Japan and S Korea groups take rare metal stake
Japan and South Korea have joined forces to secure supplies of a rare metal crucial to high-grade steel production, investing $1.8bn in Companhia Brasileira de Metalurgia e Mineracão, a Brazilian mining group that is the largest producer of the metal.
Competition for niobium, which is used to increase the hardness of steel alloys, increased last year after East China Mineral Exploration and Development Bureau, a Chinese state-owned miner, struck a deal to buy a controlling stake in Globe Metals & Mining, an Australia-listed group with niobium assets in Africa.
China’s booming steel industry has made it the world’s top importer of niobium, leaving Japanese and Korean steelmakers wary of supply shortages that could disrupt production of the profitable high-end products in which they increasingly specialise, such as seamless pipes used in nuclear power plants and oil rigs.
CBMM’s Araxá mine, in the southeastern Brazilian state of Minas Gerais, is the source of an estimated 60-70 per cent of global niobium supplies. The price of niobium has nearly doubled over the past decade to about $23,000 a tonne last year – a boon for CBMM and for Unocal, the US oil group that owns a large minority stake in the group, but a headache for steelmakers.
According to South Korea’s National Pension Service, one of the groups that is to invest in the company, a consortium of Japanese and Korean steelmakers and government-affiliated bodies has agreed to acquire a 15 per cent stake.
Japanese steelmakers also confirmed privately that a deal had been reached, though no formal announcement has been made.
Other investors include Japan’s four largest steel companies, Nippon Steel, JFE, Kobe Steel and Sumitomo Metal; Posco, the South Korean steel group; Sojitz, a Japanese trading company that is a major importer of rare metals and rare earths; and the Japan Oil, Gas and Metals National Corporation, a Japanese state-owned importer and developer.
“We are interested in investing in the overseas miner as resource assets tend to generate high returns, while Posco wants to secure rare metal as a strategic investor,” NPS said, adding that it and Posco will jointly buy 5 per cent of CBMM at a cost of Won350bn ($312m) each. The Japanese investors will together acquire another 10 per cent.
The deal is the latest example of industrial cooperation between Japan and South Korea to secure natural resources.
In 2008, six Japanese and Korean steelmakers and the Japanese trading house Itochu paid $3bn for a stake in a Brazilian iron ore miner. More recently, a Japanese-Korean consortium is making a bid to develop the Tavan Tolgoi coal mine, the world’s biggest coking coal deposit in Mongolia.
Copyright The Financial Times Limited 2011. You may share using our article tools. Please don't cut articles from FT.com and redistribute by email or post to the web.
Competition for niobium, which is used to increase the hardness of steel alloys, increased last year after East China Mineral Exploration and Development Bureau, a Chinese state-owned miner, struck a deal to buy a controlling stake in Globe Metals & Mining, an Australia-listed group with niobium assets in Africa.
China’s booming steel industry has made it the world’s top importer of niobium, leaving Japanese and Korean steelmakers wary of supply shortages that could disrupt production of the profitable high-end products in which they increasingly specialise, such as seamless pipes used in nuclear power plants and oil rigs.
CBMM’s Araxá mine, in the southeastern Brazilian state of Minas Gerais, is the source of an estimated 60-70 per cent of global niobium supplies. The price of niobium has nearly doubled over the past decade to about $23,000 a tonne last year – a boon for CBMM and for Unocal, the US oil group that owns a large minority stake in the group, but a headache for steelmakers.
According to South Korea’s National Pension Service, one of the groups that is to invest in the company, a consortium of Japanese and Korean steelmakers and government-affiliated bodies has agreed to acquire a 15 per cent stake.
Japanese steelmakers also confirmed privately that a deal had been reached, though no formal announcement has been made.
Other investors include Japan’s four largest steel companies, Nippon Steel, JFE, Kobe Steel and Sumitomo Metal; Posco, the South Korean steel group; Sojitz, a Japanese trading company that is a major importer of rare metals and rare earths; and the Japan Oil, Gas and Metals National Corporation, a Japanese state-owned importer and developer.
“We are interested in investing in the overseas miner as resource assets tend to generate high returns, while Posco wants to secure rare metal as a strategic investor,” NPS said, adding that it and Posco will jointly buy 5 per cent of CBMM at a cost of Won350bn ($312m) each. The Japanese investors will together acquire another 10 per cent.
The deal is the latest example of industrial cooperation between Japan and South Korea to secure natural resources.
In 2008, six Japanese and Korean steelmakers and the Japanese trading house Itochu paid $3bn for a stake in a Brazilian iron ore miner. More recently, a Japanese-Korean consortium is making a bid to develop the Tavan Tolgoi coal mine, the world’s biggest coking coal deposit in Mongolia.
Copyright The Financial Times Limited 2011. You may share using our article tools. Please don't cut articles from FT.com and redistribute by email or post to the web.
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