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Hebei Iron, Tewoo eye Fortescue stake
sourceLandy Lu
time2015/08/07
- Two State-owned Chinese companies are looking to take a stake in a leading Australian miner.
Hebei Iron & Steel Group Co and Tewoo Group Co have approached Fortescue Metals Group Ltd about acquiring an interest in the iron ore producer, people with knowledge of the matter said.
Two State-owned Chinese companies are looking to take a stake in a leading Australian miner.
Hebei Iron & Steel Group Co and Tewoo Group Co have approached Fortescue Metals Group Ltd about acquiring an interest in the iron ore producer, people with knowledge of the matter said.
Fortescue jumped as much as 10 percent in Sydney trading, the most in more than two months.
The Chinese companies are also separately in talks with Fortescue about investing in the infrastructure serving its operations in Western Australia's Pilbara region, the people said.
They may also consider buying stakes in Fortescue's mines, for a total investment of about $1 billion to $2 billion in the Australian firm's assets, two of the people said, asking not to be identified as the information is private.
Fortescue, controlled by billionaire Andrew Forrest, said in March it would consider selling minority stakes in mines, railways and ports. Iron ore prices have tumbled to the lowest level since at least 2009 as the largest suppliers, including Rio Tinto Group, expanded production just as economic growth slowed in China.
Fortescue traded 5.1 percent higher at A$1.865 ($1.37) on Wednesday. Rival Rio Tinto Group gained 1.6 percent.
"The market is responding to news of the Chinese interest," said Evan Lucas, a markets strategist in Melbourne at IG Ltd. "A deal that would allow it to cut its debt would help solve the biggest headache investors have with Fortescue."
Australia's third-largest iron ore producer, which has $7.2 billion in net debt, abandoned a previous plan to sell a stake in its infrastructure assets in 2013 after saying the offers did not meet its objectives for value and terms.
In March it sold $2.3 billion of bonds after halting an earlier, larger offering amid the rout in commodity prices.
Talks with the Chinese firms are at an early stage and may not result in a deal, the people said. Representatives for Hebei Iron & Steel and Tewoo declined to comment.
"While there is no imperative, Fortescue is open to commercial discussions with a range of groups on a regular basis at the mining asset level," the company reported in a statement on Wednesday. "There is no agreement of such nature with any party at this time."
Fortescue, which has a market value of $4.3 billion, has held talks with Baosteel Group Corp and Japanese firms about selling a stake in some of its mines, people familiar with the matter said in June.
Hebei Iron & Steel, China's largest steelmaker by production capacity, produced 47.1 million metric tons of steel and booked sales of 280.6 billion yuan ($45.2 billion) last year, according its website.
State-owned Tewoo, based in Tianjin, runs businesses including commodities trading, logistics, financial services and real estate.
Hebei Iron & Steel Group Co and Tewoo Group Co have approached Fortescue Metals Group Ltd about acquiring an interest in the iron ore producer, people with knowledge of the matter said.
Fortescue jumped as much as 10 percent in Sydney trading, the most in more than two months.
The Chinese companies are also separately in talks with Fortescue about investing in the infrastructure serving its operations in Western Australia's Pilbara region, the people said.
They may also consider buying stakes in Fortescue's mines, for a total investment of about $1 billion to $2 billion in the Australian firm's assets, two of the people said, asking not to be identified as the information is private.
Fortescue, controlled by billionaire Andrew Forrest, said in March it would consider selling minority stakes in mines, railways and ports. Iron ore prices have tumbled to the lowest level since at least 2009 as the largest suppliers, including Rio Tinto Group, expanded production just as economic growth slowed in China.
Fortescue traded 5.1 percent higher at A$1.865 ($1.37) on Wednesday. Rival Rio Tinto Group gained 1.6 percent.
"The market is responding to news of the Chinese interest," said Evan Lucas, a markets strategist in Melbourne at IG Ltd. "A deal that would allow it to cut its debt would help solve the biggest headache investors have with Fortescue."
Australia's third-largest iron ore producer, which has $7.2 billion in net debt, abandoned a previous plan to sell a stake in its infrastructure assets in 2013 after saying the offers did not meet its objectives for value and terms.
In March it sold $2.3 billion of bonds after halting an earlier, larger offering amid the rout in commodity prices.
Talks with the Chinese firms are at an early stage and may not result in a deal, the people said. Representatives for Hebei Iron & Steel and Tewoo declined to comment.
"While there is no imperative, Fortescue is open to commercial discussions with a range of groups on a regular basis at the mining asset level," the company reported in a statement on Wednesday. "There is no agreement of such nature with any party at this time."
Fortescue, which has a market value of $4.3 billion, has held talks with Baosteel Group Corp and Japanese firms about selling a stake in some of its mines, people familiar with the matter said in June.
Hebei Iron & Steel, China's largest steelmaker by production capacity, produced 47.1 million metric tons of steel and booked sales of 280.6 billion yuan ($45.2 billion) last year, according its website.
State-owned Tewoo, based in Tianjin, runs businesses including commodities trading, logistics, financial services and real estate.