A conglomerate of firms is teaming up to acquire an estimated 15 per cent stake in Brazil’s rare metal minerals miner. The firms, Nippon Steel Corp, JFE, POSCO, and others are will pick up the stake for around $1.8 billion, in a move aimed at fending off China and its insatiable appetite for raw materials, reported Bloomberg.

China has embarked on an aggressive overseas resource acquisition to supply the demand raised by its rapidly growing economy. Chinese firms have been on a global acquisition strategy for oil and gas assets, commodities and other resources, such as rare metal niobium. The Brazilian firm is a miner of the rare mineral.

According to Bloomberg, the Chinese move is motivated by a burgeoning demand for niobium at home, and the fact domestic output in China is very limited. However, the Chinese move has attracted interest from other players such as Japan, worried over their own resources. Japanese steelmakers, worried over china’s moves, have teamed with Korean firms to counter the Chinese overseas resource acquisition wave.

The consortium is the latest amidst a burgeoning number of deals between North Asian neighbors. The latest deal will see the consortium acquire a stake in Brazil’s Companhia Brasileira de Metalurgia e Mineracao. The company mines and processes niobium, a rare metal used to produce high-grade steel used in autos, aerospace and pipelines to make steel products lighter and stronger.

Companhia Brasileira de Metalurgia e Mineracao controls 82 per cent of the global niobium market, with more than 800 million tons of reserves, according to POSCO. POSCO is Asia’s number three steelmaker.  The firm and South Korea's National Pension Service (NPS) will invest a combined $650 million to buy a 5 per cent stake in Companhia Brasileira.

A spokesman from POSCO said the two companies will split the investment equally. POSCO also said Japanese investors including Nippon Steel, JFE Holdings, trading firm Sojitz Corp and Japan Oil, Gas and Metals National Corp will buy a 10 per cent stake in Companhia Brasileira each, reported Bloomberg.

According to Bloomberg, Brazil is the world's No. 1 niobium producer. The Brazilian mining industry association said Brazil produced 80,000 tons out of world output of 83,000 tons globally in 2010 and the ratio has been similar in the last decade. Niobium is one of 31 rare metals and is used to add strength to steel sheets and pipes used in energy projects.

8th March 2011