BEIJING - Wuhan Iron Steel Group, China's third-largest steelmaker, is in discussions with Canada-listed Adriana Resource Inc for a stake in the Lac Otelnuk iron ore project in Quebec, a senior executive said Wednesday.

"We have reached a preliminary agreement with Adriana Resource to jointly develop the iron ore project," said a senior executive from Wuhan Steel, who declined to be named.

He also said Wuhan Steel plans to organize a Chinese company union to jointly develop an iron ore project in Cameroon, West Africa. The China State Construction Engineering Corporation has expressed an interest in joining the union. The Lac Otelunk ore project contains more than 6 billion tons of ore reserves available for exploitation, with a 29 percent ore content.

Adriana Resource is a junior exploration-stage company, engaged in the acquisition and exploration of resource properties including the Lac Otelnuk project and the development of an iron ore port facility in Brazil.

Donald K. Charter, chairman of the board of Adriana Resource visited Wuhan Steel in May to discuss potential opportunities for cooperation with Wuhan Steel's Chairman Deng Qilin.

The Chinese steel company has been seeking to invest in more overseas iron ore assets to cut its reliance on expensive imports. "We aim to be self-sufficient in iron ore supplies in three to five years," Deng Qilin said in March.

Wuhan Steel in May received approval from the National Development and Reform Commission for two acquisitions in Africa that are expected to contribute nearly 2 billion tons of iron ore deposits.

In Octobor 2009 the company agreed to buy more than 40 million tons of iron ore under a seven-year contract with Corp Venezolana de Guayanathe, a Venezuelan company, at a "China Price" separate from what the big three global miners are charging.