POSCO's Mexican Operation

Steel maker puts new steel plant on line in Central American country

POSCO, the largest blast-furnace steel maker in Korea, has launched the operation of its 170,000-ton high-grade steel plate processing plant in Puebla, Mexico, on February 8th, the company announced.
Named POSMPC, the steel processing plant aims to supply various steel products in North American steel market, especially to U.S. auto makers including foreign auto makers with plants in the region, including Toyota, Honda, and Hyundai Motor.
The steel maker said it now has secured a bridgehead to supply its steel products in North America, the largest car market in the world, and stopped being just a supplier of steel plates to automakers in the region.
The operation of its Mexican plant meant that the company now has a steel production network linking Japan, China, India and Vietnam. POSCO has been supplying 200,000 tons of steel plates to Mexico annually and the new plant has boosted its capacity to 400,000 tons per year.
Mexico produces 2.2 million cars annually and imports 80 percent of its required steel plates. POSCO said it will supply steel plates that need processing directly to its Mexican plant.
POSCO President Yoon Seok-man at the launching ceremony in Puebla, said many foreign auto makers have plants in the Latin American country, along with 1,000 car parts makers, making Mexico the center of auto production in Central America.
Volkswagen, DaimlerChrysler, GM, Ford and Toyota, all well-known auto makers in the world operate car plants in Mexico. He said POSCO has built the plant to better serve its customers in Mexico.
POSCO, in the meantime, is studying a plan to build a plant to produce steel plates for cars in Altamira on the eastern coast of the Central American country by investing $200 million. The company plans to launch the construction early next year and complete it in 2009 so that it could produce steel plates directly instead of processing them.
POSCO wanted to avoid paying extra tariffs when it exports steel products to the countries signatories to the NAFTA and steel products in Mexico will not be subjected to extra tariffs because Mexico is a NAFTA country. POSCO is able to sell steel products in the United States without paying extra tariffs and also ship its steel products produced in Mexico to Europe. Mexico exports 90 percent of cars to the United States.
The steel maker plans to increase the number of steel processing plants to 25 around the world by adding 11 new steel processing plants this year, raising the volume of steel products processed in those plants to 3.4 million tons annually from 1.8 million tons.
In the meantime, POSCO said it has earned the AHSS super-strong steel quality certification from DaimlerChrysler and will supply more than 20,000 tons of high-grade steel plates to the U.S. auto company from the second half of this year, the steel maker said.
The steel maker has been supplying HSS steel plates to a number of auto makers such as GM, Ford, and Daimler, but this is the first time that the company will supply AHSS steel plates to a foreign auto maker. HSS steel can withstand the pressure of 47 kg per mm2, but AHSS can withstand the pressure of 60 kg per mm2.
POSCO started to work on getting AHSS certification in April last year and went through various tests from August to November last year. Daimler plans to use POSCO's steel plates on its JC49 produced in its plant in Mexico from the second half of the year to have the cross-over model compete with Toyota's Highlander.
POSCO, at the same time, is in the middle of competition with Japan's New Nippon Steel and Germany's Thiessenkrupp Steel to supply AHSS steel plates to Daimler to be used in its new car model to be mass produced starting next year. nw

POSCO President Yoon Seok-man delivers a speech at the dedication ceremony of the Korean steel giant's high-grade steel plate plant in Puebla, Mexico, Feb. 8, together with local dignitaries.