POSCO Shuns Mega Steel Investment to Go Downstream with Lithium, Nickel, Fuel Cells and Clean Coal

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--A new chief executive officer and chairman has brought a new strategy to POSCO (NYSE:PKX) (Seoul, South Korea), the world's fifth-largest steel maker. The company will sell non-core assets and list some affiliates to strengthen its balance sheet, and will hold back on any major new investments, said Kwon Oh-joon, who previously was the company's chief technology officer.

In the past few years, POSCO has made a string of investments and acquisitions, one of them being a steel project, which would have seen the largest single foreign investment made in India.

For related information, see July 24, 2013, article - Bureaucratic Hurdles Kill Three Major Steel Projects in India.

Although the company was left with high debts that led to a series of credit rating cuts and a 14% investment reduction for 2014, Kwon said that plans to build steel mills in India will continue, but the $12 billion mega-project will be cut back.

The new strategy aims to improve core competitiveness in steel and generate profits. The company will restructure its material and energy businesses and focus on lithium, nickel, fuel cells and clean coal, Kwon said.

Previously, Kwon had said that the company would not pursue fresh investments aimed at quantitative growth and instead focus on downstream investments aimed at boosting value. He said the global steel market was oversupplied.

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