Russia's third-largest steel producer Magnitogorsk Iron & Steel Works (MMK) is eyeing to acquire Australian iron miner Flinders Mines in a bid to expand its iron ore mining operations to secure supplies and hedge against rising prices.

In a regulatory filing on Tuesday, MMK indicated its board of directors discussed the matter at a meeting on Nov. 18, Reuters reported. No other details were provided in the filing. Both companies likewise declined when asked for comments.

Earlier, MMK said it intends to boost its steel-product sales from 7 per cent to 8 per cent in 2012 as demand from global automakers climb. Sales forecast is pegged to at least 11.4 million metric tons of products this year, 10 per cent higher than over 2010, company filings showed.

Flinders, whose market capitalization is at $309.6 million according to Reuters data. It is one of several miners active in the Pilbara region of Western Australia whose key project yield up to 15 million tonnes of iron ore annually over a 20-year mine life. Operations target to commence late 2012.

The Australian miner is reportedly currently carrying a strategic review of its company and is talking with various parties. But the selection process had not yet ended.

MMK aims to expand the Prioskolsky iron ore deposit in central Russia. Projected annual output is seen at 25 million tonnes that is enough to meet its requisites for at least more than 60 years. MMK sources 30 per cent of its iron ore demand at its own mines.

In its company newsletter, MMK said its Mill 2000 in Magnitogorsk will spur overall company growth next year. MMK will start the second phase of the mill in July.

The increasing demands from vehicle manufacturers have put Russian steel producers to fast- track output expansion plans. According to Fitch Ratings Ltd., Russian passenger-car output grew 54 per cent to 1.27 million vehicles in the first nine months of 2011 alone, while steel-pipe production soared 18 per cent to 7.7 million tons.

MMK expects total Russian sales may grow 14 per cent next year.

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