In Search of Mineral Resources Overseas

Chairman Chung tours three countries in Africa to secure deals to explore for minerals in high demand

Chairman Chung Joon-yang of POSCO toured a number of countries in Africa including Mozambique, Zimbabwe and South Africa, in search of deals to explore for coal, manganese and other minerals in those African countries from June 11. During the week-long tour, the POSCO top executive signed an MOU to explore for silica stones with a local company in Zimbabwe on June 15 while he was on a visit to the African country. Chung called on President Mugabe and asked for help in the silica stone exploration project, which is being pushed under a deal with Anchor Holdings, a local mineral exploration firm, as well as the supply of other resources from the African country to POSCO. He also toured Mozambique to inspect the Revuboe coal mine in which POSCO shares a stake with Nippon Steel Corp. of Japan based on a deal made with the Japanese steelmaker in May.
Silica stone is a mineral that is needed to make silicon products for solar batteries and ferroalloy products. Many companies in the world are competing fiercely to secure the mineral and the silica stone buried in Zimbabwe is 99.9 percent pure and, therefore, highly sought after. The project is significant in that POSCO has diversified its mineral resources exploration to places other than Australia and North America. On June 16, Chung visited South Africa to inspect the progress in the Kalahari manganese mine, in which POSCO has an 11.36 percent stake. He also called on Kumba Co. and the Sishen iron ore mine, which supply iron ore to POSCO.
POSCO set up a joint venture with Samancor in South Africa in 1996 to produce Fe-Or, in line with its strategy to mold itself into an integrated resources material producer in Korea, and has been engaged in the production of lithium and magnesium, among others. The steelmaker plans to explore a diverse number of minerals including chrome, tungsten, manganese, molybdenum and lithium overseas. In January, the company secured a 3.75 percent stake in the Roy Hill iron mine in Australia and plans to increase the stake to 11.25 percent soon. POSCO has been pushing its plan hard to secure more stakes in iron ore and coal mines in the United States and Australia.
POSCO-China, along with Korean Resources Corp., have acquired a 60 percent stake in China’s Yongxin Rare Earth Metal Co., a Chinese producer of minor metals.
According to POSCO, the Chinese unit of the steelmaker and the state-controlled exploration company jointly purchased the stake for 59.76 million yuan (11.05 billion won). POSCO-China won approval from the Baotou City government on June 9 for the validity of the business deal. As a result, POSCO-China now owns a 31 percent stake in the Chinese company, and Korea Resources holds 29 percent.
Located in the rare-earth mining district of Baotou, Yongxin Rare Earth Metal Co. has produced neodymium, a rare earth element used to make permanent magnets. POSCO-China and Korean Resources plans to renovate production facilities at the Chinese company by November to produce 1,000 tons of neodymium and as much NdFeB every year.
The strongest existing magnetic material in the world, NdFeB is expected to become increasingly sought after, as it is used to make motors for electric vehicles and wind turbines.
On June 8, POSCO had a meeting with Japanese-based global home appliance companies at POSCO-Japan’s Osaka branch. Participants of the meeting, presided over by Senior Vice President Shin Young-kwan, shared information on the current sales situation of the companies and discussed development strategies for the future.
The company made a presentation on its sales plans for its steel sheet products for home appliances, followed by briefs on development circumstances of Japanese appliance makers. Participants also debated various issues, which included measures to offer integrated services by means of POSCO’s supply chain management hubs and ways to enhance lock-in ties and early vendor involvement activities with customer companies. nw

(from left) Chairman Chung Joon-yang of POSCO, 1st L, is seen among Korean business leaders at a dinner hosted by President Lee Myung-bak at a hotel in Hanoi, during Chief Executive’s state visit to Vietnam last year,; Chairman Chung Joon-yang of POSCO meets with Minister Virbhadra Singh of the Ministry of Steel Industry at his office in New Delhi, India early this year.