POSCO is poised to exploit Colombia’s iron ore and coal deposits as it ratchets up efforts to ensure steady supplies of raw materials and lay a firm footing in the fast-expanding Latin American market.

The country’s top steelmaker clinched a deal on Thursday in Seoul to set up a joint venture with Blue Pacific Assets Corp. of Colombia as early as later this year to extract iron ore and coal there. POSCO did not provide details on the value of the project.

POSCO said it has also agreed with Fanalca S.A., a Colombian auto parts producer, to establish a plant to manufacture large-diameter steel tubes in Latin America’s fourth-largest economy. The two firms aim for an annual capacity of 200,000 metric tons.

“POSCO will provide a springboard for Colombia’s industrial and economic development,” said Chung Joon-yang, POSCO chief executive.

“We will take the lead in cooperation between Korea and Colombia on economy, culture and other areas.”

Through the projects, the world’s fourth-largest steel mill seeks to boost raw materials supplies for its steelmaking operations and fortify its presence in the Latin American region, while paving the way for its subsidiaries to embark on infrastructure projects.

POSCO is currently working on projects in Bolivia, Chile and Brazil to drill resources such as lithium and niobium.

It estimates demand for steel pipes at 200,000 metric tons in 2015, versus last year’s about 30,000 metric tons, driven by brisk energy projects underway in Colombia and nearby Ecuador, Peru and Bolivia.

The deals come on the sidelines of Colombian President Juan Manuel Santos Calderon’s three day visit to Seoul, which aims at strengthening economic and diplomatic ties.

“I’m pleased to draw investment from POSCO, which is a global steel company, for Colombia’s continuous growth,” Santos said at a signing ceremony, promising his government’s concrete support.

Later in the day, the two countries reached an agreement for a $10 billion project to develop oil mines and related facilities and shipping centers in Colombia, the Ministry of Knowledge Economy said.

Under the deal, Korea and Colombia will explore crude fields in Llanos grasslands, eastern Colombia, and build pipelines to the country’s western coast to ultimately ship to Korea and other Asian markets.

Colombia is believed to own oil reserves of 1.9 billion barrels, but it exports almost all its daily output of 267,000 barrels to the United States.

The ministry said it plans to launch a working group with public officials and industry professionals to nail down details for the project by November and carry out a joint feasibility study with Colombia later this year. Participants include the state-run Korea National Oil Corp., which is at present engaged in 10 oil exploration projects in Colombia.

The two governments inked a separate deal to help revamp electricity supplies in the Latin American country as it seeks to rev up its power production to 16.2 gigawatts from 13.5 gigawatts by 2014, according to the ministry.

By Shin Hyon-hee (heeshin@heraldcorp.com)