Picking Up and Moving
The world’s third-largest steel maker is looking to export its steel-making FINEX Plant One after ending its operation, in the wake of kicking off the full operation of its FINEX Plant Three.
Via this move, POSCO is planning to step up its financial restructuring by enhancing profits while at the same time adjusting the domestic steel production volume, as the industry is suffering from a glut of product these days.
A high ranking POSCO associate said on April 21, “The company is to end the running of FINEX Plant One and sell its facilities. We are seeking overseas buyers who seem to be more keen than the local counterparts.”
The company reportedly requested the government’s swift approval for the overseas sale.
FINEX technology was designated as the nation’s core technology and is regulated by the government, so the sale of related facilities overseas needs approval.
The steel behemoth invested 10 years from 1992 and developed the world’s first FINEX technology with Siemens VAI. They finished the construction of the first FINEX plant with demo plant facilities capable of producing approximately 600,000 tons of hot metal in 2003.
Consequently, the company started the operation of the second plant with an annual production capacity of 1.5 million tons in 2007 and recently launched the operation of its third plant with an annual production capacity of 2 million tons.
According to Korea Iron and Steel Association, as of the end of last year, the local steel production stood at approximately 66 million tons. The figure, even a 4 percent decrease from the year before, represents an overall supply glut in the country stemming from the slowdown of steel related-industries like construction, shipbuilding, and overflowing import supplies from China.
Therefore, the company which produced approximately 38 million tons last year could unburden itself from its oversupply by shutting down its first plant.
Moreover, Plant One, a demo facility, lags far behind commercially-intended Plant Two and Plant Three in production capacity and economic viability.
The not-too-big facilities of FINEX Plant One with a possible price tag of several tens of billions of won (US$30-40 million) are expected to capture a lot of attention from technology-seeking overseas companies.
This is because FINEX technology is slated to gain popularity on the back of strengthened environmental regulations and emerging markets’ move to build their own steel-making factories.
In this aspect, the company’s overseas sale seems to depend on a governmental green light, as one government associate pointed out, “FINEX technology is the nation’s core technology. Thus, its export necessitates the government’s approval.”