Chinese consortium buys US$1.95 billion stake in niobium company

A Chinese group made up of five state-owned enterprises has paid for a 15% stake in Companhia Brasileira de Metalurgia e Mineracao (CBMM), the world’s top niobium producer. The Brazilian niobium producer is valued at US$13 billion. The US$1.95 billion deal underscores China’s growing intent to secure supplies of mineral resources. The Chinese consortium consists of Baoshan Iron & Steel Co. Ltd. (Baosteel) , CITIC Group, Anshan Iron & Steel Group Corp., Shougang Corp. and Taiyuan Iron & Steel Group Co. Ltd. The deal pits the Chinese group against Japanese and South Korean companies that bought a similar-size stake in CBMM. The four Japanese companies — JFE Holdings Inc., Nippon Steel Corp., Sojitz Corp. and government-funded Japan Oil, Gas & Metals National Corp. — and South Korea’s National Pension Service and Posco, bought a combined 15% stake in CBMM for about US$1.8 billion in March. The Moreira Salles family of Brazil which controls Itau Unibanco, owns the remaining 70% of CBMM and under the terms of agreement, the status quo would be maintained for now.
Niobium: A Vital Component in the Steel Industry
Niobium used to strengthen steel and is vital in the production of super alloys that are used in cars, oil and gas pipes, bridges and aircraft engines. It is also used to make stainless steel. The mine owned by CBMM controls 80% of the world’s niobium supply. Brazil holds the largest proven niobium reserves in the world. Global demand for the metal grew by 10% annually from 2002-2009, according to a statement from CBMM. The company has been in operation for 50 years and has been developing niobium applications and other related technology.
(September 2, 2011)