SHANGHAI/HONG KONG (Reuters) - A Chinese group made up of five state-owned enterprises has paid $1.95 billion for a 15 percent stake in a Brazilian niobium producer, underscoring China’s growing appetite to secure supplies of mineral resources.
The deal values Companhia Brasileira de Metalurgia e Mineracao (CBMM), the world’s top niobium producer, at $13 billion and pits the Chinese group against Japanese and South Korean companies that bought a similar-size stake in the Brazilian company earlier this year.
Brazil’s Moreira Salles family, which controls Itau Unibanco (ITUB4.SA), owned the remaining 30 percent of CBMM and under the terms of the deal, the status quo would be maintained for the time being, a source said.
Niobium is used to strengthen steel and produce superalloys used in cars, oil and gas pipes, bridges and aircraft engines, and to make stainless steel.
The mine owned by CBMM produces 80 percent of the world’s niobium supply, the source added, so the deal would help China secure the future of its steel industry.
The consortium consists of Baoshan Iron & Steel Co Ltd (Baosteel) (600019.SS), CITIC Group CITIC.UL, Anshan Iron & Steel Group Corp ASISG.UL, Shougang Corp SGANG.UL and Taiyuan Iron & Steel Group Co Ltd, Baosteel said in a statement on Friday.
The Chinese consortium was being advised by UBS AG UBSN.VX, sources familiar with the matter told Reuters.
The official Xinhua news agency reported on the deal on Thursday.
Brazil holds the largest proven niobium reserves in the world. Global demand for the metal grew by about 10 percent annually during 2002-2009, according to a CBMM statement.
CBMM had more than 50 years of operating history and had been developing niobium applications and related technology, the Baosteel statement added.
The move by the Chinese consortium follows a similar move by Japanese and South Korean companies earlier this year.
A grouping of four Japanese companies — JFE Holdings Inc (5411.T), Nippon Steel Corp (5401.T), Sojitz Corp (2768.T) and government-funded Japan Oil, Gas & Metals National Corp — along with South Korea’s National Pension Service and Posco (005490.KS), bought a combined 15 percent stake in CBMM for about $1.8 billion in March.
(This story is corrected in the third paragraph to show Moreira Salles family stake
in CBMM is 70 percent, not 30 percent.)
Editing by Chris Lewis