UPDATE 1-ThyssenKrupp wants a German raw materials pool

By Tom Kaeckenhoff and Marilyn Gerlach DUESSELDORF/FRANKFURT, Nov 12 (Reuters) - ThyssenKrupp , Germany's biggest steelmaker, said the government and German companies should jointly set up a company to buy key raw materials needed by the industrial sector. "There is an interest among those in the steel industry for such a company," ThyssenKrupp Chief Executive Officer Ekkehard Schulz told reporters on the sidelines of a steel conference on Friday. Germany, which depends on raw materials from abroad to power its export-driven economy, announced last month a government strategy to secure access to crucial raw materials and called on countries to address the issue together at international talks. German Economy Minister Rainer Bruederle has also urged industrial firms to set up a "Deutsche Rohstoff AG", or German raw materials company, to find and secure rare earths. But he also ruled out the state's taking a stake in it. Government sources said Berlin could support the company by giving state guarantees to its investments. Worries about the potential for inflation as well as scarce resources are prompting talk globally of metals stockpiling, but any such moves by big industrial consumers may aggravate high prices and increase market risks for companies. ThyssenKrupp has been complaining about volatile and rising prices of iron ore and coking coal, which are used in steelmaking. Mining companies in April ditched an age-old annual benchmark system for a new scheme that bases each quarter's prices of iron ore on the average spot market price. INVESTORS SCEPTICAL Some analysts in the steel industry expressed scepticism on the viability of such a company. "I am not really sure whether this can ever work. Maybe there is an initiative among major German companies to set up something, but everybody has different interests," said Kepler analyst Rochus Brauneiser. "What politicians can do is to do something like this electric car initiative, where they have set up a body to coordinate and bring together those involved in the issue to make a kind of joint effort," Brauneiser added. A spokesman for ThyssenKrupp told Reuters that Schulz's comments were part of a concept now being thrashed out jointly by Bruederle and BDI German Industry Association. "It is still at a very early stage. The raw materials here could be iron ore, copper, nickel and coal for example. It will not involve rare earth," the spokesman said. "One of the many things that need to be sorted out too involves antitrust issues," the spokesman said. Schulz said the company could be listed on the stock exchange, with ThyssenKrupp and the government each taking a minority stake in it. "ThyssenKrupp would certainly not take a majority stake in it," Schulz said, adding its shareholding in the central purchasing company could be in the form of bringing in ThyssenKrupp's own business of purchasing raw materials. Salzgitter, Germany's No. 2 steelmaker, declined comment. ArcelorMittal management board member Michel Wurth, who attended the conference, told reporters his company would like to know more of the details of the concept but added that unlike ThyssenKrupp, ArcelorMittal also owns mines. (Additional reporting by Andreas Rinke; Editing by Victoria Bryan and Jane Baird) Keywords: THYSSENKRUPP/RAWMATERIALS (marilyn.gerlach.reuters.com@reuters.net; 00 49 69 7565 1279) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved.

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