UPDATE:Posco CEO: Steelmakers Won't Welcome BHP-Rio Tinto JV
June 09 2009 - 7:26AM
Dow Jones News
Steelmakers globally will not welcome a planned iron ore joint
venture announced last week by miners Rio Tinto PLC (RTP) and BHP
Billiton Ltd. (BHP), the chief executive of South Korean steelmaker
Posco (PKX) said Tuesday.
"The BHP-Rio joint venture is not positive for the steel
industry and they (steelmakers) will oppose the proposed plan,"
Chung Joon-yang told reporters on the sidelines of an annual steel
industry event.
His remarks follow a statement earlier Tuesday by the China Iron
and Steel Association that said it strongly opposed the joint
venture. "The joint venture agreement goes in the direction of a
monopoly," the association said in a statement on its Web site.
The association suggested China should have a say in global iron
ore trading as it is Australia's largest customer for iron ore
exports.
Chung added that the second quarter will likely be the most
difficult period this year for Posco, the world's fourth-largest
steelmaker by output.
But the company expects steel demand to start to recover from
the second half of this year, he said.
Posco's net profit in the first quarter fell by 69% to KRW325
billion from KRW1.031 trillion a year earlier due to weak demand
and high costs.
Chung also said that the company continues to be in talks with
BHP and Brazil's Vale S.A. (VALE) on iron ore prices. Chung added
that he expects to conclude talks with BHP at price levels similar
to those reached with Rio Tinto.
Rio Tinto, the world's second-largest producer of seaborne iron
ore, recently finalized deals with Posco, Taiwanese steelmakers
China Steel Corp. and Dragon Steel Corp. and Japan's Nippon Steel
Corp. to cut 2009-10 iron prices by 33% to 44%.
Vale and BHP are the world's biggest and third-biggest producers
of seaborne iron ore, respectively.
Chung added that Posco has no plans to acquire companies
involved in raw materials for the industry for now.
-By Kyong-Ae Choi, Dow Jones Newswires; 822-2198-2236;
kyong-ae.choi@dowjones.com