China Minmetals inks deal with Shunde for Chilean iron ore

China's largest diversified metals trading company, the state-run China Minmetals Corp, plans to cooperate with a Guangdong-based private company to develop iron ore mines in Chile.

Minmetals' subsidiary, China Minmetals Zhuhai Import and Export Trading Co Ltd, has signed an agreement with privately-owned Shunde Rixin Development Co Ltd to import and market iron ore from Chilean mines owned by Rixin.

The little known Shunde Rixin Development Co, said to be a Chinese auto components manufacturer and metals-mining company in the Guangdong province, has managed to acquire 70 per cent stake in a Chilean mine, estimated to hold 3 billion tonnes of iron ore reserves over the weekend. The Chilean government holds the remaining 30 per cent in the Chilian mine.

Although the company has not divulged the financial part of the transaction, media reports said that Shunde will have to invest as much as 15 billion yuan ($2.2 billion), which would include investing in the mine, shipments and transport system.

This is Shunde's first overseas acquisition and is one of Guangdong province's largest overseas purchase this year.

Li Zihao, chairman of Shunde, told Chinese media that the new way to expand overseas is to buy resources first and inject investment later. Foreign governments and companies are more amenable and accept Chinese private firms compared to large state owned enterprises, he added.