Bloomberg reports the largest Taiwanese steelmaker China Steel Corp. is in talks with five groups for purchase of share packages in coal and iron ore assets, that will reduce dependence on the suppliers of raw materials.
According to the company’s Chairman Tsou Jo-chi, one of their main objectives is investment in Australia, in addition, Brazilian and African assets are also prospective.
"This is the way to maximize profits, which are under pressure of mining companies", - said Peter Tzeng, an analyst at Taiwan's Polaris Securities Co. According to him, raw materials account for 70 percent of the mill’s costs.
Earlier, China Steel announced that seeks to boost self-sufficiency in raw materials and at the same time to increase steel production by 35% (from 14.8 to 20 million tons) by 2014. Thus in five years the company plans to cover 30% of coal and ore needs from its own mines.
China Steel consumes 10 million tons of coking coal and 20 million tons of iron ore per year. The company already owns 5% stake in the coal mine Sonoma (Australia).
Annual steel consumption in Taiwan makes up 23 million tons. China Steel share on the domestic market makes 75%.