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Posco to Pursue Mine Investments ‘More Aggressively’ (Update2)

By resourceINTEL · February 26, 2010 · 12:38 am · Leave a Comment

Feb. 26 (Bloomberg) — Posco, Asia’s most profitable steelmaker, will “aggressively” pursue investments in mines as the costs of iron ore and coal escalate with the economic recovery.

“The company will pursue investments in overseas mines more aggressively to secure raw materials,” Chief Executive Officer Chung Joon Yang said at a shareholder meeting in Seoul. Posco may buy a stake in a coal mine in Mozambique, it said in documents prepared for the meeting, without details on costs.

Steelmakers globally are facing soaring costs, with analysts forecasting that suppliers of coal and iron ore may ask for as much as an 86 percent jump in prices this year. The global steel market has bottomed and will grow by 9.2 percent in 2010 as demand rebounds in the U.S., Europe and Japan, the World Steel Association said last October.

“Economies at home and abroad are on a recovery path now, but the outlook for a full recovery is uncertain,” Chung said today. “We expect competition among steelmakers to increase.”

Pohang, South Korea-based Posco, which has risen 68 percent in the past year, gained 0.9 percent to 535,000 won at 11:03 a.m. in Seoul trading, outperforming a 0.2 percent advance in the local benchmark Kospi.

Iron Ore Mine

To meet rising iron ore needs, Posco said it will buy as much as a 15 percent stake in the Roy Hill project in Australia. Last year, Posco bought a 16.7 percent stake in Jupiter Mines Ltd., it said today. The Korean steelmaker purchased a 10 percent stake in Macarthur Coal Ltd., the biggest exporter of pulverized coal, in 2008.

Posco is planning a record 9.3 trillion won ($8 billion) in capital spending for 2010, up from 4.9 trillion won in 2009.

BHP Billiton Ltd., the world’s largest exporter of coking coal, may raise prices to $240 a metric ton this year, up from $129 a ton a year ago, UBS AG said Feb. 18. Prices of iron ore may rise 40 percent this year, Moody’s Investors Service’s analyst Matthias Hellstern wrote in a Feb. 22 report.

Posco is planning $30 billion of overseas expansion in India, Indonesia and Vietnam to regain its spot as Asia’s largest steelmaker.

“We will go ahead with overseas mill plans in countries including India and Indonesia in order to strengthen the company’s status as a global player,” Chung said…read more at the Bloomberg