POSCO AGREES TO PAY RIO TINTO 80 PCT MORE FOR IMPORTED IRON ORE

July 1, 2008

July 1st (Trading Markets) – POSCO (KSE:005490), the world’s fourth-largest steelmaker, said Tuesday that it has agreed to pay Australian miner Rio Tinto (ASX:RIO) 80 per cent more for iron ore supplies, heralding another increase in steel prices.

The deal, retroactive to the contract that began on April 1, follows a February agreement with Brazilian mining company Vale under which the South Korean steelmaker agreed to pay 65 per cent more for iron ore.

POSCO said it is still in talks with another Australian miner, BHP Billiton, for an increase in prices of iron ore.

Shares of POSCO were trading at 544,000 won on the Seoul bourse as of 11:17 a.m., unchanged from the previous session’s close.

Prices of iron ore, from which metallic iron can be economically extracted, have been soaring as demand shows no sign of abating.

Increased iron ore prices could squeeze margins for steelmakers, which are already facing increasing costs for coal and coke.

In order to reflect the increased prices of raw materials such as iron ore and coal, POSCO is expected to consider an increase in the price of steel products in the coming months.

Last week, POSCO said it plans to raise prices of steel products starting from this month to cover rising costs of raw materials, its third hike this year.

In February and April this year, POSCO raised its prices for hot-rolled steel and cold-rolled steel by more than 10 per cent, citing the same reason.

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