S.Korea to offer $1 bln finance to Brazil's Vale

SEOUL, Nov 20 (Reuters) - South Korea will offer up to $1 billion 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 $60 billion 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. The deal comes at a time when global mining giants are cutting production, investment and jobs to ride out a deep global credit crisis. Vale, which also produces nickel, said in recent weeks it would cut iron ore output by 10 percent, or 30 million tonnes, and slow the ramp up of its Goro and Onca Puma nickel projects in New Caledonia in the South Pacific and northeastern Brazil, respectively. Sharply reduced demand for steel from auto to construction has caused iron ore buyers such as ArcelorMittal to cut back production and suspend deliveries of some raw materials, with some companies defaulting on contracts. In China, the world's largest steel producer, iron ore stocks are piling up in major ports and spot prices are trading below long-term contract prices for the first time in years. RENEWED INTEREST 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. A dramatic pull-back in commodities prices in recent months also has triggered renewed interest in mining assets, with POSCO raising its stake in Australian iron ore miner Murchison Metals -- whose share prices fell below A$1 (U.S.$0.6) from nearly A$5.0 in May -- to 12.26 percent from 9.7 percent this week. South Korea, home to the world's No.4 steelmaker POSCO, imported 46 million tonnes of iron ore in 2007. Nearly 70 percent of the imports came from Australia and 23 percent was shipped from Brazil. In a separate deal, state-run Korea Resources Corp, which spearheads Korea's overseas raw materials investments, also signed a memorandum of understanding to cooperate with its Brazilian counterpart, 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.