Fosun sinks roots in Hainan iron ore

FOSUN International Ltd, China's largest diversified private company, will take a 60-percent stake in a venture to mine and process iron ore on the southern island of Hainan, Bloomberg News said.

Fosun will control the 1.5-billion-yuan (US$197 million) Hainan Mining United Co through two subsidiaries, the Shanghai-based company said on Friday night in a statement to the Hong Kong stock exchange, where its shares are quoted. Hainan Iron & Steel Co will own the remaining 40 percent.

Guo Guangchang, China's ninth-richest person, and three fellow graduates of Shanghai's Fudan University founded Fosun, which last month raised HK$13.3 billion (US$1.7 billion) from a Hong Kong initial public offering to aid expansion in businesses spanning pharmaceuticals, steel, mining, retail and financial services.

The company will contribute 900 million yuan toward the venture from internal resources rather than apply proceeds from the share sale, the statement said.

Hainan Steel will contribute its share of capital in kind, including land use, building and mining rights, and mining and manufacturing equipment, it added. The assets it pledged generated 207.6 million yuan of after-tax profit in the nine months ended September 30, 2006, under Chinese accounting standards, the statement said.

Fosun will appoint four of the venture's seven directors and nominate the board chairman. Hainan Steel has the right to recommend its first general manager.

Fosun, whose stock gained 38 percent since trading began July 16, applied to the stock exchange to resume trading of its shares today.