Arrium spurned billion dollar bid on expectations of iron ore rebound

Aussie iron ore miner and steelmaker Arrium (ASX:ARI) has stated publicly that it spurned a $1 billion takeover bid from a Korean consortium due to expectations of a rebound in iron ore prices.

The Australian Financial Review reports that Arrium CEO Geoff Plummer believes the bid led by South Korean steel titan Posco was timed to coincide with the iron ore price plunge, and that the offer was grossly undervalued as spot prices are set to revive.

"The iron ore prices have come back almost exactly USD$20 since those lows and I think most people still forecast further strengthening" said Plummer.

Arrium, which officially changed its name from OneSteel in July, engages in both iron ore mining and the production of steel and mining consumables, and has invested heavily in mines on South Australia's Eyre Peninsula over recent years.

Arrium announced its rejection of the bid last week on the grounds that it was undervalued and conditional.

Plummer also says that a doubling of production by the South Australian mines will shore up the company's prospects even in the event that iron ore prices remain weak.