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Posco Buys Stake in Roy Hill Holdings
Jan. 25, 2010 Posco recently signed a cooperation agreement to buy a 15% stake in Roy Hill Holdings, which is currently leading the Roy Hill iron ore mining project in the Pilbara region of Australia.
In the first phase of the deal, Posco will secure 3.75% of shares in exchange of reviewing its feasibility and supporting expenses for port construction for the project. Posco’s share in the company will increase to 15% 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, which has 2.4 billion tonnes of coal reserves and plans on producing 55 million tonnes of iron ores annually starting in 2014.
By participating in the Roy Hill project, Posco will be provided with more than 10 million tonnes of iron ores annually starting in 2014. The company expects an increase in raw material self-sufficiency from the current 12.4% to more than 30%.
Posco is actively seeking to secure raw materials by investing in various regions, including iron ore mines of Australia’s POSCMAC, Jack Hills, and Jupiter, and Brazil’s NAMISA. The company is also pursuing coal mines such as Australia’s Mt. Thorley, Foxleigh, Carborough Downs, Integra, and Newpac, as well as Canada’s Green Hills and Elkview; New Caledonia’s nickel mine; Mt. Hope molybdenum mine in the U.S.; and South Africa’s Kalahari manganese mine.