Wuhan Iron and Steel (Group) Corp, China's fourth-largest steelmaker by output, said it will boost investment in overseas iron ore mines and plans to achieve 100 percent iron ore self-sufficiency in three to five years.

Wisco, the parent company of Shanghai-listed Wuhan Iron and Steel, wants to abandon its heavy reliance on imported iron ore, which is sold at high prices by the top-three iron ore producers: Vale, Rio Tinto and BHP Billiton.

Wisco said in a statement the group will "secure part of iron ore resources in Canada and Brazil to achieve self-sufficiency".

Deng Qilin, general manager of Wisco, was quoted as saying by China Metallurgical News on Monday, "We won't buy a single ton of iron ore from traders after three years at the earliest, and five years at the latest."

But Sun Jing, director of Wuhan Iron and Steel's communication department, said that "within three to five years" is just an expression, which means the company will not buy iron ore if prices are too high, National Business Daily reported.

"We will have to buy iron ore at $150 per ton forever if we do not own iron ore resources, and the iron ore giants can raise prices at any time," said Sun, adding that equity acquisition of overseas iron ore resources will strengthen the company's voice in iron ore pricing negotiations.

Data provided by Wang Guoqing, a senior analyst at the Beijing Lange Steel Information Research Center, showed that in December prices of imported iron ore rose more than 21 percent month-on-month, and the rally continued in January.

During the same period, steel-product prices only rose 2.5 percent on average, eroding domestic steelmakers' profits, the data show.

Related Readings