A deal between Korean steel producer, POSCO (NYSE: PKX; KS: 005490), and Etna Resources Inc. (TSX VENTURE: ETN) is set to double the steel company’s investment in non-ferrous metals this year.
With the price of Lithium rising, due to its use in portable electronics, and electric vehicle production ramping up, investment in lithium production looks like a sure bet for POSCO.
Etna Resources’ letter of intent for the deal with POSCO is worth CDN $5 million.
POSCO, the Pohang Iron and Steel Company, is registered on both the New York Stock Exchange and the Korea Stock Exchange. It is the second largest steel producer in the world, by market value. Etna Resources, Inc. trades on the Canadian Venture Exchange. Etna Resources, Inc. is soon to be renamed Pan American Lithium Corp. (TSX.V: PL).
Seeing the non-ferrous metals Lithium and Magnesium as “the new growth engines for the next generation of the company,” POSCO CEO Joon-yang Chung also signed a letter of understanding to build a magnesium refinery in Gangwon Province, South Korea, last November. Building the refinery should save the company some USD $30 million by producing magnesium ingots locally, over importing them from China.
POSCO has 30 days to complete its due diligence on Etna Resources’ lithium properties. The CDN $5 million funding covers the Etna Phase One development costs for the exploitable mineral brine recovery at the Cierro Prieto Geothermal Plant, 30 km south of Mexicali, Baja California, Mexico.
According to a report at Axcessnews, the rights to this site were optioned by Etna Resources in Q4, 2009, when the annual recoverable minerals were estimated at between $450 to $500 million. There are six square miles of existing sequential evaporation ponds where the brines are recovered and the metals concentrated to almost twelve times original salt content.