POSCO to Acquire 24.5% Equity in Australian Iron Ore Project

POSCO announced on Friday the board members approved acquirement of 24.5% equity in Australian Premium Iron (API), an iron ore mine project of Australia, at A$ 183 million. POSCO will support development investment along its equity ratio and gain iron ore at 9.8 million tonnes per year from API in and after 2014. POSCO’s self sufficiency rate of iron ore is expected to rise to 34% from present 18%. The firm aims to strengthen cost competitiveness by acquirement of stable material source when iron ore supply tightens globally and ore price surges in oligopoly market.

API is now fifty-fifty controlled by American Metal & Coal International (AMCI), a US mining company, and Aquila Resources, an Australian mining company. POSCO will acquire 49% shares in AMCI and then take 24.5% equity in API.

API project develops a mining site of 9,400 square meters and plans to start iron ore production at 40 million tonnes per year in 2014. POSCO’s official says API’s production cost is at lowest level among new iron ore projects in Western Australia. The feasibility study finished in June and concrete plans now exist to construct a mine, a railway and a quay.

POSCO will be able to obtain iron ore at 9.8 million tonnes per year from API, which equals to 20% of POSCO’s annual ore consumption. The firm eyes ore supply to newly constructed offshore iron works as well as self consumption.