China Steel looking into foreign mines

China Steel Corp (中鋼), the nation's largest steelmaker, is considering investing in iron and coal mines overseas to help secure sources of raw materials.

"We don't exclude any chances to invest in mines," Chen Yuan-cheng (陳源成), China Steel executive vice president, said yesterday. Many mining companies, including one from the Philippines, have approached China Steel, he said, without giving any names.

A Chinese-language newspaper reported yesterday that China Steel is considering investing US$1 billion in a Philippine mining project to supply ore for steelmaking. Chen said any possible investment is still at a "very, very early stage." Demand from China, which buys between 8 percent and 10 percent of Kaohsiung-based China Steel's products, has helped drive prices of iron ore and coal to records, increasing costs for the Taiwanese steelmaker and competitors such as Japan's Nippon Steel Corp.

China Steel's possible Philippine investment "shows the company is keen in securing raw materials," said Simon Chao (趙永宏), a fund manager at President Investment Trust Corp (統一投信). Still "the outcome of any mining investment is uncertain by nature."

The mines China Steel has opportunities to invest in are "either new ones or those that have yet to start," Chen said. "We have to be careful" in studying the projects.

The company's stock lost 2.9 percent to close at NT$26.70 on the Taiwan Stock Exchange.