Iron ore miner Vale signed a preliminary deal to jointly build an intergrated steel mill in Brazil with South Korean steelmakers Posco and Dongkuk Steel.

The plant, which is expected to be 50% owned by Vale, 30% by Dongkuk and 20% by Posco, seeks to produce 3Mt/y of steel once it is built in 2014, Dongkuk said in a statement. The mill, to be located in Brazil’s Ceara state will eventually have a capacity of 6Mt/y.

The plant will serve as a bridgehead for Posco to advance into the North and South American markets, a spokesperson said, adding that the plan is subject to board approval.

Vale has been under pressure from President Luiz Inacio Lula da Silva to create more jobs in Brazil by investing in steel projects, a business in which Vale said it did not want to be a majority stakeholder because it puts it in direct competition with its clients, steel mills.

Although Vale has been aggressively diversifying its activities away from iron ore into other minerals it still sees its core business as iron mining, not steelmaking.