisition, the two AMMC units -- ArcelorMittal Canada Mining General Partnership and ArcelorMittal Canada Infrastructure General Partnership -- are expected to supply 1 million tons of iron ore per year to the Taiwanese steel maker.
China Steel said the purchase is expected to help the company raise a ratio of self-supplied iron ore by 4.2 percentage points to 11.6 percent.
The acquisition agreement was entered into by a consortium organized by China Steel, its South Korean counterpart POSCO and various other investors. The consortium will take a 15 percent stake in each of AMMC's two subsidiaries for US$1.1 billion, while AMMC will retain the remaining 85 percent.
China Steel said the investment is pending approval from the Taiwanese government but added that it expects the deal to be closed by the end of the second quarter.
Currently, China Steel has iron ore assets in Brazil and Australia. The company said it is keeping a close eye on the chances of acquiring more such assets overseas.
Shares of China Steel closed up 0.91 percent that day at NT$27.60, with 25.74 million shares changing hands on the Taiwan Stock Exchange.
Local steel stocks have been supported in recent sessions by hikes in international iron ore prices amid tight supply, which could prompt steel suppliers to raise product prices, dealers said.
China Steel said it has witnessed a recovery in global demand, prompting it to raise its domestic wholesale prices by 0.39 percent from December for products to be delivered in January and February.