BHP, Posco plan India steel project
Posco chairman Lee Ku Taek and BHP chief executive Charles Goodyear both this week said they were looking for investment opportunities to continue to deliver growth. Steel demand is surging in China as well as in India, where economic growth outpaced China last year. Unlike China, India has abundant iron ore resources. State-run Steel Authority of India Ltd forecasts India's steel consumption will almost double to 60 million tons a year by 2012.
India, with 34 million tons a year of capacity, is the world's eighth-biggest steel producer. BHP said its role would be to supply raw materials. 'BHP's interest would be limited to the supply of steel-making raw materials and associated materials-handling facilities and infrastructure to the steel industry,' the Melbourne-based company said in a statement to the Australian Stock Exchange.
India has the world's fourth-biggest iron ore deposits, more than two-thirds of which are in a belt along Orissa and neighbouring Bihar state. But it is short of coking coal, a key ingredient in the manufacture of steel using blast furnaces. Posco has developed a technology that cuts out the need to use coke, made from coking coal. The process enables steelmakers to use cheaper and more abundant thermal coal. Posco said it intends to use the technology when expanding abroad if its commercial plant now being set up proves a success. BHP has been benefitting from increased production to meet rising demand from China that bolstered prices for its iron ore, copper, zinc, silver and lead. It plans to spend US$4 billion on mines, smelters and oil fields to maintain growth. The company this week reported that second-half profit more than doubled to a record US$2.04 billion on the soaring Chinese demand. Posco said on Thursday that it may have a non-binding agreement by the end of this year.