POSCO to Build Titanium Slab Factory in Kazakhstan

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Researched by Industrial Info Resources (Sugar Land, Texas)--South Korean integrated steel producer POSCO (NYSE:PKX) (Pohang, South Korea) has announced that it has formed a 50:50 joint venture with Kazakhstani titanium sponge producer Ust' Kamenogorsk Titanium and Magnesium (TAS:UKTMP) (UKTMP) (Ust' Kamenogorsk) to build a titanium-slab production facility in eastern Kazakhstan.

POSCO and UKTMP will each invest approximately $25 million in the new plant, which is expected to start production in late 2010. Titanium sponge, which is titanium ore produced in sponge form, will be supplied by UKTMP. Titanium slabs produced at the facility will be shipped to Korea, where they will be transformed into titanium plates at POSCO's steel plant in Pohang. POSCO also indicated that it will work closely with Kazakhstan to develop titanium resources and infrastructure in the country.

Titanium has an extremely low density and high resistance to corrosion, which makes it a key metal in the aerospace industry, particularly in the form of alloys with metals such as aluminum, molybdenum, vanadium and iron. It is also commonly used in medical prostheses, dental implants and various industrial processes. Titanium's value is 10 times that of steel, with the metal often trading at values up to $42,400 per ton.

Domestic consumption of titanium in Korea is currently estimated to be about 5,000 tons per year. By using titanium produced from the Kazakhstani source, POSCO hopes that the imports of the metal from other sources will diminish, causing the price to stabilize. In the past, Korea has relied entirely on imports of titanium, as it has no local production facilities.

With the production of titanium slabs in Kazakhstan and titanium sheets in Korea, the country joins the U.S., Russia and Japan in owning an integrated titanium production facility. The titanium produced in Korea is intended to replace imports from Japan.

Titanium will be rolled into sheets at the Pohang steelworks on Korea's southeast coast, a facility that was constructed in four phases from April 1970 to February 1981. POSCO began test-rolling titanium in September 2008 at Pohang, using the existing rolling equipment. The company has been successful in producing high-quality titanium sheets through acquired core technologies. POSCO has cooperated with potential customers in commercial production tests and product evaluations.

POSCO aims to have the necessary technology in place by the first half of 2010, with commercial production starting later the same year, enabling the company to provide titanium to domestic customers and exporting the metal to potential customers in China and Europe, as well as other overseas regions.

The world's total reserves of titanium are estimated to be about 600 million tons. Titanium is generally found as rutile and ilmenite. Large reserves of ilmenite occur in Australia, India, China, Canada, Norway and New Zealand, while major rutile deposits are found in South Africa and North America.

Demand for titanium tends to follow a cycle with an overall upward trend. Japan and Russia are the largest producers of titanium sponge, accounting for 29.8% and 24.1% of the world's total production, respectively, in 2006. Kazakhstan, with 18.5% of the total global production levels, was a clear third in the production statistics and recorded an annual growth rate in titanium-sponge production of almost 10% between 2001 and 2006.

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