Burgeoning
POSCO-NSC Tie-Up
Two steel makers decide to extend tie-up for another 5 yrs

POSCO and Nippon Steel Corp. have decided to extend their strategic tie-up for another 5 years recently.
Both steel makers agreed that their cooperation under the agreement in the last five years has been exceeded their expectations in many areas including R&D, technology exchange, and raw material purchase, among others, and thus the tie-up should be extended.
They set up a steering committee co-chaired by vice presidents of their companies with an expert committee and working group under the committee. They purchased some shares of each other companies following the signing of the agreement in August, 2000.
The two companies jointly conducted research on 11 technology themes, including specially the technology to use low-cost raw material, the treatment of waste water and its recycling. They applied for patent rights for many technologies they have developed jointly.
The Steering Committee operated a working group which conducted research on various areas including production, environment, quality and cost reduction related to environment. In the past five years, the group met for over 150 times with more than 2,000 people taking part in those meetings, vastly raising the quality of steel.
Their joint projects stretched over to finding low-cost, but good quality coal and iron ores around the world. The joint work included joint investments in coal mines in Australia and Canada. They together provided funds to iron ores mines to expand in Australia and India.
They also succeeded in computerizing documents for purchase of raw material and jointly operated it. The two steel makers also increased their stakes in Siam United Steel in Thailand and upgraded their participation in managing the SUS with admirable results.
The two steel makers also cooperated in the engineering sector, especially in the production technology. They conducted the inspection of the system over four times with considerable results.
They allocated time for training manpower under the cooperative tie-up arrangement under which they each dispatched 20 personnel to each other's steel plants. They also exchanged the technology related to expanding new demand for steel by sharing work on steel houses and steel cans.
At the present time, POSCO has 2 percent share of NSC, while the Japanese steel maker holds about 3 percent of POSCO's share, becoming large shareholders of each company.
The two firms plan to expand their cooperative ties in other fields also depending on the trends of the steel industry and market conditions around the world to boost their growth.
Question and Answer on the cooperative tie-up:
Question: What are the limits of technology exchange and joint research under the tie-up?
Answer: The technology exchange will be limited to those related to production process and joint research will be focused on environmental technology.
Q:What are real results from technology exchange?
A:Technology exchanges have been made at work sites mainly. For example, NSC imported a German-made mud gun used by POSCO, contributing to cost reduction.
Q:Does cooperation in production indicate cooperation expansion into marketing and production together?
A: Cooperation has been limited to the production sector, without having been expanded to the marketing area.
Q:Would there be joint investment in capital and integration of business in the future?
A: The strategic tie-up has been working very well for both steel makers so far. There are no plans for cooperation in capital investment and integration of business.
Q: Would there be increases in each other's stakes in each other?
A: There is no such plan at the present time.
Q: What's in the future for the cooperative tie-up?
A: The two partners plans to deepen their current tie-up and add more substances if they benefit both. nw

Chairman Lee Ku-taek of POSCO.