Australian iron ore miner and steelmaker Arrium today rejected an unsolicited $1-billion takeover offer from an Asian consortium led by Hong Kong-based commodities giant Noble Group, South Korean steelmaker Posco and others.

In a filing with the Australian Securities Exchange, Arrium, formerly known as OneSteel, said that after the market closed on Friday it received an unsolicited proposal from a consortium comprising of Noble, Posco, the National Pension Service of Korea, Korea Investment Corp and Korea Finance Corp.

''The proposal was stated to be conditional, incomplete and non-binding,'' Arrium said in the filing. "We also believe that the highly conditional nature of the proposal carries significant risk," it added.

The consortium's conditions to the offer include a six-week due diligence period, negotiations with existing lenders, no dividend payment, and no material adverse change to the company's operations or capital structure.

The consortium has offered A$75 cents a share, 8 per cent higher than Arrium's three-month average stock price. Arrium share price closed at A$54.5 cents on Friday.

Arrium's shares were as high as $1.36 in May, before the iron ore price started to decline due to the global economic crisis that has affected steelmakers and in turn iron ore miners.

Arrium said in the filing, ''Arrium's board and its advisers have carefully reviewed the proposal. The board believes that the proposal undervalues Arrium in the context of a change of control transaction.''

Analysts believe that the consortium has deliberately made a low-ball offer and will come back with a higher bid.

Sydney-based Arrium, which was spun out from BHP Billiton in 2000, changed its name from OneSteel in July after shifting its focus from steel making to iron ore production.

With a turnover of $7.6 billion and debt of A$2.78 billion, Arrium was almost entirely an Australi- focussed steel manufacturer and distributor.

The company later focussed on growing its resource based businesses and now has significant mining and mining consumables businesses, as well as steel and recycling business.

Arrium currently exports approximately six million tonnes of iron ore to China annually from its Middleback Ranges mining operation in South Australia. The company expects to increase its export sales to around 11 million tonnes per annum by mid-2013 by bringing on-line additional sales from its Southern Iron operations in South Australia and the doubling of its port capacity at Whyalla, South Australia to approximately 12 million tonnes per annum.

Arrium's mining consumables includes Moly-Cop grinding media, the world's largest supplier of grinding balls and grinding rods  for theglobal mining industry, particularly the copper, gold and iron ore sectors.

The business has leading market positions in South America, North America and Australasia supplying around 950 thousand tonnes per annum.

Its steel and recycling business includes the integrated OneSteel business, which is a leading manufacturer of long steel products, structural pipe and tube, and wire products in Australia. It is also a leading distributor of structural steel and reinforcing products in Australia with around 200 sites across the country, and a significant supplier of scrap metal to foundries, smelters and steel mills in Australia and internationally.

Since 2000, Arrium has acquired scrap metal company Smorgon Steel for $1.2 billion, Chile-based forged steel grinding balls producer Moly-Cop and Canada-based producer of ball stock for forged grinding balls AltaSteel for a total of $932 million, and WPG Resources iron ore assets for an around A$320 million.

With steel being an underperforming asset of Arrium, the consortium is more interested in the company's iron ore business.

Arrium's chairman Peter Smedley said that the bid is opportunistic since it sought to take advantage of the recent decline in iron ore prices.

The spot prices for iron ore has risen to $104.20 a tonne yesterday from a low of $86.70 in the first week of September, but still down from around $170 a tonne a year ago.

Noble, which is interested in Arrium's iron ore mining assets, is keen to lower its dependence on lower grade iron ore sourced from India, while Posco wants to be self reliant on the mineral required for steelmaking.

Posco, which uses the Finex direct injection blast furnace steel-making technology at its plants in Korea, has deliberately asked for a lengthy due diligence period since it wants to know whether the costs saving Finex technology could be adapted at Arrium's Whyalla steel facility