POSCO on charm offensive in Africa
By Kim Da-ye
POSCO announced Sunday the nation’s largest steelmaker has made progress in securing resources in Africa during CEO Chung Joon-yang’s visit to the continent.
As a result of Chung’s trip, the steelmaker is now in talks with resource-rich African nations regarding the Mbalam iron ore project in Cameroon, the resource and infrastructure development in the Democratic Republic of Congo and a joint venture company to exploit chrome and coal in Zimbabwe.
Chung began visiting four African nations ― Cameroon, the Democratic Republic of Congo, Zimbabwe and Ethiopia ― on Jan. 25. He met with heads of states, ministers and corporate heads and discussed how securing resources and cooperation for POSCO’s entry into the African markets, the firm said in a statement.
In Cameroon, Chung discussed POSCO’s plan to participate in the Mbalam iron ore project.
The steelmaker says that about 200 million tons of high-quality iron ore is lying under Mbalam, and the mine is expected to begin producing 35 million tons a year from 2014.
POSCO said that Cameroon is yet to develop iron ore in Mbalam but recently gave foreign companies mining concessions which POSCO hopes to gain. Cameroon has a wealth of minerals ― nearly 50 kinds that could be commercially exploited ― as well as its strategic location by the Gulf of Guinea, the firm said.
The steelmaker is trying to persuade the copper-rich Democratic Republic of Congo with a mutually-beneficial “package deal” in which POSCO will develop copper mining and help the country build hydro-power plants.
The firm said that the country “actively reviewed” the joint development of a copper mine and the plan to build a 2,500 megawatt mid-size hydro-power plant and a 40,000 megawatt grand-size hydro-power plant in the Congo River. The Congo is one of the world’s most powerful rivers after the Amazon.
In Zimbabwe, Chung met with Vice President Joice Mujuru and discussed developing chrome, coal and iron ore and building hydro-power facilities in Kariba, northern Zimbabwe.
In particular, POSCO signed a preliminary deal with Zimbabwean firm Anchor Holdings in order to setting up a joint mining firm for securing mining rights and developing in the country. The steelmaker said the company could even open in the first half of the year.
“We have seen considerable progress in winning the mining rights for chrome, the main raw material for stainless steel,” POSCO said in a statement. “We received a positive answer from Zimbabwe’s mines minister when Chung asked the minister for supports in securing mining rights for chrome.”
POSCO is also in talks with Brazil’s Vale for developing coal mines at the Tete region in Mozambique. The region is estimated to have 2.4 billion tons of coal, and the annual production is expected to be 7 million tons of coking coal and 4 million tons of non-coking coal, POSCO said.
Chung also visited Ethiopian Prime Minister Meles Zenawi and signed a memorandum of understanding for economic cooperation between POSCO and Ethiopia regarding joint research for the steel industry, exploration for natural resources and cooperation in building more infrastructure.
POSCO said that Chung was accompanied by Lee Dong-hee, vice chairman and CEO of Daewoo International which POSCO acquired last year. Daewoo International, with eight offices in Africa, will support POSCO and its affiliates including POSCO Engineering & Construction and POSCO Power, boosting synergy effects among the affiliates.
Resources in the African continent have been of great interest to the Korean government whose knowledge economy ministry is looking overseas to secure supplies of natural resources.