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## posco / murchison metals article! (the age!) ##

  1. 2,257 Posts.
    Posco backs Murchison on iron ore
    Date: September 3 2005

    By Jamie Freed

    MURCHISON Metals has given Fortescue Metals a run for its money in the race to become the "third force in iron ore" after South Korean steel giant Pohang Iron and Steel, known as Posco, took up a strategic equity stake in the emerging miner.

    The $3 million deal will fast-track Murchison's $1 billion-plus Stage 2 Jack Hills and Weld Range project in Western Australia's Midwest region. The company aims to have 1 billion tonnes of high-grade resources firmed up in 2008 and to export at least 25 million tonnes a year starting in 2009 in a project about half the size of Andrew Forrest's $2.3 billion Pilbara play.

    Fortescue expects to ship iron ore by the end of 2007, but has not found an infrastructure development partner despite months of discussions. It is also involved in a legal dispute with an indigenous group over a native title agreement.

    Murchison executive chairman Paul Kopejtka said he was thrilled with the Posco deal.

    "You don't get the likes of a Posco on your register unless you have a quality asset," he said. "It is our goal to become a major world player in the iron ore business."

    He said talks with South Korea's third-biggest company began last year and were followed by an extensive six-month due diligence program to ensure the project met with Posco's investment criteria.

    Subject to shareholder approval, Posco will have a 5.5 per cent stake in Murchison, with an option to increase it to 19.9 per cent and to name a company director.

    The deal highlights the growing focus on the Midwest region of Western Australia, near the port of Geraldton, where companies such as Murchison, Gindalbie Metals, Midwest and Mt Gibson Iron are developing projects.

    This represents a regional shift in the iron ore industry, which for decades has centred on BHP Billiton and Rio Tinto.

    There have been ongoing talks about sharing infrastructure between the Midwest companies. Mr Kopejtka said Murchison treated its project as a stand-alone when making financial projections, but would continue to explore the opportunity to share port and rail facilities.

    In the meantime, Murchison said mining of its smaller Stage 1 project was on track to begin shipping iron ore to China by next year. Murchison shares closed 1.5¢ higher at 40¢.

    [ TheAge ]

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