South Korean steelmaker POSCO signed a cooperation agreement on January 14 to buy a 15 percent stake in Roy Hill Holdings that leads the Roy Hill iron ore mining project in the iron ore-rich Pilbara region of Australia, a recent company press release said.
In the first phase of the deal, POSCO will secure 3.75 percent of shares in exchange for reviewing its feasibility and supporting expenses for port construction for the project in question. POSCO's share in Roy Hill Holdings will increase to 15 percent if its profitability is confirmed in a feasibility study in the second half of the year.
Roy Hill Holdings currently owns the Roy Hill mines that have 2.4 billion metric tons of iron ore reserves and is planning on producing 55 million mt of iron ore annually starting from 2014.
By participating in the Roy Hill project, POSCO will be provided with more than 10 million mt of iron ore annually starting in 2014, expecting an increase in raw material self-sufficiency from the current 12.4 percent to over 30 percent.