It is reported that Fortescue Metals Chinese shareholder Hunan Valin Steel plans to triple its capacity through mergers and capital investment and is eyeing a listing on the Hong Kong stock market to raise up to USD 1.68 billion.

While as top 10 steelmaker, Hunan Valin is considered second tier. It produces 10.8 million tonnes annually, compared with 30 million tonnes from the biggest mill owner, Baosteel, but is planning a push into the top echelon.

Mr Li Xiaowei chairman of Hunan Valin Steel said in March 2011 that the company wanted to increase annual production capacity to 30 million tonnes.

The Hunan based Xiaoxiang Morning Herald said that Mr Li told a local government meeting last week that the steelmaker's parent company, Hunan Valin Iron & Steel Group, may seek to raise as much as CNY 10 billion in the float and use the proceeds to increase capacity.

Mr Li said that the company wanted to double its profit next year, forecasting steel production would hit 19 million tonnes.

Valin was the first Chinese steelmaker to take a large stake in an Australian iron ore miner, paying USD 1.27 billion for a 17.4% stake in Fortescue Metals Group at the start of 2009. The move made it Fortescue's second largest shareholder after founder Andrew Forrest and secured iron ore supplies for the group.

The purchase was followed by Wuhan Steel's USD 247 million investment in Australian iron ore firm Centrex. Later, Shanghai based Baosteel acquired a 15% stake in Aquila Resources, worth up to USD 4 billion. Baosteel had spent 18 months in talks with Fortescue before discussions collapsed in 2008.