OneSteel has bought iron ore assets in South Australia including Peculiar Knob from WPG Resources for $346 million, as it continues its focus on the iron ore export market.
OneSteel has also said it will also expand its export port facilities at Whyalla at a cost of $200 million, bringing capacity up to 7 million tonnes. With South Australian premier Mike Rann saying the work is due to be completed by the end of the year.
OneSteel chief executive Geoff Plummer said the company was aiming to maximise the opportunities from its port facilities at Whyalla.
"Progressing these two initiatives simultaneously delivers a significant step up in our port capacity and iron ore sales, including enabling us to leverage our existing infrastructure to deliver high grade ore to the market quickly to take advantage of current iron ore prices,” he said.
Mr Rann told the ABC the investment flies in the face of Opposition Leader Tony Abbott’s view that Whyalla would become a ghost town under the planned carbon tax.
OneSteel Whyalla steel plant CEO Mark Parry said the planned purchase was part of a strategy to boost the focus on exports just days after rival BlueScope announced plans to dramatically cut its export manufacturing business.
"I think for Australia generally the manufacturing environment is a difficult one and opportunities and options such as this certainly give us that opportunity to diversify away from just being a manufacturing business," he said.
"We can’t continue to run a manufacturing business that’s running at a $185 million loss."
The takeover of WPG’s iron ore assets is expected to be completed in October