GWR 2.33% 8.8¢ gwr group limited

hunan valin invests in fortescue -

  1. 1,569 Posts.
    lightbulb Created with Sketch. 14

    Could this mean they want to buy more GWR?

    http://business.smh.com.au/business/hunan-valin-in-box-seat-as-fortescue-partner-20090219-8cm4.html

    Hunan Valin in box seat as Fortescue partner
    John Garnaut in Beijing
    February 20, 2009
    HUNAN VALIN IRON & STEEL has pipped China's largest steelmaker, Baosteel, as the leading candidate to fund a $3billion-plus expansion of the Fortescue Metals Pilbara iron ore project.

    Amid the backdrop of an expected 20 to 30 per cent fall in the iron ore price - albeit less in Australian dollar terms - in what are expected to be protracted negotiations this year, Valin is Fortescue's latest flirtation with a long line of Chinese steel mills.

    Most of them, such as the leading privately owned mill Shagang, were forced to take a back seat last year to Baosteel, the national champion.

    Baosteel and Fortescue were talking for most of last year, but the steel maker was not interested in paying anything like the share price premium demanded by Fortescue's chief executive, Andrew Forrest.

    Baosteel gave up in December, and other mills dropped away, believing Mr Forrest would only do a deal if on the brink of liquidation.

    "Baosteel has been on the conservative [side] regarding the outlook for iron ore," said a source who advised Baosteel during the talks. "They couldn't reach an agreement with [Fortescue] on price. Others, obviously, are more aggressive."

    Baosteel's exit left space for the adventurous steel maker Li Xiaowei and his Valin group to broaden its talks with Fortescue and approach the miner's second-largest shareholder, Harbinger Capital Partners, about buying part of its stake.

    Valin was a struggling steel maker owned by the Hunan provincial government in a province that lacked iron ore and coking coal.

    Nevertheless, the manager, Li Xiaowei, persuaded the provincial government to back a listing of some of its assets on the Shanghai Stock Exchange. Then he persuaded the equally ambitious Lakshmi Mittal - who controls the world's largest steelmaker, ArcelorMittal - to stump up $US400million ($627million).

    The Chinese Government was unimpressed and closed off Chinese steel mills from further substantial foreign investment. But Valin had already shot up to ninth place on the production charts, producing 11million tonnes of steel last year and investing in the Australian iron ore explorer Golden West Resources.

    Chinese industry experts said Valin lacked the clout in Beijing to get funding. But Mr Li is an enterprising man, and a deal with Fortescue is not out of the question. "Valin has no money, but talking doesn't cost much," said Xu Zhongbo, a Beijing academic and businessman who studies the management of Chinese steel companies.
 
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