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19 Feb, 2008 05:09

Russian steel giant to buy 51% of Singapore’s Delong

The consolidation of the global steel industry continues with Russia's Evraz Group planning to buy up to 51 per cent of Singapore's Delong Holdings for around $US 1.5 billion.

Evraz is offering to buy 10 per cent of Delong's share capital at $US 3.94 per share, with a call option to acquire another 32 per cent at the same price within six months. In addition, Evraz can buy a further 9 per cent after certain restrictions are lifted.

The deal will be the Russian firm's first major investment in the Asia Pacific region. It will give Evraz a foothold in China, the world's largest steel market.

Meanwhile, global steelmakers are facing a sharp increase in iron ore prices.

The world's biggest ore supplier, Vale Group of Brazil, has announced a 65 per cent rise in contract rates from April. Japanese steelmakers Nippon and JFE and South Korea's Posco have confirmed they've made agreements with Vale on the price hike.