World’s biggest steelmaker seeks closer ties with Vale’s competitor

China Baowu Steel Group, the world’s largest steelmaker, is seeking closer ties with iron ore miner Rio Tinto, the main competitor of Vale, as China’s demand for the raw material recovers.

Baowu is seeking to benefit from efforts to repair trade relations between China and Australia, the steelmaker’s president Chen Derong said in a meeting on Friday (17) with Rio Tinto executives, according to a press release.

Beijing resumed some shipments from Australia earlier this month to end more than two years of diplomatic disputes.

Chen said the Chinese company also wants to get more involved in upstream production to help weather global market turbulence.

“We cannot rely on the old way to secure such a large amount of supplies for China; we need to upgrade,” he said.

Baowu established a joint venture with Rio Tinto last year to develop the Western Australia’s US$2 billion Western Range project.

The Chinese company agreed to buy up to 126.5 million tonnes of iron ore over 13 years at market prices through the joint venture.

Baowu leads China’s new giant iron ore trading consortium, China Mineral Resources Group, which will make purchases on behalf of some 20 of China’s largest steelmakers.

Baowu absorbed Sinosteel last year and some other smaller steelmakers in an industry-wide integration to give China more bargaining power in the international market and to help meet carbon emissions reduction targets.

With information from Bloomberg