Hebei Iron & Steel Group Co, China’s largest steel producer, is investing about C$194 million ($195 million) for a stake in Canada iron ore developer Alderon Iron Ore Corp., as Chinese steel makers look for cheaper ore to cut their production costs.
Hebei said it was the ideal time to invest in upstream assets as the broader market is taking a more cautious approach to iron ore demand.
The deal is part of efforts by Chinese steel producers to gain more control over foreign iron ore supplies, which is dominated by a handful of global miners.
Hebei will initially buy a near 20 percent stake in the Canadian company for C$88.3 million at C$3.42 per share, or a 0.6 percent discount to the last traded price, Hebei said in a statement on Friday.
Following that, Hebei will invest C$105.7 million, giving it the right to buy 25 percent interest in…
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