ArcelorMittal, the world's largest steelmaker, is in talks with Chinese Wuhan Iron & Steel Group to jointly develop overseas mining projects to gain more raw material resources and reduce cost risks, a media report said.

Peter Kukielski, head of ArcelorMittal's mining sector, visited Wuhan Steel last week for talks in this regard, state -run 'China Daily' reported today.

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Wuhan Steel spokesperson Bai Fang said the two sides are still in discussion stage and nothing has materialised yet.

ArcelorMittal has 26 iron ore mines with an annual production capacity of 51 million tons and aims to expand to 100 million tons by 2015, the report said.

The company is looking at plans in countries including Liberia, Senegal and Mauritania, Kukielski said.

"Although ArcelorMittal is self-sufficient with iron ore now, they still aim to gain new iron ore resources working with Chinese steelmakers will help them to reduce risks," said Hu Kai, an analyst with consulting firm Umetals.Com.

"If European economy changes and cannot digest the expansion of iron ore supplies, ArcelorMittal can transfer it to China to manage risks. It's a win-win situation. If Wuhan Steel is bidding for an iron ore project with competitors, the price will definitely be driven up. The joint development will help reduce cost risks for both sides," said analyst Xu Xiangchun from Mysteel.Com.

 Wuhan Steel is a good potential partner as it has accumulated experience after years of going overseas, he said adding that the company has been seeking to invest in more overseas iron ore assets to cut its reliance on expensive imports.

"We aim to be self-sufficient in iron ore supplies in three to five years," Deng Qilin, chairman of Wuhan Steel, said in March.

Wuhan Steel in May received approval from the National Development and Reform Commission for two overseas acquisitions in Africa that are expected to contribute nearly 2 billion tons of iron ore deposits.

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