Posco Secures Stable Supply of Iron Ores from Australia
09/01/2005 - Posco recently made an early extension to its iron ore supply contract with Rio Tinto of Australia.
Posco recently made an early extension to its iron ore supply contract with Rio Tinto of Australia.
The two companies signed a renewal for the initial 15-year contract and made a promise to maintain their future partnership. Posco's new contract means a stable supply of 128 million tonnes of iron ore from Rio Tinto for 10 years starting from April 2007 to March 2017.
Posco's strong partnership with Rio Tinto began with the first contract between the two companies in 1973. The partnership was enhanced when Posco and Rio Tinto succeeded in managing the coal mine in MT. Thorley Australia in a joint venture in November 1981.
Prior to extending their contract with Rio Tinto, last November Posco made a contract with CVRD of Brazil to purchase 103 million tonnes of iron ores for 10 years, and also established a memorandum of understanding with BHP Billiton of Australia last December to extend the contract to purchase 125 million tonnes of icon ores for 10 more years.
As market demand for steel components has been increasing rapidly all over the world, particularly in China, the price of raw materials for steelmaking — namely iron ores and coking coal — has reached record highs, greatly intensifying the competition among steelmakers. In Standard and Poor's recent evaluation of global steelmakers and their level of competitiveness, they stated that the supply of raw materials would be the greatest variable to decide the future of the steel industry. They also pointed out that securing a stable supply of raw materials would be the key to survival.