Baosteel, China's largest iron and steel conglomerate, wants to forge an alliance with Anglo American, the mining company that rejected a merger approach from rival Xstrata in June.

Baosteel has tabled a proposal to pay £1bn for a 30% stake in Anglo's huge Minas Rio iron ore mine in Brazil, which it acquired last year for £3.7bn.

If Anglo agrees a deal with Baosteel, the Chinese company could help it fend off bids from predators such as Xstrata, which was told last week by the City's Takeover Panel to make a formal bid for Anglo by 20 October or walk away.

Baosteel, which is based in Shanghai, employs 112,000 staff and generates annual revenue of $21.5bn (£13.5bn). It is keen to expand internationally and has been exploring opportunities in Africa and Asia as well as South America.

Anglo has made it clear that it is seeking a partner to help develop Minas Rio, which is expected to produce more than 35m tonnes of iron ore by 2011. Production could rise by another 50% within a decade. Two other companies are understood to have contacted Anglo about buying a stake in Minas – the Bahrain-based Gulf Industrial Investment Company and Sojitz, a Japanese conglomerate. But Baosteel is understood to be the frontrunner.

Latin America is Anglo's fastest growing region and this week the group will take shareholders and analysts to Brazil and Chile to review its operations there.

Baosteel, China's largest iron and steel conglomerate, wants to forge an alliance with Anglo American, the mining company that rejected a merger approach from rival Xstrata in June.

Baosteel has tabled a proposal to pay £1bn for a 30% stake in Anglo's huge Minas Rio iron ore mine in Brazil, which it acquired last year for £3.7bn.

If Anglo agrees a deal with Baosteel, the Chinese company could help it fend off bids from predators such as Xstrata, which was told last week by the City's Takeover Panel to make a formal bid for Anglo by 20 October or walk away.

Baosteel, which is based in Shanghai, employs 112,000 staff and generates annual revenue of $21.5bn (£13.5bn). It is keen to expand internationally and has been exploring opportunities in Africa and Asia as well as South America.

Anglo has made it clear that it is seeking a partner to help develop Minas Rio, which is expected to produce more than 35m tonnes of iron ore by 2011. Production could rise by another 50% within a decade. Two other companies are understood to have contacted Anglo about buying a stake in Minas – the Bahrain-based Gulf Industrial Investment Company and Sojitz, a Japanese conglomerate. But Baosteel is understood to be the frontrunner.

Latin America is Anglo's fastest growing region and this week the group will take shareholders and analysts to Brazil and Chile to review its operations there. read more>>

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