Taipei, April 28 (CNA) China Steel Corp., one of Taiwan's leading steel makers, said Friday it has signed an agreement to acquire a 2.5 percent stake in the Roy Hill iron ore project located in Australia.
China Steel said it will spend about 305.2 million Australia dollars (US$317 million) for the stake in a bid to boost the company's self-sufficiency rate in raw materials to 7.5 percent from the current 2 percent.
After intensive negotiations, the agreement will allow the local steel maker to acquire the Roy Hill project stake from POSCO, a counterpart in South Korea, which currently owns a 15 percent stake in the iron ore project.
POSCO's wholly owned unit POSCO WA located in Australia will transfer the stake to China Steel's 100 percent owned subsidiary, CSC Steel Australia Holdings, the Taiwanese company said.
In January, POSCO, the world's third largest steel maker, agreed to raise its stake in the Roy Hill project to 15 percent from 3.8 percent.
The investment from China Steel will be funded as equity into Roy Hill Holdings, which serves as the holding company of the Roy Hill project, to meet the needs for future development expenses, the steel maker said.
The Roy Hill project is an open pit iron ore mine located in the Pilbara region of West Australia and is scheduled to start operations in 2014, according to China Steel.
The media recently reported that a feasibility study has been completed on the project.
The project, which has its own railway and port facilities and is able to connect itself to Port Hedland for exports through a dedicated 342 kilometer railway, is expected to ramp up to its full annual capacity of 55 million tons of iron ore lumps and fines.
Due to the investment in the Roy Hill project, China Steel said it is expected to secure 1.38 million tons of iron ore every year and increase the company's self-efficiency rate.
China Steel said it will continue efforts in seeking opportunities in Australia and other countries to acquire more iron ore and coking coal mines to further boost its self-sufficiency rate to 30 percent in five years.
The investment plan is pending regulatory approval, China Steel said.
(By Chao Hsiao-hui and Frances Huang)