Roy Hill iron ore mine in Pilbara, Australia (Posco)
South Korea’s top steelmaker Posco will receive 150 billion won ($133 million) in dividends from Roy Hill Holdings, the developer of Australia’s largest single iron ore mine, officials said Monday.
With the dividends to be paid out next month, Posco will have secured 270 billion won in total from its preemptive investment in the Australian mine.
As Australia’s largest single mine, Roy Hill comprises an iron ore reserve of 2.3 billion tons and accounts for 55 million tons in annual export volume -- positioning it as the world’s fifth-largest exporter of iron ore.
In a consortium to develop the mine, Posco injected 1.3 trillion won in 2010, seeking to stabilize its iron ore supply and hedge on material costs. Its investment accounted for 12.5 percent of shares, standing next to US-based real estate brokerage Hancock, which holds 70 percent.
As the price of iron ore fluctuated in the following years, concerns were raised over profitability, but Posco sustained its investment without faltering. From 2017, Roy Hill Holdings saw its operating profit improve drastically and paid out its first dividends to shareholders in the third quarter last year.
Currently, Posco is securing a stable supply of 15 million tons per year, which translates into 26 percent of its annual consumption.
Meanwhile, the Korean steelmaker is carrying forward five other iron ore investment projects across the globe, securing more than 40 percent of its annual supply from overseas suppliers.
By Bae Hyun-jung (email@example.com