November 2, 2012 / 8:25 AM / in 5 years

POSCO consortium open to resuming Arrium bid: source

SEOUL (Reuters) - A consortium including South Korean steelmaker POSCO (005490.KS) may resume $1.2 billion bid talks with Australian mining firm Arrium Ltd (ARI.AX), a source with direct knowledge of the matter told Reuters on Friday.

The consortium, which also includes Noble Group Ltd (NOBG.SI), dropped its A$1.2 billion ($1.2 billion) takeover bid on Wednesday, balking at paying more after the company’s board rejected a sweetened offer.

“If they (Arrium) change their mind and propose talks, the consortium is open to sitting down...Whether or not to resume negotiations really depends on Arrium’s proposal,” the source said, declining to be named as he was not authorized to speak to the media.

The source, however, said the bidding group, Steelmakers Australia, was not planning to mount a hostile bid for the Australian steel and mining firm.

Arrium shares closed up 2.2 percent on Friday, after plunging 12.7 percent the previous session after Steelmakers Australia had said on Wednesday it was “determined it will cease seeking engagement with the Arrium Board.”

“This does not mean that negotiations completely stopped,” the source said. He declined to comment whether Steelmakers Australia would bypass Arrium’s board and talk directly to its lenders.

He also said POSCO, the world’s fourth-biggest steelmaker, is looking at “a couple of coal mines” in Australia for possible investments, without elaborating.

    He said recent asset price declines offer opportunities to snap up resources, but POSCO will cherrypick only “good and sustainable” resources.

    “The asset price slump is expected to be prolonged and POSCO will take time and have a careful look at assets for possible investments,” the source said.

    POSCO aims to double raw material self-sufficiency to 50 percent by 2014 from the 2010 level. POSCO seeks to secure iron ore and coking coal resources which are key steel-making ingredients.

    Reporting by Hyunjoo Jin; Editing by Ron Popeski

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