Ferrowest up 14% on Donbu Steel MOU

Shares in Belmont-based Ferrowest Ltd were up 14 per cent today after the company agreed to consider a supply deal to South Korean steel manufacturer Dongbu Steel, in exchange for its consideration of investment and other forms of support for the project.

The company was trading at 65 cents at close of trade today.

The full text of a company announcement is pasted below

• The Company is pleased to announce that it has executed a Memorandum of Understanding with Dongbu Steel Co., Ltd. ("Dongbu"), a high quality steel manufacturer with three steel works currently in operation in South Korea.
• Dongbu is seeking a long term supply of approximately 250,000tpa of merchant pig iron ("MPI") as feed stock for a new 2.8Mtpa electric arc steel plant that is currently under construction adjacent to Dongbu's existing Asansteel works, just to the south of Seoul.

250,000tpa is 50% of the proposed initial annual production from the Yalgoo Iron Project.

• Under the terms of the MOU, Dongbu and Ferrowest will consider the long term supply of MPI to Dongbu and Dongbu will consider investment and other support to assist in advancing the Yalgoo Iron Project.
• Dongbu intends to engage Korean Resources Corporation (a state owned organisation charged with identifying and securing key mineral resources for Korean companies) to review the Yalgoo Iron Project.
• The MOU is non-binding and non-exclusive, with Dongbu being one of a number of parties holding discussions with Ferrowest at this time about securing MPI product and investment in the Yalgoo Iron Project.
• As a manufacturer of the highest quality steel products, Dongbu has a need for MPI to supplement scrap iron feed to its electric arc furnace operations. The high quality iron units provided by the MPI will average down contaminants introduced from the scrap iron feed stock and allow Dongbu to make high quality hot rolled coils.