The National Development and Reform Commission (NDRC) has given the nod to two proposed purchases by Wuhan Iron & Steel Group, giving the steel mill stakes in 2 billion tons of iron ore reserves.

According to a statement made Monday by the NDRC, Wuhan Iron & Steel will be able to purchase, together with Guangxin Foreign Trade Group and Kam Hing International Holdings, iron ore mining rights in Soalala, Madagascar. Soalala's iron ore reserves total about 800 million tons.

The mill will also purchase a controlling stake in Liberia-based Bong Iron Ore, which has proven reserves of over 1.3 billion tons.

Wuhan Iron and Steel, which sources more than 80 percent of its iron ore from imports, has been trying to become self-sufficient through winning stakes in and controlling mines overseas.

Wuhan Iron and Steel signed an agreement with Australian Centrex Metals Ltd (CXM) last week to jointly develop iron ore mines in southern Australia. It announced a plan in April to build a steel plant in Brazil. The company has set up two overseas resource investment companies in Canada and Austria.

Other domestic mills have also stepped up efforts to tap into markets with abundant mines, such as Africa, South America and the Middle East. Anshan Iron and Steel Group plans to build four deformed steel bar plants and one electric steel mill with a US-based mill.

"The resource monopoly places world steel mills in a weak position in iron ore talks with the three major global miners [BHP Billiton, Rio Tinto and Vale]. Multiple iron ore sources will surely improve the current situation," Ma Zhongpu, chief analyst with the steel research company Umetal, told the Global Times.

The three miners have broken with 40 years of annual iron ore pricing tradition and are imposing a quarterly pricing system.

On Friday, many Chinese steel mills also received offers from Rio Tinto for free-on-board ore, with fine ore with a grade of 63.5 percent priced at $123 per ton and lump ore priced at $138 per ton. Free-on-board indicates a buyer pays the cost of marine shipping, insurance, transportation and unloading of the cargo. Buyers are fully responsible for the cargo after taking delivery.

The three miners are proposing prices of $160 per ton, including freight, in the third quarter.

Li Xinchuang, head of the Chinese Metallurgical Industry Research Institute, said Chinese steel mills should broaden their supply channels, but cau-tioned that mining cycles take a long time.

"It will take at least five years for iron ore in Liberia to feed Wuhan Iron and Steel, and its infrastructure, including ports and railways, is ready," Li said.

Li added the Madagascar mine will take more time to benefit the company due to its poor existing fundamental facilities.