HYUNDAI Steel will continue to purchase iron ore and coking coal from its existing three major suppliers for the new blast furnace it aims to build after 2012.
“We are planning to sign long-term contracts with our current suppliers for the operation of the third blast furnace,” Oh Myung-suk, executive vice president of Hyundai Steel’s integrated steel project division, said.
For the No.1 and No.2 blast furnaces, Hyundai has secured 98 per cent of its total iron ore demand and 84 per cent of its overall coal needs in five to 10-year contracts with Brazil’s Vale, BHP Billiton and Rio Tinto .
The first delivery of iron ore will arrive on August 23 from Vale and the coal will arrive on September 15 from BHP and Rio, said the country’s second-largest steelmaker by sales after Posco.
The company, which needs 13.6 million tonnes of iron ore and 6.5 million tonnes of coal per year for the two furnaces, will also buy the raw materials in the spot market over the period, Mr Oh said.
As for planned investment in the new No. 3 furnace, he said it will take less than $US2.4 billion ($2.9 billion).
Asked if Hyundai Steel has any plan to strengthen or diversify its business through acquisitions, Mr Oh said “we have no interest in acquiring companies and instead will focus on completing the (8-million-tonne-a-year) integrated steel mill (by the end of 2010).”
The No. 1 and No. 2 blast furnaces - whose construction reached 80 per cent as of Friday - will have an annual output capacity of 4 million tonnes each, with the third furnace also expected to have an annual capacity of 4 million tonnes.
To meet high domestic demand for shipbuilding plates, Hyundai said it will start operation of a 1.5 million-a-year thick steel plant in December.
The company may double the plate plant’s capacity when operations of the first two furnaces stabilise as planned by 2012, Mr Oh said.
South Korea, which houses the world’s top three shipbuilders, imported 7.2 million tonnes of shipbuilding plates last year and Posco and Dongkuk Steel Mill supplied 7 million tonnes, according to Hyundai Steel.
“We will focus on supplying automotive steel to our affiliates Hyundai Motor and Kia Motors but will also raise the shipbuilding plate business as another income source,” said the executive vice president.
“We will be able to supply thick steel plates at the quickest time to companies such as Hyundai Heavy, Hyundai Mipo and Hyundai Samho Heavy compared with other local suppliers.”
SourcE: Melbourne Herald Sun
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