The $1.1-billion purchase of a stake in ArcelorMittal's ( MT ) Canadian iron-ore unit by China Steel Corp. and Posco increased interest in Canada's ability to meet Asian demand for the steelmaking raw material, Bloomberg reported.
Champion Iron Mines Ltd. (CHM.TO), Alderon Iron Ore Corp. (ADV.TO) and Labrador Iron Mines Holdings Ltd. (LIM.TO) surged yesterday in Toronto after Taiwan's China Steel and South Korea's Posco led a group that agreed to buy 15% of ArcelorMittal Mines Canada Inc.
The deal, the second-biggest in the Canadian iron-ore industry, gives the Asian steelmakers' group access to deposits generating about 40% of the country's production of the commodity, ArcelorMittal said on its website.
"It shows you that Canada is an important iron-ore producer and you've got foreign buyers demonstrating an interest in the product that we have, the infrastructure and the risks involved in operating here," said Wojtek Nowak, a Toronto-based analyst at Fraser Mackenzie Ltd.
Canada is positioning itself as a source of shipments to compete with Australia and Brazil, the world's two largest iron-ore exporters. Canada's Champion, Alderon and Labrador Iron plan to capitalize on the country's supply of skilled labor and its lower political risk compared with rival iron-ore regions such as West Africa.
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