POSCO E&C, a construction arm of steelmaker POSCO, said Friday it has signed a memorandum of understanding with a mineral explorer to develop a large vanadium mine in Australia’s Northern Territory.

The company said the deal reached late last week with Australian mineral resource developer TNG calls for joint feasibility studies to be conducted at the Mount Peake mine.

Once a decision is made to move forward, POSCO E&C will take part in the construction and engineering aspects of the project.

The builder said preliminary on-site studies to determine the commercial value of the project were concluded in 2012, with partnership talks between POSCO E&C and TNG beginning in earnest late last year. The mine is estimated to have 118 million tons of vanadium.

Vanadium is used to produce specialty steel alloys that are resistant to abrasion, and to make vanadium pentoxide, a catalyst for the manufacturing of sulfuric acid.

A company source said that the MOU outlines a thorough feasibility study that will be carried out before any final decision is made on construction and development.

Mount Peake is 235 kilometers northwest of Alice Springs and is close to existing power and transport infrastructure, including a railway and LPG pipeline. Besides vanadium, the mine contains titanium and iron. (Yonhap)