Hebei Iron & Steel Group Co, China's largest steel producer, plans to acquire a 19.9 per cent stake in Canada's Alderon Iron Ore Corp and a 25 per cent interest in its Kami iron ore project for C$194-million ($195-million).
Shijiazhuang, Hebei-based Hebei Iron & Steel, formed through the 2008 merger between of Tangsteel and Hansteel, will initially buy a 19.9-per cent stake in the Vancouver-based iron ore miner for C$88.3 million at C$3.42 per share and get to nominate two directors to Alderon's board.
Hebei will also form a joint venture with Alderon and invest C$105.7 million to develop Alderon's Kami iron project located along the Quebec-Labrador border.
Hebei will acquire a 25-per cent direct interest in the project, and will buy 60 per cent of the annual production up to a maximum of 4.8 million tonnes at little below the average market prices.
Hebei will also assist Alderon in obtaining debt financing for the $1-billion Kami project from financial institutions, including Chinese banks.
''Alderon now has both the capital and the China market access to build a world-class company,'' said the company's chairman Mark Morabito in a statement.