FINEX Export
According to industry sources on Nov. 2, POSCO is in a quandary over whether or not to export FINEX technology.
Recently, the Korean Association for Industrial Technology Security (KAITS) approved POSCO’s plan to export FINEX technology to China’s Chongqing Iron & Steel Group. However, POSCO is still considering whether or not to proceed with the plan.
FINEX is a new steel-making technology developed by POSCO with more than 300 billion won (US$264.67 million) of investment in research and development. Unlike conventional blast furnaces, which requires the process of sintering and coke making that makes powdery forms of iron ore and bituminous coal solid to make iron molds, it eliminates unnecessary steps and allows the direct use of powdery forms of iron ore and bituminous coal as feed stock. Since such technology allows the company to reduce investment and production costs and pollutant emissions, Chinese and Indian companies are requesting technology export.
POSCO signed an agreement with Chongqing Iron & Steel in 2013 to build a 3 million ton FINEX steel mill in China. Also, the company signed a similar agreement with India’s steel firm Uttam Galva Steel, Ltd. Following the permission beforehand from Chongqing City in July, POSCO recently got approval from the Korean government as well. Since FINEX technology is currently categorized as a national core technology in the steel sector, approval from KAITS is required for export, according to the Industrial Technology Outflow Prevention and Protection law.
Unlike the general technology export case that transfers a technology and receives royalties, POSCO needs to establish a joint company with overseas partners to jointly produce and manage blast furnaces.
POSCO is hesitating to push ahead with the plan, because the world steel oversupply problem has worsened compared to 2013, when the company signed a memorandum of agreement (MOA) with China’s Chongqing Iron & Steel. It previously planned to set up a low cost production system in an emerging country with overseas facility expansion and technology transfers. However, there will not be many profits now.
POSCO’s investments are expected to drop from 5.39 trillion won (US$4.76 billion) last year to 3.3 trillion won (US$2.91 billion) this year. Also, its new investments will be injected into the “sub-process” business, such as product competitiveness improvement and overseas market expansion.