South Korea's POSCO to Invest in Australian Coal

South Korea's POSCO the world's fourth-largest steel maker, said on Tuesday it may invest in Macarthur Coal, raising the possibility of a bidding war for the Australian miner, already in talks with ArcelorMittal.

"We have expressed an interest in buying a stake in Macarthur but that hasn't developed into formal talks as we've received no response from them," a POSCO spokesman told Reuters.

The Australian Financial Review reported on Tuesday that POSCO may be looking for a stake in Macarthur.

In response to media speculation on the company's suitors, Macarthur said it was in talks with ArcelorMittal.

"The company advises that the discussions with ArcelorMittal are continuing. The board will continue to advise shareholders of any future relevant developments in those discussions," it said in a statement.

Arcelor, the world's top steelmaker, bought a 14.9% stake in Macarthur for $604m last month and has been holding talks on an unspecified new transaction with the Australian firm.

Soaring coal prices, driven by tight supply and voracious demand from fast-industrialising China and India, have put Australia's mining sector in play amid a global resources grab.

Macarthur supplies steelmakers with more than one-third of the world's pulverised coal, making it an attractive target at a time when steel prices are red hot.

Major shareholders of the Australian group include its top shareholder Ken Talbot, who has been gradually selling off his stake of around 24%, and China's state-owned CITIC Resources Holding with a 17.66% stake.

The purchase by ArcelorMittal last month scared off another potential bidder who had approached JP Morgan, the bank advising on the sale of Talbot's stake.

JP Morgan has not said who has approached it but a banker at a rival investment bank said Xstrata, Anglo-American, Peabody Energy and Vale had all put offers on the table in the past.

Shares in Macarthur closed up 3% to A$20.4 and POSCO closed up 0.4% at 553,000 won.

POSCO aims to boost self-sufficiency in raw materials such as iron ore and coking coals to 30% from around 20% by 2012 by investing in global mining projects.

Miyoung Kim and Jonathan Standing, Reuters