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Posco to Acquire Stake in Brazilian Iron Ore Mine

10/28/2008 - Posco will invest $554.4 million as part of a consortium formed to acquire a 40% total stake in NAMISA, a subsidiary of Companhia Siderurgica Nacional, Brazil.

Posco is participating in a consortium formed to acquire a 40% stake in NAMISA (Nacional Minerios SA), a subsidiary of the Brazilian company CSN (Companhia Siderurgica Nacional).
 
The consortium is investing a total of $3.12 billion for the 40% stake in the NAMISA mine. Posco is contributing $554.4 million of the total, for which it will receive a 6.48% stake. This will be Posco’s largest investment in raw materials ever, and the consortium’s total investment is the largest historical investment by steel companies to secure raw materials.

The consortium comprises seven companies: Posco, Nippon Steel, JFE, Sumitomo Metal Mining, Kobe Steel Works, Nisshin Steel, and Itochu Corp. Posco’s stake in the investment will be similar to that of Nippon Steel and JFE.

Posco currently secures 25% of its iron ore requirements from Brazil. With the new investment, the company will receive from Namisa Mine an annual iron ore supply of 1 to 1.8 million tons from next year to 2011, and over 3.7 million tons after 2012. The expanded iron ore supply will enable Posco to increase its self supply rate of iron ore from the current level of 14% to a future rate of some 25%.

Located in Minas Gerais, Brazil, Namisa Mine holds iron ore reserve of about 500 million tonnes with a long-term supply contracts with external mines totaling a capacity of 1.7 billion tonnes. Next year’s iron ore production is expected to reach 1.8 million tonnes, and investments are being progressively made to expand production up to 38 million tonnes by 2013.

According to Posco, the mine is supported by a well-established infrastructure that includes railways and loading ports and ensures supply stability. The consortium has also secured stakes in adjacent railways and long-term exclusive right for the port.