China's Tianjin Minerals and Equipment Group Corp. agreed to pay $990 million for a 16.5 percent stake in a Sierra Leone iron-ore mine, The Wall Street Journal reported.
The investment values African Minerals Ltd.'s Tonkolili Mine at $6 billion, and marks the company's second major deal with a Chinese partner in as many years. The London-based company received a $1.5 billion investment from Shandong Iron & Steel Group to finance African Minerals' operations last year to produce 20 Mt/a. African Minerals plans to use proceeds from the deal with Tianjin Minerals to fund Tonkolili's expansion to 35 Mt/a.
Small miners world-wide have been struggling to obtain financing for projects as slower economic growth in China, the world's largest consumer of the steelmaking ingredient, has helped push down iron-ore prices.
The deal by Tianjin Minerals marks the China's return to a resource market where it has struggled to secure supply. Acquisitions, including a $8 billion iron project 900 miles north of Perth, Australia and a $3 billion magnetite project in Western Australia's Cape Lambert, have had years of delays or been suspended amid cost overruns.
A senior official at China's National Development and Reform Commission last December said that while Chinese companies had invested more than $10 billion in overseas iron-ore mines, few of the projects had begun operation, according to the official Xinhua news agency.
But while official caution over such projects has increased, so has the country's appetite for steel.
Iron-ore imports rose to a record 73 Mt in July and fell only slightly in August, according to the government. China depends on imported ore for 60 percent of the country's steelmaking.
The government estimated that China is likely to produce a record 780 Mt this year. State-led construction of railways and other infrastructure and restocking of inventories are behind the recent gains in demand.