China's Shandong Iron and Steel Group has agreed to pay $1.5 billion for a stake in London-listed African Minerals' Sierra Leonean mine project, African Minerals said.
The investment, which would give Shandong Iron and Steel a 25% stake in the Tonkolili iron ore mine, is the latest in a series of investments by resource-hungry China in West Africa's rich mineral deposits.
Shandong's funding would help build the Tonkolili mine and pay for related rail and port infrastructure, said African Minerals.
"When completed, this strategic investment will enable us to accelerate the development of Tonkolili," it said.
Shandong would also gain stakes in two other African Minerals subsidiaries and secure long-term supplies of 10 million tons of iron ore annually at prices discounted from the market.
Shandong Iron and Steel is China's fifth-largest steel mill by output, according to the country's state-run press.
China's hunger for raw materials has soared in recent years along with the development of its economy and its firms have increasingly looked at West African countries for minerals. Last month, African Minerals sold a 12.5% stake in the company to China Railway Material, a supplier of steel products to China's rail industry, for $280 million, Chinese state press has said.
And in March, Chinalco, the state-owned Chinese mining giant, reportedly signed an agreement to pay Anglo-Australian miner Rio Tinto $1.4 billion for a 47% stake in Rio's Simandou iron ore project in Guinea.
Copyright Agence France-Presse, 2010
