Korea revs up WA investment

A $40 BILLION liquefied natural gas supply contract has crowned a sustained investment push into Western Australia by South Korean companies determined to shore up their long term supplies of key commodities.

State-owned Korea Gas Corporation this week agreed to buy 1.5 million tonnes of LNG annually from Chevron’s proposed $25 billion Wheatstone LNG plant near Onslow for 20 years.

Chevron did not disclose the contract value, but based on its recent $90 billion, 20-year deal to supply 3mt annually to Japan from Wheatstone, the Kogas contract would notionally be worth more than $40 billion.

The Kogas deal is its second with the Wheatstone project, after signing up as a foundation customer late last year and taking a direct 5 per cent interest in the project.

The deal cements South Korea as a major supporter of WA’s LNG industry, following Kogas’ first Australian LNG supply deal with the Woodside-operated North West Shelf in 2003, and a 20-year supply deal with Chevron’s Gorgon project last year.

South Korea has also been aggressively growing its presence in WA’s mining sector through giant steel maker Posco, amid increasing competition from China and Japan for new long-term supplies of raw materials.

Posco first moved into the Australian iron ore sector in 2001 via a direct 20 per cent interest in the main deposit at BHP Billiton’s Area C mining project in the Pilbara.

But Posco this week scored its biggest local investment since then with a $182 million deal to buy a 24.5 per cent interest in the $5.7 billion West Pilbara iron ore project planned by Perth’s Aquila Resources.

Posco will acquire the stake from private US miner AMCI, which holds a 50 per cent interest in the project and has been seeking a buyer since June last year.

Posco has a long-standing relationship with AMCI as a co-investor in Brian Gilbertson’s Pallinghurst Resources, which is poised to emerge with 85 per cent of WA manganese and iron junior Jupiter Mines. Posco bought an initial stake 13 per cent stake in Jupiter late last year.

Posco this month also boosted its stake in Mid West iron ore miner Murchison Metals to 13.9 per cent, making it the largest shareholder in the half-owner of the $4 billion Oakajee port development and Jack Hills iron ore project.

In January, Posco also agreed to earn a 15 per cent stake in Gina Rinehart’s $7.2 billion Roy Hill iron ore project in the Pilbara, slated to start production in 2014.

Investing in early stage exploration has also delivered it a strategic 17 per cent stake in Sandfire Resources and its rich DeGrussa copper-gold deposit, situated about 150 kilometres north of Meekatharra.

Furthermore, Korean industrial conglomerate Samsung last year agreed to take a two per cent stake in Perdaman’s planned $3.5 billion Collie urea project for which it is lead engineer.