No Plans To Sell Macarthur Stake - POSCO

Stability of supply is reason for stake

South Korean steelmakers POSCO, has reiterated its desire to hold on to its stake in Australian miner, Macarthur Coal, in the face of a bidding war.

"Ninety-nine percent of our investment purpose in Macarthur is to secure a stable supplier," Kwon Young-tae, POSCO's senior vice president, told Reuters after a conference with analysts.

POSCO will continue to review the proposed merger between Macarthur and Gloucester saying it had made no decision yet on whether to support the deal.

POSCO is one of Macarthur’s three largest shareholders. The Australian miner has rejected bids from America’s Peabody Energy and Australia’s New Hope. Global miner Xstrata has also been rumoured to be preparing a bid.

An archive on the Macarthur takeover battle is available here.

Korea, Japan To Oppose Iron Ore Price Hikes

Industries, Government Opposed To Pilbara Merger

South Korea’s government and the country’s steelmakers will hold talks in Tokyo with their Japanese counterparts about the sharp rise in iron ore prices.
The Korea Iron & Steel Association, whose members include Posco and Hyundai Steel Co., will hold talks in Tokyo with its Japanese counterpart to form a consensus, South Korea’s Ministry of Knowledge Economy said today.

The ministry said officials and executives at the joint government-private sector gathering concurred that the 90 percent on-year hikes in iron ore and 55 percent gains in bituminous coal prices will increase steel product prices, which will then cause price rises in other industries.

A joint press release said that "a rise in steel prices will adversely affect autos, shipbuilding and industrial plant sectors that can hurt consumers and overall sales," adding that companies in both South Korea and Japan have agreed to work together to follow price increases being pursued by global miners Vale, Rio Tinto and BHP Billiton. The groups are also concerned about a move to shorter-term contracts.

Chinese and European steelmakers have also made it clear that they oppose the rise in prices.

The bi-lateral talks are part of an annual gathering between the two groups and the countries’ governments. Talk will also focus on cooperation against plans to combine BHP and Rio Tinto’s plans to combine iron-ore assets in Australia claiming that the venture may hinder competition.

Lee Seung-woo, head of the Ministry of Knowledge Economy's steel and chemical industry division, represented South Korea at the meeting, while the Japanese delegation was headed by Masaki Koito, head of steel industry division at the Ministry of International Trade and Industry.

Executives from the Nippon Steel Corporation and the Iron and Steel Institute of Japan also attended the meeting.

SAIL, POSCO Sign FINEX Steel JV

New Plant Expected To Use Low-Cost Technology

Steel Authority of India Ltd and the Korean steelmaker, POSCO, have signed a joint venture for steel production using its FINEX technology in order to bring down the cost of production. The two companies are looking at building a 5-million tonne plant in Jharkhand, India.

FINEX uses non-coking coal fines and iron ore fines, to produce iron which will be capable of making high-grade steel. This would then be processed by SAIL to make specialised steel. The cost of production is expected to be lower as it avoids the high cost of converting coal into coke.

Global Steel In Talks Over North Korean Iron Ore

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.

POSCO Agrees Iron Ore Price With Vale

POSCO To Pay 86 Per Cent More For Iron Ore

South Korean steelmaker POSCO said on Friday that it has agreed with Brazilian iron ore miner Vale a provisional price of $100-105 a tonne for iron ore. The price will run during the April-June quarter. The price is an increase of 86 per cent on its previous price.

"The agreement is provisionally made. Depending on the final decision, the prices will be applied retroactively," Choi Doo-Jin, public relations team leader at POSCO, told Reuters by phone. Mr Choi added that talks were continuing. Talks are still continuing with Rio Tinto and BHP Billiton.

Posco will review whether to raise its steel prices after talks on raw material prices are completed.

POSCO Agreed Soft Coking Coal Price

POSCO To Pay $167 A Tonne for Soft Coking Coal

South Korea's POSCO, the world's fourth-largest steelmaker, is to pay Xstrata $167 per tonne for its April-June soft coking coal imports, according to a report by Reuters. The news agency quoted a source with knowledge of the deal.

The price compares with last year’s price of $80 per tonne last year.

Hard coking coal and pulverised coal injection (PCI) would be likely imported at $200 and $170 respectively, the same as Japanese and Chinese mills were paying.

Iron Ore Miners, Steelmakers Moving Away From Annual Contract

London’s Financial Times newspaper reports on Monday that iron ore miners and Japanese steelmakers have reached a tentative agreement to adopt short-term contracts linked to the spot market, bringing to an end the 40-year old annual benchmark system.

"There is an understanding on both sides to move to quarterly pricing," the newspaper quoted a source involved in the talks as saying. The source added that a final deal will be settled in a matter of weeks.

Reuters confirmed sources in Asia as saying that negotiations were continuing about a move to quarterly pricing.

"Korea, Japan and China have received 90-100 percent hike offers based on quarterly systems from miners, which Japanese steelmakers seem to move toward accepting," a source at a large Asia steelmaker close to the negotiations said.

One sources suggested that Japanese steel mills are ready to accept the change as they are more concerned about security of supply than prices and are seeking to safeguard tonnage rather than prices.

Current spot iron ore prices are trading at twice the level of the 2009 benchmark.

A move towards quarterly coking coal contracts was announced earlier this month and analysts expect iron ore to adopt a similar system.

POSCO To Spend Agressively To Secure Raw Materials

POSCO, South Korea’s largest steelmakers, says it will actively pursue overseas investments in raw material assets as the costs of coal and iron ore become higher.
CEO Chung Joon Yang told shareholders that “the company will pursue investments in overseas mines more aggressively to secure raw materials.”
With iron ore contract prices up by around 40 per cent and even greater increases mooted for coal, steelmakers face escalating costs as the industry looks set to recover after the global recession.

“Economies at home and abroad are on a recovery path now, but the outlook for a full recovery is uncertain,” Mr Chung said today. “We expect competition among steelmakers to increase.”

The company is planning to buy a stake of as much as 15 per cent in the Roy Hill project in Australia to add to the 16.7 per cent stake POSCO bought in Jupiter Mines last year. POSCO also has a 10 per cent stake in Queensland’s Macarthur Coal.
POSCO has also bid for a stake of as much as 68 per cent in Korean trading firm, Daewoo International.

The company plans to spend as much as $8 billion in capital spending in 2010, almost double its spending last year. The company is also looking to expand overseas with as much as $30 billion earmarked for expansion into India, Indonesia and Vietnam. “We will go ahead with overseas mill plans in countries including India and Indonesia in order to strengthen the company’s status as a global player,” Mr Chung said.

Korean Retailer Submits Bid For Daewoo International Stake

South Korean second-largest retailer, the Lotte Group, has emerged as an unexpected bidder for the controlling stake in commodities trader and shipper, Daewoo International, according to an unidentified source within the company.

Yesterday, the country’s largest steelmaker, POSCO, indicated that it would be bidding for the stake of between 50 per cent plus one share and 68 per cent, which has been put up for sale by nine Daewoo shareholders.

Meanwhile analysts have played down Lotte’s chance of succeeding in buying the stake, pointing to various synergies in the POSCO bid and the fact that POSCO has more cash to bid for the Daewoo stake.

POSCO is looking at Daewoo’s energy and resource development business which it can tap into to secure supplies for its steel business.

It is believed that a number of other bidders handed in letters on intent by Wednesday’s deadline, although other than POSCO and Lotte none have been identified. It is believed that a consortium put together by a former Daewoo executive was also looking to put together a bid.

The sale of the Daewoo stake is being handled by the state-run Korea Asset Management Corp.

Des Nogalski

POSCO In Bid For Daewoo Stake

South Korea’s POSCO, the world’s fourth largest steelmakers, is the favourite to buy a controlling $2 billion stake in Korean trading and resources firm, Daewoo International. Nine Korean financial institutions, including state-run debt clearer Korea Asset Management, are looking to sell a stake of between 50 percent plus 1 share and their entire 68 percent in Daewoo. It is understood that there other bidders for the company, including a consortium headed by a former executive of Daewoo.

POSCO said on Wednesday it had submitted a letter of intent ahead of a deadline to buy a stake in the company although it is not clear how much of the stake it is looking to buy. A source close to the deal said he expects POSCO to bid for the whole 68 per cent stake.

Last month POSCO said it would be spending $8.3 billion on investments and has earmarked a third of that for acquisitions.

Daewoo as a number of development projects, including a gas development in Myanmar and a nickel project in Madagascar as well as a 24 per cent stake in one of Korea’s leading life insurer, Kyobo Life. The company’s shipping arm already transports POSCO steel products however its iron ore trading activities makes it particularly attractive to POSCO as it seeks to shore up its raw material supply. Daewoo also ships base metals, auto parts and consumer electronics.

Daewoo’s corporate value is valued at around 5.4 trillion won (around $4 billion), some 50 per cent higher than its market capitalisation.

Daewoo is considered one of the most attractive acquisition targets this year as it focuses on development of buoyant oil, gas and resources, while its trading business should benefit from a global economic recovery.

Daewoo's resources portfolio includes an 8 trillion won ($6.9 billion) gas development in Myanmar and a nickel project in Madagascar. It also has a 24 percent stake in unlisted Kyobo Life, South Korea's No.3 life insurer.

Oriental Minerals Exercises Option On Korean Lead-Zinc Properties

Canadian-based Oriental Minerals, the only western metals exploration company active in South Korea, announced on Wednesday that it has given notice of intent to exercise options on the Yeonwha and Taebaek lead-zinc properties in South Korea in return for cash and shares worth $2.1 million. Oriental was granted the options under a 2006 agreement with the Se Woo Mining Company.


Oriental is currently progressing its three core mineral deposits in South Korea: Sangdong tungsten-molybdenum, Sangdong molybdenum and Muguk gold but regards the Taebaek and Yeonwha properties as longer-term additions to its portfolio.

Iron Ore Miners 'To Ask For 40 Per Cent' Price Increase

China’s the 21st Century Business Herald reported on Wednesday that Australian iron ore miner Rio Tinto Ltd has asked Korean and Japanese steel mills for a 40 per cent increase in 2010 benchmark prices.

The prices to Korea and Japan are widely seen to act as a guide to the price to be demanded from Chinese steel mills for iron ore.

"When this year's iron ore price talks started, Japanese and Korean steel mills agreed to a higher benchmark price for this year, so the key issue now becomes how much the price hike will be," the report said, citing a mining source close to both Rio Tinto and BHP Billiton Ltd.

Rio Tinto refused to comment on the story.

Baosteel Group Corp. representing Chinese steel mills are also said to be holding price talks with the three global miners according to the report, which also speculated that Baosteel is ready to agree in principal to the price rise.
However Chinese steel mills are said to be unlikely to accept a rise of 30 per cent over 2009 levels and are looking at an increase of around 20-30 per cent.
According to an Australian mining source Japanese and Korean steel mills may be willing to accept a 40% rise this year although they haven't formally done so.

POSCO Signs Kazakhstan Titanium Sponge JV

POSCO has signed a joint venture agreement with Kazakhstan titanium sponge manufacturer UKTMP to produce titanium slabs.

According to the agreement, POSCO and UKTMP will each invest 50% to establish an industrial pure titanium slab plant in the Eastern Kazakhstan region of Ust-Kamenogorsk. Construction will start in the latter half of this year with completion in 2012.

Titanium sponge, the material needed to manufacture titanium slabs, will be supplied by UKTMP, while POSCO will use the slabs manufactured at the plant to produce sheets to sell on to clients.

POSCO To Enter Lithium Market

A deal between Korean steel producer, POSCO and Etna Resources Inc. is set to double the steel company's investment in non-ferrous metals this year.

With the price of Lithium rising, due to its use in portable electronics, and electric vehicle production ramping up, investment in lithium production looks like a sure bet for POSCO.

Etna Resources' letter of intent for the deal with POSCO is worth CDN $5 million.


POSCO, the Pohang Iron and Steel Company, is registered on both the New York Stock Exchange and the Korea Stock Exchange. It is the second largest steel producer in the world, by market value. Etna Resources, Inc. trades on the Canadian Venture Exchange. Etna Resources, Inc. is soon to be renamed Pan American Lithium Corp.

Seeing the non-ferrous metals Lithium and Magnesium as "the new growth engines for the next generation of the company," POSCO CEO Joon-yang Chung also signed a letter of understanding to build a magnesium refinery in Gangwon Province, South Korea, last November. Building the refinery should save the company some USD $30 million by producing magnesium ingots locally, over importing them from China.

POSCO has 30 days to complete its due diligence on Etna Resources' lithium properties. The CDN $5 million funding covers the Etna Phase One development costs for the exploitable mineral brine recovery at the Cierro Prieto Geothermal Plant, 30 km south of Mexicali, Baja California, Mexico.

According to a report at Axcessnews, the rights to this site were optioned by Etna Resources in Q4, 2009, when the annual recoverable minerals were estimated at between $450 to $500 million. There are six square miles of existing sequential evaporation ponds where the brines are recovered and the metals concentrated to almost twelve times original salt content.

Source: Newsblaze

POSCO Forecasts 10 Per Cent Rise In Global Steel Demand

South Korea's POSCO forecast on Monday global steel demand would rise about 10 percent in in 2010, recovering to 2008 levels.

The world's No.4 steelmaker also expected iron ore and coking coal prices to recover this year, Park Myung-kil, a senior vice president at POSCO, said in a document released for a parliamentary economic forum.

Source: Alibaba

South Korea To Invest In Rare Metals

Reuters reports that South Korea will invest KRW 300 billion to develop technologies and raise self sufficiency rates of rare metals such as lithium and magnesium by 2018.

The statement said that in the private sector, POSCO will invest KRW trillion in 5 sectors including rare metals, non ferrous metals, carbon materials, future new materials and recycling through 2018. LS Nikko will spend KRW 500 billion in expanding production of rare metals by 2020. Local demand on rare metals has been rising sharply along with the growth of future advanced businesses including LCD and hybrid cars.

It said that "Through the investment the government aims to raise the self sufficiency rates of rare metals from current 12% to 80% by 2018."

South Korea SK Energy said that in October it would supply lithium ion batteries for a hybrid electric vehicle project for Daimler unit Mitsubishi Fuso, joining the competition with early movers in the sector including LG Chem and Samsung SDI.

The statement said that as part of the investment POSCO will set up a magnesium refining plant to produce 10,000 tonnes per year from 2011 and 100,000 tonnes from 2014 in an eastern province of Kangwon, which accounts for 40% of magnesium ingots buried in the country, to reduce imports of magnesium ingots.

Source: Steel Guru

POSCO To Build Magnesium Refining Plant

POSCO said yesterday it is likely to build a "magnesium refining plant" in Gangwon Province.

"It is almost certain that we will sign an MOU with Gangwon Province to build a magnesium refining plant," said Kim Dong-wan, a POSCO spokesman.

The world's fourth-largest steelmaker has a magnesium sheet manufacturing plant in Suncheon, South Jeolla Province, supplying small magnesium parts for makers of handsets, notebooks and MP3 players.

POSCO also plans to make magnesium sheets for lighter bicycles in the Suncheon plant.

POSCO and Gangwon Province are now in talks to decide on the amount of the investment, he said.

The steelmaker's move comes as the company has been aggressively widening its revenue streams in the materials business to seek new growth engines.

"POSCO's steel output is now 33 million tons a year, but it is expected to stop expanding the capacity when the figure reaches 40 million. POSCO is already turning its eyes to other businesses in the local market," said Choi Moon-sun, an analyst with Korea Investment & Securities.

"I think POSCO will tap the bicycle business very aggressively with magnesium products," he said.

POSCO recently agreed with Kazakhstan's UKTMP to jointly establish a titanium slab manufacturing firm to produce titanium in Ust-Kamenogorsk, eastern Kazakhstan.

If the titanium slabs are shipped to POSCO in Korea to make titanium coil, Korea will become the world's fourth country to produce titanium-based coil after Japan, Russia and the United States, the steelmaker said.

On Sept. 1, POSCO established the ferromanganese manufacturing company POS-HiMetal to enter the ferromanganese manufacturing business.

The company plans to start the construction of a plant in April next year and complete the construction in September 2011, to produce 75,000 tons of highly pure ferromanganese a year, POSCO said.

Source: Korea Herald

Fortescue In Talks With Japan, Korea

Fortescue Metals Group Ltd., Australia’s third-biggest iron ore exporter, is in talks to sell to Japanese and Korean mills for the first time as it seeks to take market share from Rio Tinto Group and BHP Billiton Ltd.

“We’ve been in active discussions with them,” Executive Director Graeme Rowley said today in an interview. As “contracts come up for renewal I would expect that they will come and talk very positively with us about us joining in their supply chain,” he said, without further identifying the mills.

Fortescue, which started its A$2.8 billion ($2.6 billion) project last May, has sold all the ore produced to steel mills in China, the world’s biggest buyers. The mills it’s talking to have contracts to buy ore from Rio and BHP, Australia’s two largest exporters, Rowley said.

Fortescue, controlled by billionaire Andrew Forrest, rose 2 percent to A$4.17 at the 4:10 p.m. Sydney time close on the Australian stock exchange. The Perth-based company has more than doubled in market value this year to A$13 billion. It plans to boost capacity by the end of next year with a A$360 million expansion of its Christmas Creek mine.

The company will “largely” finance expansion plans by itself to bring production up to 95 million metric tons a year after failing to agree on terms for $6 billion in funding from China, Forrest said last week. Expansion of Christmas Creek will take total capacity to 55 million metric tons by the end of 2010, Rowley said today.

China’s demand for iron ore means it would likely play a more dominant role in pricing iron ore over time, Rowley said, adding that he supported efforts to change the annual contract period to the calendar year.

“A January 1 price date is eminently sensible,” he said. “The April 1 was based around the Japanese financial year.”

Source: Bloomberg

See also: Fortescue posts Q3 loss

POSCO To Expand Energy and Materials Businesses

POSCO, the world's fourth-largest steelmaker, is aggressively widening its business lines, particularly in eco-friendly energy and materials business, as the company seeks new growth engines.

On Aug. 22, the steelmaker set up an affiliate POSCO Electrical & Electronic to transform household sewage into so-called "refuse-derived fuel" and use it to generate electricity. The heat generated during the procedure can be used for other purposes.

In other words, POSCO E&E dries and reshapes sewage to make it a complementary coal fuel used to generate electricity.

POSCO officials said the company is doing the waste-to-fuel business in Busan and Pohang only, but plans to expand the business across the nation.

Another growth engine of the steelmaker is development of fuel cells that can replace diesel engines currently used for ships.

The company's subsidiary POSCO Power plans to develop related fuel-cell technologies from as early as next month.

POSCO said the new technology will help ships comply with the international regulation which forces shipbuilders to reduce nitrogen oxide emissions by twice the current reduction level by 2016.

POSCO Power will start building a "stack" manufacturing plant at the fuel cell production mill in Pohang from the end of the year, company officials said. The facility is essential in generating electricity.

"POSCO will invest 432 billion won ($368.6 million) by 2012 to commercialize a third-generation fuel cell that can replace the phosphate and melted carbonate fuel cell," a POSCO official said.

The steelmaker is also eyeing on synthetic natural gas manufacturing business using cheap coal, in partnership with SK Energy.

After gasification of cheap coal in high temperature and high pressure, the company can produce synthetic natural gas through refining and synthesis process, official said.

Only the United States is operating one synthetic natural gas manufacturing plant now and the future prospect of the business is remarkably bright, they said.

POSCO plans to invest 1 trillion won by 2013 to build a coal gasification plant to produce 500,000 tons of synthetic natural gas a year, according to the company.

Through this business, the steelmaker will be able to secure synthetic natural gas that is 30 percent cheaper than existing natural gas as well as to help the local industry reduce 200 billion won worth annual imports of expensive natural gas, company officials said. The large-scale investment will also help create more than 300,000 jobs a year, they said.

The development of synthetic natural gas is part of the Ministry of Knowledge Economy's "future growth smart projects."

Materials development is another sector for POSCO to find fresh revenues.

Last month, the company held an across-the-board workshop to discover new opportunities in comprehensive materials business such as super-strong, super-light materials and next-generation new materials in Gyeongju in North Gyeongsang Province.

POSCO is to review each business prospect for each material by the end of this month and reflect it in the mid-term management strategy, company officials said.

"From early next year, the company will be able to actively engage in R&D for materials applications and related business," a POSCO official said.

POSCO CEO Chung Joon-yang signed a memorandum of agreement on Sept. 29 with Kazahkstan's UKTMP to jointly establish a titanium slab manufacturing firm.

Under the agreement, POSCO and UKTMP will each invest 50 percent of stakes in the company to build a titanium slab plant in Ust-Kamenogorsk, eastern part of Kazakhstan.

If the titanium slabs are shipped to POSCO in Korea to make titanium coil, Korea will become the world's fourth country to produce titanium-based coil after Japan, Russia and the United States, the steelmaker said.

Titanium is resistant to sea water, light but strong and nonferrous metal which can be used for shipbuilding, atomic power generation, water containing, airplane engines and frames.

On Sept. 1, POSCO established ferromanganese manufacturing company POS-HiMetal. The company plans to start the construction of the plant in April next year and complete the construction in September 2011, to produce 75,000 tons of highly pure ferromanganese a year, POSCO said.

Highly pure ferromanganese is used as raw materials for automobile high manganese steel. To date, Korea used to import solid manganese metal 100 percent from China but the supply has recently become somewhat instable.

POSCO witnessed the need for development of highly pure ferromanganese because too much input of solid manganese metals lowered the temperature of molten iron to an excessive level, causing quality deterioration and cost buildup.

POSCO will spend 220 billion won in building the highly pure ferromanganese manufacturing plant and adopt Dongbu Metal's patented technology in the early business period, the steelmaker said.

Source: Korea Herald

Posco Signs Kazakh Titanium JV

South Korean steelmaker Posco said yesterday it has signed a deal with the Ust-Kamenogorsk Titanium and Magnesium Plant, a Kazakh titanium sponge producer, to build a titanium slab plant in the eastern Kazakhstan.
With the joint venture, Korea will become the fourth country in the world to have a titanium slab production system behind the U.S., Russia and Japan.

Titanium is a high-end non-steel metal with a value that is 10 times that of steel products. It is traded at between 40 million won and 50 million won ($34,000 and $42,400) per ton. It is resistant to erosion and salt water but is lightweight. It is used for ships, airplane engines and nuclear power plants.

The two companies will each invest half of the approximately $50 million cost of the plant, to be completed in 2012. The titanium slabs manufactured in Kazakhstan will be made into titanium plates at Posco’s steel plant in Pohang.

Posco, which was once entirely reliant on titanium imports, hopes that the titanium produced at the plant in Kazakhstan will help reduce its imports of titanium to Korea as well as stabilize titanium prices. Domestic consumption of titanium is estimated at around 5,000 tons a year.

“There is a great deal of value in developing the rich resources in Kazakhstan,” said Chung Joon-yang, Posco’s president. “Starting with the titanium business Posco and Kazakhstan will continue to cooperate to develop infrastructure and natural resources.”

Karim Massimov, prime minister of Kazakhstan, said that the Korean steelmaker will have the full support of the Kazakh government.

Source: Joongang Daily