Steel Strip

Evraz Group SA, the steelmaker partly owned by Russian billionaire Roman Abramovich, bought a 16 percent stake in Australian iron-ore company Cape Lambert Iron Ore Ltd., potentially derailing a bid to sell the company’s mine to China.

“It is Evraz” that bought the holding, Tony Sage, a director in Perth-based Cape Lambert, said today by phone from Singapore. “At this stage, there has been no discussion of a bid or the price of a bid.”

Global steelmakers are seeking to secure raw-material supplies including coal and iron to help cut costs as prices surge. Cape Lambert agreed in February to sell its iron-ore project to China Metallurgical Group Corp. for A$400 million ($391 million).

“Evraz is building a global business, and their strategic objective is to” meet all their own iron-ore needs, said Michael Kavanagh, an analyst with UralSib Financial Corp. in Moscow. “One would imagine they’d go for a full takeover. It’s a first step into Australia.”

Cape Lambert, which had disclosed the stake purchase yesterday without identifying the buyer, jumped 6.5 Australian cents, or 8.9 percent, to close at a record 79.5 cents on the Australian stock exchange. The company’s London-listed shares gained as much as 12 percent to 38 pence.

Cape Lambert’s board met today with representatives of Evraz and Merrill Lynch & Co. in Singapore, and the talks may lead to a takeover offer, Sage said earlier by phone. The board will not accept an offer less than A$1.20 a share, he said.

Bloomberg.com: Emerging Markets