UPDATE 3-Vale, Fortescue plan tie-up to boost iron ore market share in China
* Vale could buy up to a 15 pct stake in Fortescue on market
* Ore blending to start within 6 months, in China
* Fortescue shares touch 16-month high (Adds Fortescue CEO, China steel association comments)
By Stephen Eisenhammer and Sonali Paul
RIO DE JANEIRO/MELBOURNE, March 8 (Reuters) - The world's no.1 and no.4 iron ore miners are in talks that could see Brazil's Vale SA taking a minority stake in Australia-based Fortescue Metals Group and blending their iron ore to win market share in China.
The proposal will help the pair match the quality of iron ore produced by rival Rio Tinto , seen as the benchmark in China, and comes just as beaten-down iron ore prices stage a recovery to eight-month highs.
The two companies have been in talks for around a year, Fortescue said on Tuesday, for what would be the first deal involving the "big four" iron ore miners following a collapse in the price of the steel-making commodity in recent years.
The non-binding memorandum of understanding could see Vale buy between 5 and 15 percent of its Australian rival's shares on market, which up to Monday had been sitting not far off seven-year lows. It would also allow Vale to take stakes in Fortescue's existing or future mines. Joint blending operations in China could begin within six months.
"This is not any strategy to try and exert control over the market. It's rather trying to capture value that exists there by creating a blend that ... we believe will suit our customers very nicely," Fortescue Chief Executive Nev Power told reporters. Continuación...