By Lee Hyo-sik
POSCO, the world’s third largest steelmaker, plans to raise its self-sufficiency ratio for iron ore, coal, nickel and other minerals to 50 percent by 2014 through investments in more overseas mines. This is to more effectively cope with widely fluctuating international prices of natural resources.
The firm has spent a total of $2.1 billion over the past three decades to buy stakes in iron ore and coal mines across the globe, boosting its resource sufficiency rate to nearly 34 percent.
``We have bought stakes in overseas mines single-handedly to secure a stable supply of iron ore and other natural resources. But these days, we try to form a consortium with mining firms or other steelmakers in a bid to minimize risks associated with resource investments,’’ a POSCO spokeswoman said.
POSCO has been expanding investments not only in existing mines but also in undeveloped ones. To boost the cost-effectiveness of its resource development projects, the firm has attempted to acquire stakes in early-stage mines at lower costs.
The spokeswoman said the steelmaker has so far made inroads into Southeast Asia, Australia and South America. ``But now we are trying to establish a strong foothold in resource-rich Africa.’’
Through dozens of resource investments around the world, POSCO has raised its self-sufficiency ratio to 33.9 percent and boosted business ties with suppliers.
``Demand for various steel products from China, India and other rapidly developing economies continue to head upward in a long run. We believe securing a stable supply of resources is a key to maintaining our global competitiveness,’’ she said. ``It is particularly so for POSCO as it imports all iron ore, coal and other minerals from overseas.’’
The spokesman said the steelmaker plans to purchase stakes in more mines abroad to boost the self-sufficiency rate to over 50 percent by 2014.
Early this month, POSCO Chairman Chung Joon-yang flew to Australia to confirm its participation in the Roy Hill iron-ore project.
Chung met with Gina Rinehart, Chairwoman of Hancock Prospecting, which holds the largest stake in development project, as well as CEOs of other consortium partners, including Japan’s Marubeni, STX Group and China Steel.
Under the agreement, POSCO acquired a 12.5 percent stake in the Roy Hill project. The Roy Hill mine with estimated reserves of 2.3 billion tons is expected to produce about 55 million tons of iron ore annually from 2014. Of them, POSCO will bring 7 million tons into the country per year for the next 30 years.
Meanwhile, POSCO Engineering & Construction, the steelmaker’s construction arm, is currently in talks with Hancock Prospecting to undertake Roy Hill development project valued at $5 billion.