POSCO Receives 150 Billion KRW Dividend from Roy Hill Mine in Q1

Roy Hill Holdings Declares Dividend of 1.17 Trillion KRW
POSCO Receives Dividend Corresponding to 12.5% Stake

[Asia Economy Reporter Hwang Yoon-joo] POSCO will receive a dividend payment of 150 billion KRW from Roy Hill Holdings.

The board of directors of Roy Hill Holdings in Australia resolved on the 25th to pay a quarterly dividend of 1,350 million AUD (approximately 1.17 trillion KRW) for Q1 2021, the highest quarterly amount, based on solid earnings performance. Accordingly, POSCO will receive about 150 billion KRW corresponding to its 12.5% stake in April. Since the first dividend payment of 50 billion KRW in Q3 last year, the total dividends POSCO has received amount to 270 billion KRW.

The Roy Hill mine, located in the Pilbara region of northwestern Australia, is the largest single mine in Australia with iron ore reserves of 2.3 billion tons and an annual production capacity of 55 million tons of iron ore. In 2010, POSCO participated in the development of the Roy Hill mine along with Taiwan's China Steel and other major suppliers to secure a stable supply of high-quality iron ore amid the oligopolistic market of large suppliers. POSCO has invested a total of 1.3 trillion KRW to hold a 12.5% stake and currently receives 15 million tons of iron ore annually from Roy Hill, which accounts for more than 25% of its annual demand.

Since commencing commercial production in 2017, Roy Hill Holdings' business performance has rapidly improved, and last year it fully repaid the 6.2 billion USD loan taken for mine development ahead of schedule. Achieving debt-free management, the company began paying quarterly dividends last year, establishing a stable profit-generating foundation and being recognized as a successful project. In Q1 of this year, with iron ore prices remaining high at 160-170 USD per ton, Roy Hill Holdings' operating profit is expected to reach 1.8 billion AUD. Due to the rising iron ore prices increasing raw material purchase costs, POSCO requested the maximum dividend for Q1 from Roy Hill Holdings, and the major shareholder Hancock actively accepted this, confirming a dividend amount more than double that of the previous quarter.

Meanwhile, POSCO is pursuing iron ore investment projects in six locations including Roy Hill in Australia, Brazil, and Canada. By procuring more than 40% of its annual iron ore demand from five ongoing production projects, POSCO is ensuring stable supply while also partially hedging raw material cost burdens through dividend income and purchase discounts.