Baosteel bids $1.59 billion for 30-per cent stake in Anglo American's Minas mine

China's state-owned and the country's largest steel maker, Baosteel has made a $1.59-billion bid for a 30 per cent stake in Anglo American's Minas-Rio iron ore project in Brazil.

The UK-based Observer reported on Sunday that Baosteel had tabled an offer of $1.59 billion for a 30-per cent stake in the London-based Anglo American's Minas-Rio iron ore project, in which the miner acquired a 49-per cent stake in January 2008 for $5.5 billion.

If the deal materialises, this will be Baosteel's second strategic investment in as many months to secure supplies of iron ore; in August it acquired a 15-per cent stake in Australian iron ore and coal miner Aquila Resources for $240 million. (See: Baosteel acquires 15-per cent stake in Australian iron ore miner Aquila Resources)

In June, after rejecting Swiss miner Xstrata's $68 billion proposed "merger of equals", (See: Anglo American rejects Xstrata's $68-billion deal)  Anglo American started talking to other mining companies and investors to take a stake in Minas-Rio to shore up its defences in the event of Xstrata making a hostile bid. (See: Anglo American builds defenses should Xstrata's merger proposal turn hostile)

At that time Anglo was reported to be in talks with Dubai Natural Resources World, Bahrain-based Gulf Industrial Investment Co, diversified Japanese conglomerate Sojitz, and the Chinese state-owned metals group Chinalco, to sell its 30-per cent stake or co-develop the Brazilian iron ore mines, which require an investment of about $3.6 billion.

The Observer said that Gulf Industrial Investment Company and Sojitz have also put in a bid for a stake in Minas-Rio, but Baosteel is reportedly to be the frontrunner.