Talks Said To Be Aimed At Musan Development Rights
Isle of Man-based Global Steel Holdings, chaired by Pramod Mittal, is negotiating with the government of North Korea government for a stake in the country’s Musan Iron Ore mines, which are estimated to hold reserves of more than seven billion tonnes. The move is seen as an attempt of securing supplies of the raw material in the light of recent sharp price increases demanded by global iron ore miners.
North Korea recently terminated an agreement on rights to Musan with China’s Tonghua Iron & Steel Group without offering any reason. The Chinese company had offered to put in about 7 billion yuan and had planned to extract 10 million tonnes of iron ore each year. $240 million had been put aside to build roads and railways from Musan to the nearby Chinese border.
Mr Mittal visited Pyongyang last week to talk to senior government officials; but in a comment to India’s Economic Times he denied that his company was in talks to acquire a stake in Musan. However, sources close to the talks said that Global Steel could be negotiating for developments rights over a fixed period of time – 20 to 50 years is common in the industry. Global would mine the iron ore and get to buy an agreed portion of the reserves.
Global Steel has steelmaking plants in Bulgaria and Nigeria totalling some 2 million tonnes of output each year. The company also has a 20-year management contract to operate Zimbabwe Iron & Steel (ZISCO) and owns two coal blocks in Mozambique.
North Korea is said to contain some of world’s largest reserves of iron ore, closely rivalling those of Brazil.
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