TAIPEI, Taiwan, Feb. 22 (UPI) -- China Steel Corp., Taiwan's biggest steel producer, plans to invest in a coal mine in Australia.
Under the terms of the deal, China Steel will pay Australian miner MCG Group $108 million for a 10 percent stake in the coal mine known as MDL162 in Queensland's Bowen Basin, the company announced this week.
Of the $108 million, $53 million will go toward acquiring the 10 percent stake in MDL162, with the remaining $55 million to be used as working capital for future plant construction and further exploration of the mine.
China Steel will get up to 600,000 tons of metallurgical coal a year from the mine, which the company said it will ship to Taiwan for domestic consumption. Metallurgical, or coking, coal is used for steelmaking.
The mining site is expected to be operational in 2016, the International Business Times reports.
Separately, the Taiwanese steel company said it was raising domestic steel prices for April and May an average of 1.11 percent, citing a global recovery in steel prices along with a relaxed financial environment in China, one of Taiwan's top export markets.
The global steel market "has shown signs of bottoming out," China Steel said in a statement. "[Taiwan's] downstream industries have resumed taking new orders from both local and overseas clients because of an improving international political/economic environment and rising global steel prices."
China Steel's price hike is the company's first in five months. It was preceded by price cuts averaging 7.08 percent for domestic deliveries of steel this month and last month as rising uncertainty in the global economy slowed demand for steel and triggered price cuts worldwide.
In announcing the price cuts last November, the company said cheap steel imports "have disrupted the order in the domestic market and damaged the interests of all Taiwanese steelmakers."
The Taiwan Steel and Iron Industries Association in December said it expects the steel sector to benefit from massive public work projects planned for the country, particularly beginning in the first quarter of this year.
China Steel has been exploring overseas acquisitions, as it aims to increase supply amid growing demand. Aside from Australia, it has strategic investments in Brazil and South Korea.
Currently the company imports 20 million metric tons of iron ore, also used for steelmaking, each year from Australia and Brazil.