Posco eyes 20 pct of Australian miner Sandfire
By James Regan
SYDNEY, May 5 (Reuters) - World No. 4 steel maker POSCO (005490.KS) of South Korea has agreed to acquire 19.99 percent of Australian prospector Sandfire Resources NL (SFR.AX), providing funds to dig deeper for iron ore and other minerals, the latest Asian industrial heavyweight to invest in the Australian outback.
Sandfire said POSCO will acquire the stake, the maximum allowed before POSCO would be required to declare a full takeover under Australian securities rules, via a A$7.2 million ($6.7 million) share placement.
The transaction still needs approval from Australia's Foreign Investment Review Board government agency, which has been inundated with applications by Asian firms looking to invest in Australian mining.
"The Chinese in particular have been very active in looking in Australia," said Peter Buck, managing director of Breakaway Resources NL (BRW.AX), which is looking for nickel about 700 kilometres (430 miles) east of Perth and also seeking partners.
Chinese nickel refiner Jinchuan Group has spent millions bying strategic stakes in Australian nickel miners, including Allegiance Mining AGM.X and Fox Resources Ltd (FXR.AX).
WESTERN WANTS FERRAUS
Chinese lead and zinc miner Western Mining Co (601168.SS) said on Monday it was buying 10 percent of FerrAus Ltd (FRS.AX), which is developing an iron ore mine in Australia, for a minimum of A$15.5 million.
Also on Monday, Chinese steel mill Shougang proposed buying 19.99 percent of another iron ore prospector, Prosperity Resources Ltd (PSP.AX).
Chinese Iron and Steel Group plans to lift its stake in Apollo Minerals Ltd (AON.AX) to 19.9 percent, while Chinese steel trader Sinosteel wants to buy outright Midwest Corp Ltd MIS.AX, another explorer.
Sandfire Chairman Miles Kennedy said the placement would give his company the funds to accelerate exploration for manganese, lead, zinc, silver, iron ore and gold in Australia and also pursue opportunities abroad.
Posco had already been named as the company's marketing agent in South Korea, he said.
"This alliance will give us the financial, technical and corporate backing of one of the world's leading consumers of carbon steel materials," Kennedy said.
Worldwide, iron ore prices have risen six years straight, jumping 65 percent for some miners in 2008 alone, thanks to an appetite among Chinese steel mills for imported ore required in the initial stages of steelmaking.
A tonne of nickel MNI3 that cost about $6,000 a tonne six years ago, now sells for $28,000.
Sandfire stock rose as much as 9.5 percent to A$0.46 before closing 6 percent higher at A$0.445. Prosperity ended 22 percent up at A$0.195. ($1=A$1.07) (Reporting by James Regan; Editing by James Thornhill)
