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POSCO to get 1st dividends from Aussie iron ore mining field

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Seen is the Roy Hill iron ore mining field in Australia in which POSCO has a 12.5 percent stake. / Courtesy of POSCO
Seen is the Roy Hill iron ore mining field in Australia in which POSCO has a 12.5 percent stake. / Courtesy of POSCO

By Baek Byung-yeul

POSCO will receive 50 billion won ($42.7 million) in dividends from Roy Hill Holdings, which operates an iron ore mine in Australia that the steel maker has invested in, the company said Thursday.

It said board members of Roy Hill Holdings, operator of the Roy Hill iron ore project in Western Australia, agreed to pay 475 million Australian dollars in dividends.

"This is Roy Hill Holding's first dividends payout. POSCO, which holds a 12.5 percent stake, will receive around 50 billion won," POSCO said.

While Roy Hill Holdings runs the iron ore project in Pilbara, Western Australia, Hancock Prospecting is the majority shareholder with a 70 percent stake. The remaining 30 percent is owned by a consortium comprised of POSCO with 12.5 percent, Marubeni with 15 percent and China Steel Corporation with 2.5 percent.

The mine is the largest of its kind in Australia with iron ore reserves estimated at 2.3 billion tons, according to POSCO. Roy Hill Holdings exports 55 million tons of iron ore annually, making it the fifth-largest.

In 2010, POSCO signed a raw material development contract with Roy Hill Holdings in order to secure a steady iron ore supply chain.

Earlier, there had been concerns about POSCO's move as the average price of iron ore per ton had decreased to $56 in 2015 from around $130 to $140 when the steelmaker joined the project, but POSCO has worked on developing the mine by improving efficiency in operations, the company said.

Thanks to its efforts, the company procured 6 million tons of iron ore in 2016 and has purchased 15 million tons of iron ore in total, POSCO said.

"This year marks 10 years since POSCO invested in the iron ore mine. Despite a global economy that is struggling with the impact of the COVID-19 pandemic, Roy Hill's decision to offer a large dividend means its business is back on track, dispelling all concerns towards the project," POSCO added.

After Roy Hill improved its business performance, its contribution to POSCO's finances continued to increase. POSCO said its equity income from Roy Hill was around 150 billion won in 2019, a sharp increase from about 12 billion won in 2016.

POSCO has actively sought overseas resource development projects since 1971, two years before the steelmaker started operating its steel mill in Pohang, North Gyeongsang Province. Since it invested in the Mount Thorley coal mine in Australia in 1981, POSCO currently holds raw material business rights in 23 areas across the world.


Baek Byung-yeul baekby@koreatimes.co.kr


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