Kobe Steel to Invest in Southdown Iron Ore Project in Australia
03/23/2012 - Kobe Steel, Ltd. has reached agreement with trading firm Sojitz Corp. to take a 33% equity share in Sojitz Resources & Technology Pty Ltd. By acquiring these shares in Sojitz, Kobe Steel will indirectly hold a 9.9% interest in the Australian Southdown iron ore project.
Kobe Steel, Ltd. has reached agreement with trading firm Sojitz Corp. to take a 33% equity share in Sojitz Resources & Technology Pty Ltd, currently a 100% owned subsidiary of Sojitz Corp.
Sojitz Resources & Technology and Grange Resources Limited are conducting a Definitive Feasibility Study for Australia's Southdown Project. Sojitz Resources & Technology has a 30% stake in the project, while Grange Resources holds the remaining 70%. By acquiring shares in Sojitz Resources & Technology, Kobe Steel will indirectly hold a 9.9% interest in Southdown.
The Southdown iron ore project will produce magnetite pellet feed, a pulverized magnetic iron ore that is highly suitable for processing into pellets. The Southdown magnetite deposit is located approximately 90 kilometers northeast of the Port of Albany on the south coast of Western Australia. The project is planning for the production of 10 million tonnes per year of premium magnetite pellet feed with about 69% iron content.
In the future, high-grade iron ore is expected to decrease and iron ore prices are forecast to remain high. By participating in this project, Kobe Steel will be able to further increase its iron ore interests, which will help Kobe Steel to secure the necessary resources and increase the competitiveness of its steel business.
The total cost of the Southdown Project is estimated to reach approximately 250 billion yen, and the first shipment is expected in 2015.
In addition to acquiring shares in Sojitz Resources & Technology, Kobe Steel agreed with Sojitz Corp. to offtake 1.5 million tonnes per year of the magnetite pellet feed produced from the Southdown magnetite deposit. For Kobe Steel, this will help to stabilize the operation and reduce costs at Kobe Steel's Kakogawa Works Pellet Plant.
Sojitz Resources and Technology is located in Perth, Western Australia, and holds a 30% interest in the Southdown Project.
Grange Resources Limited, also located in Perth, Western Australia, holds a 70% interest in the Southdown Project.
