Sinosteel doesn't rule out buying Fortescue stake

BEIJING (Reuters) - Sinosteel Group, China's largest ferrous metals trader, does not rule out taking a stake in Australian iron ore miner Fortescue Metals Group Ltd (FMG.AX), Sinosteel President Huang Tianwen said on Thursday.

Australian media have reported that Chinese state-owned metals firms, including Sinosteel, Chinalco and Baosteel, want to buy a stake in Fortescue, as Beijing seeks to wield more control over raw material supplies from the Australian outback.

China, the world's largest steel producing country, is especially seeking stakes in iron ore start-ups to break its dependence on ore from heavyweights Rio Tinto Ltd/Plc (RIO.AX) (RIO.L) and BHP Billiton Ltd/Plc (BHP.AX) (BLT.L).

However, Huang denied that the company was looking to take a stake in BHP, the world's largest miner, with Chinese state-owned partners.

"(Sinosteel) does not participate such unified activities," he said.

Chinalco, China's largest aluminum maker, is looking to diversify into other raw materials and has bought 9.3 percent of Rio Tinto.

After Huang's comments, shares in Fortescue reversed a fall of more than 1 percent and were up 2.9 percent at A$9.51 at 0522

GMT.

Sinosteel is also optimistic about reaching an official agreement to purchase a stake in Australia's Midwest Corp MIS.AX, Huang told reporters on the sidelines of an industry conference.

Sinosteel, which already owns 19.9 percent of Midwest, offered a revised A$1.36 billion ($1.31 billion) to the mining start-up. A deal is conditional on winning at least 50.1 percent acceptance.

($1=1.038 Australian Dollar)

(Writing by Alfred Cang; Editing by Edmund Klamann)