Posted on 03 September 2007

 

Source: The Star, August 31, 2007

The venture aims to secure stable supply of steel

Posco, Asia's third biggest steel maker, and Japan's Nissan Motor Co will build a processing plant in Kawasaki to make automotive and stainless steel.

The factory, Posco's third in the country, would have a capacity of 120,000 tonnes and be completed in May next year, Ko Min Jin, a spokeswoman for the Pohang, South Korea-based company, said yesterday.

The venture was "to secure a stable supply of steel'', said Kana Minamitate, a Nissan spokeswoman. "Boosting negotiating power with Japanese steel makers is not the goal.''

Posco sells about a quarter of its output outside its home market, and has been expanding operations overseas to benefit from rising demand, targeting new factories in India and Mexico.

Nissan halted output at three of its Japanese plants for five days in November 2004 because it did not have enough steel.
 

The Posco flag flutters in front of the company's headquarters in Seoul. — AFP

"It's a good news for Posco,'' said Shin Yoon Shik, a steel analyst with Meritz Securities Co. "The plan signals that the quality of Posco's products is recognised by Japanese automakers, which have higher standards than (South) Korean companies.''

Posco said in December last year it will spend about US$400mil by 2010 to increase the number of processing plants overseas to 40 from 14. Japan is the world's third largest motor vehicle market behind the United States and China.

The new factory, which will use hot-rolled steel from Posco's South Korean plants, was part of a joint venture established last year in which Posco held a 69% stake, Posco's spokeswoman said.

Nissan's Pauline Kee, another spokeswoman for the carmaker, put Posco's shareholding at about 70%, with the balance held by Nissan Trading Co, one of the company's wholly owned units.

The venture would help the South Korean steel maker gain a further foothold in the Japanese market, which was relatively closed to foreigners, Meritz's Shin said.

The company, which has its other Japanese plants in Osaka and Nagoya, is the world's fourth biggest steel maker by crude steel output.

"It's going to help Posco increase sales through the venture,'' said Atsushi Kawai, a senior analyst at Mizuho Investors Securities Co in Tokyo.

The carmaker, which has a plant in Yokosuka, south of Kawasaki, has been revamping its line-up and introducing new models this year in a bid to stem a decline in sales in Japan.

 

 

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