Ratings agencies Standard & Poor and Moody Investors Service have offered tacit support for Gina Rinehart Roy Hill iron ore project in the Pilbara by applauding a move by South Korean steel giant Posco to further invest in the development.

Although both S&P and Moody's warned that the proposed USD 1.5 billion buy in to boost POSCO stake in Roy Hill from 3.75 per cent to 15% would further weaken the steel giant's balance sheet, they talked up the strategic rationale for the deal.

Moody said "The transaction will considerably enhance POSCO iron ore self-sufficiency and its cost competitiveness. S&P added that POSCO increased stake in Roy Hill was a core investment and can enhance POSCO medium term cost position."

POSCO board agreed recently to increase its stake in Roy Hill in line with a two year old agreement with Ms Rinehart. Although neither ratings agency was asked to discuss Roy Hill's viability, their support for POSCO investment should also prove a fillip for Ms Rinehart.
(Sourced from thewest.com.au)