Liaoning Xiyang Group, a privately-owned miner in China, will develop a one-billion-ton iron ore deposit in Russia, including an onsite steel mill, beginning in April 2010, the China Securities Journal reported late last week.

Zhou Furen, the group's chairman, told the newspaper that Liaoning Xiyang will initially invest 3.3 billion yuan ($483.1 million) to develop the mine and set up a steel mill with an annual capacity of 4 million tons.

Zhou said the company has ample cash reserves to finance the project, though he would welcome participation from other private steelmakers.

Operations at the Berezov iron ore deposit, located 20 kilometers north of the Inner Mongolian border town of Shiwei, are due to begin in 2012, he said.

Zhou, number 10 on the Forbes China Rich List in 2008, told the newspaper the mine has estimated iron ore deposits of 1 billion tons, of which 747 million have been verified.

The average iron content of the Berezov ore is between 40 and 55 percent, he added

The company has also signed an agreement with state-owned China Railway Construction Corp. to build a rail line connecting the mine, which covers 220 square kilometers, to the Chinese rail network.

Zhou said the company's overseas expansion was compelled by Beijing's moves to curb private investment in the steel industry. The government has said it intends to close down smaller mills under its industry revitalization plan, which aims to consolidate control of 45 percent of the steel production capacity in the hands of the top five players.

The concession to exploit the Berezov mine was first acquired by a subsidiary of state-owned Shandong Luneng Group for 315 million rubles ($9.92 million). Liaoning Xiyang acquired the rights when it purchased a 90 percent stake in the subsidiary for 100 million yuan ($14.64 million) in 2007.

Liaoning Xiyang is one of China's largest suppliers of magnetite products, and also produces steel and fertilizer. The company earned 20 billion yuan ($2.93 billion) sales revenue and 1.5 billion yuan ($219.6 million) profit in 2007, according to its website. The group also owns mining assets in North Korea.

($1 = 0.146391 yuan, $1 = 0.0315 rouble)