POSCO iron ore JV POSMAC starts operations

POSCO iron ore JV POSMAC starts operations

POSMAC, Korean steel maker POSCO's iron ore joint venture with Australian company BHP Billiton started operations on October 30,2003. POSCO entered into this project which will secure the mill a stable supply of 3 million tons of iron ore annually for the next twenty five years, in April 2002. POSCO invested a total of A$16.3 billion (Won 13.5 billion) through its Australian bituminous coal joint venture POSA (Pohang Steel Australia Pty. Ltd.) earnings to this joint venture. Such iron ore supply will account for 7% of the company's 42 million tons of annual iron ore purchasing requirements. POSCO estimates that the cost of this iron ore will be 10% less than before. With this project, POSCO and BHP Billiton aimed to enhance Marra Mamba ore to supply high quality hematite. This new mine is expected to have 890 million tons of ore reserves. The main idea to participate in such joint venture was the concern that competition in securing iron ore could become more severe with China continuously expanding steel production capacity, already reaching more than 200 million tons annualy. With similar intentions POSCO has further joint venture projects for other raw materials such as coal and nickel in close cooperation with the world's major raw material suppliers. POSCO owns 20% stake in this joint venture, Autralia's BHP Billiton 65%, Japan's Itochu %8 and Mitsui Corporation balance 7% .