By Cameron Chai
Kobe Steel, a Japanese steelmaker, has signed an agreement with Sojitz, based in Tokyo, Japan, to acquire 33% shares in its subsidiary, Sojitz Resources & Technology.
Sojitz Resources has partnered with Grange Resources, a producer of magnetite iron ore, to conduct a definitive feasibility study on Southdown Project, an iron ore project, located near the Port of Albany in Western Australia. Grange Resources owns a 70% equity share in the project and Sojitz Resources & Technology holds the remaining 30%. Kobe Steel will indirectly own a 9.9% stake in the project by purchasing shares in Sojitz’s subsidiary.
The Southdown Project will manufacture pulverized magnetic iron ore, which is more ideal for pellet production. The project has an annual production capacity of 10 mmt of high-quality magnetite pellet feed with approximately 69% of iron content. The overall project cost is projected to reach about 250 billion yen. The production of iron ore is anticipated to commence in 2015.
Kobe Steel has also signed a contract with Sojitz to purchase 1.5 mmt of magnetite pellet feed that is produced from the iron ore deposit. This will help Kobe Steel to continue stable operation and minimize production costs at its pellet facility located at Kakogawa Works. Thus, the acquisition of Sojitz Resources & Technology will help the steelmaker to secure required resources, as well as enhance the competitiveness of its business.
Source: http://www.kobelco.co.jp/