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Posco meets with Australian leaders to discuss arrium plans
[CANBERRA] Executives from steelmaker Posco met with Australian government officials this week to discuss the South Korean company's potential interest in Arrium Ltd, the Australian mill that's in administration and seeking a buyer.
The group that traveled for Tuesday's meeting in Pohang included South Australia's state Treasurer Tom Koutsantonis, federal Industry Minister Greg Hunt and union leaders, according to a statement from Koutsantonis' office on Wednesday. Arrium, which appointed an administrator in April, has operations that include the Whyalla steelworks and port in South Australia, a steel manufacturing, distribution and recycling unit, and an iron ore mining division.
Posco has "expressed a strong desire to acquire the Whyalla steelworks," Mr Hunt said in an e-mailed statement Thursday. Posco spokesman Kang Min Suk confirmed the meeting had taken place, but said that the South Korean firm, Asia's second-biggest mill by market value, hasn't placed a bid and that Posco participated as a "technology provider." Posco's interest is in exporting its Finex steel production technology, Kang said by phone Thursday. "The meeting was mainly about our executives introducing the technology and showing the delegates our mills."
Global steel producers have been pressured by rising exports from China, producer of about half the world's metal, which have weighed on prices and eroded profits. Lenders in April rejected Arrium's proposed $927 million recapitalization plan.
"Posco briefed me on their future vision for Whyalla, where the plant not only continues current operations, but grows significantly," according to Hunt. Introducing the Finex technology at the mill in South Australia could expand production by 50 per cent, he said.
The process to sell Arrium's steel assets is a long way from completion and Posco is one of several companies that's "active in the bidding process," according to the earlier statement from Koutsantonis' office. Australian officials are seeking to meet with other potential buyers in the coming months, Koutsantonis said.
Binding offers for Arrium's steel and iron ore businesses are scheduled to be submitted in December and due diligence materials are being prepared for bidders, the producer's administrator KordaMentha said last month. A separate process for a sale or an initial public offering is underway for Arrium's mining consumables business, which has sites from Chile to Indonesia.
Liberty House Group, a London-based steelmaker, is among bidders to have submitted an offer for Arrium's steel and iron ore assets, people with knowledge of the process said last month. Arrium's shares, which plunged 97 per cent in the past three years, were halted April 6 after lenders rejected the proposed funding agreement with GSO Capital Partners.