S.Korea to Offer $1bn Finance to Brazil's Vale

South Korea will offer up to $1bn of financing to Brazilian iron ore miner Vale as the resource-hungry Asian country beefs up its interest in mining projects, a state-run bank said on Thursday.

The deal, agreed during South Korean President Lee Myung-bak's visit to Brazil, would help the world's largest iron ore miner fund its $60bn spending planned over the next five years, as it faces falling iron ore prices and tumbling demand from steelmakers amid fears over a deep global recession.

"The agreement will allow us to share information on mining projects with a top-class global company and is also expected to bolster South Korean firms' participation in raw material projects in South America," the state-run Export-Import Bank of Korea said in a statement.

South Korea, home to the world's No.4 steelmaker POSCO, imported 46 million tons of iron ore in 2007, and 23% of the import came from Brazil.

The deal may give Vale, which also produces nickel, an edge over its rivals, as global mining giants are cutting production, investment and jobs to ride out a persistent global credit crisis.

Vale said in recent weeks it would cut iron ore output by 10 percent, or 30 million tons, and slow the ramp up of its Goro and Onca Puma nickel projects in New Caledonia in the South Pacific and northeastern Brazil, respectively.

In a separate deal, state-run Korea Resource Corp also signed a memorandum of understanding with its Brazilian counterpart to expand cooperation in mining, the presidential Blue House said in a statement.

Currently South Korea is participating in 19 raw material projects in five South American countries, including gas and liquefied natural gas ventures by SK Energy in Peru.

South Korea has become more aggressive in going overseas to secure raw materials, as prices of commodities from oil to grains and iron ore soared to record highs earlier this year, risking growth and fanning inflation worries in Asia's fourth-largest economy.

On Wednesday, trading company Daewoo Logistics said it would develop farmland covering 1.3 million hectares in Madagascar, an area larger than Qatar, to plant corn and palm oil, reflecting Asia's latest push to secure stable grain supplies from overseas.

Reporting by Miyoung Kim, Reuters.