Canadian mining company Noront Resources announced Tuesday that Baosteel Resources will purchase 9.9 percent of its equity with 17.4 million CAD ($18.23 million).

Baosteel Resources is a subsidiary of the Baosteel Group. In addition to the 9.9 percent in equity, Baosteel Resources may choose to spend another 11.7 million CAD ($12.27 million) to take advantage of its stock options warrant with Noront Resources and increase its share holdings to 14.5 percent, according to the contract.

The contract also states that Baosteel has the right to appoint a director to Noront Resources and can increase its share of equity to 17.4 percent. The contract will be put into practice in June of next year.

In contrast to other cases that have involved overseas purchases of domestic enterprises, Baosteel did not require absolute control of the Canadian company. Xu Lejiang, chairman of Baosteel Group, has said that he does not advise Chinese steel companies to control upstream resources 100 percent. Xu explained that the advantage does not lie in using them to develop resources. He also predicted that a reverse in the supply-demand relationship may lead to a dramatic drop in the price of iron ore.