POSCO's New
Plant in China

Giant steelmaker builds steel production network linking Korea, China, Vietnam, and India

POSCO dedicated officially its Zhangjiagang Pohang Stainless steel Plant's integrated production system in Zhangjiagang, Jiangsu Province, China, Nov. 22, with dignitaries from both Korean and Chinese sides attending among some 1,500 participants. Among the dignitaries were POSCO Chairman & CEO Lee Ku-taek and Wang Rung, Standing Commissioner of Jiangsu Province, and Director-General Lee Jae-hoon of the Ministry of Commerce, Industry and Energy.
Chairman Lee, at the dedication ceremony, said the new plant facilities will help us to be in line with the Chinese government's policies to reduce steel imports as it has the capacities to turn out high-quality hot-rolled STS plates, which were largely imported from foreign countries. He said POSCO will keep pursuing steel business in the direction of helping joint development the steel industries in both Korea and China.
POSCO invested total of $720 million in the integrated production system including an electric-furnace and installations to make 600,000 tons of steel plates per year.
Zhangjiagang Pohang Stainless Steel, the largest production base of POSCO in China,
began to operate its first cold-rolling lines in 1977 with an annual capacity of 200,000 tons, and added another 200,000 tons in 2003 by rolling out the second line. The new addition of the 600,000 ton annual capacity of hot rolling, a process that precedes cold rolling, made POSCO the first foreign steelmaker in China to establish a local STS integrated production system. The Korea-based company's accumulated investment in Chinese units including that for the Qingdao Pohang STS, is now estimated over $1 billion. The new IPS, which is a testimony to POSCO's unique expertise in environment-friendly, cost-efficient steelmaking technologies , is seen by POSCO as aligned with the new industrial policy direction set by the Chinese government, and is expected to establish new win-win business models with the other players in the Chinese steel market.
POSCO expects the new IPS plant to contribute greatly to the competitiveness of its Chinese units by providing them with a stable supply of hot-rolled products, which they need to be able to meet the heightened demands for STS products in Zhangjiagang and Qingdao. The demand for STS products in the Chinese market is increasing 10 percent annually on average.
The IPs plant in Zhangjiagang raised POSCO's total annual STS production capacity to 2.6 million tons, enhancing the company's profile as the third largest STS maker, following China's Taiyuan Iron and Steel Co.(3 million tons) and Germany's TKS(2.82 million tons).
Thanks to this latest addition, POSCO is expected to strengthen its presence in Asia as a leading STS supplier, as well as to boldly confront the ongoing changes in the global steel industry, such as the consolidation of major steel companies.
Chairman Lee said POSCO plans to build a steel production belt linking Pohang, Gwangyang, China, Vietnam and India, adding that the company plans to invest $1.13 billion in Vietnam to build a cold and hot-rolled steel production plant under a policy to make the company's operation global, not limited to domestic operation. During his meeting with Korean reporters in Hanoi, where he arrived after inspecting a site to build a steel plant near Ho Chi Minh City in Vung Tao.
On possible M&A with POSCO by global steel companies like Mittal, which has acquired Arcelor Steel early this year, he said it is just a theory, impossible actually, and "we will not let it happen,"he said. But he warned that the company cannot afford to just watch it since it is the trend in the world steel industry. "We have to watch the trend with a keen eye, as if it could happen to us,"he said.
He said POSCO has to be prepared to defend itself from such moves by strengthening the synergy between POSCO's steel mill in India, the Zhangjiagang STS Plant, and the projected STS plant in Vietnam and its home-base in Pohang and Gwangyang.
The POSCO chairman also said the mutual stakeholding exchange agreement with New Nippon Steel would make up a very good defense mechanism against hostile M&A attempts.
India's steel plant will be completed in 2010, following the Zhangjiagang STS plant and Vietnamese steel plant also is to be completed in 2009, forming an Asian belt of operation for POSCO, making it a global steelmaker. nw

(above photo) POSCO Chairman Lee Ku-taek,left, and Wang Rung, Standing Commissioner of Jiangsu Province in China at the dedication ceremony of POSCO's Zhangjiagang Pohang Stainless Steel Plant in Jiangsu Province. A view of the POSCO's new stainless steel plant.